Tuesday, October 18, 2011

Study Finds 9-9-9 Plan Would Double the Sales Tax for Many Residents

I like Herman Cain. I like his innovative and direct way of approaching and possibly finding solutions to the nations problems. That said, I am not sure he is right for the Presidency. I just have not made up my mind yet, although I do believe he would be an excellent Senator or Representative.

Herman Cain has made the his 9-9-9 plan the cornerstone of his economic policy, saying it would replace federal taxes with a simple mix of income, business and sales taxes, all at 9 percent. But, according to a new analysis by the Tax Foundation, such a plan wouldn't necessarily lower taxes to 9 percent. People in most states would pay more, when state and local sales taxes are included. In some cases, customers could even end up paying twice as much in sales tax.

The study found that the combined sales tax in all but four states would rise to at least doubt digits. In Delaware, Montana, New Hampshire and Oregon -- the only four states that do not collect sales taxes at the state or local level – residents would only have to pay the 9 percent national sales tax. In Alaska, where there’s only local sales taxes, at an average of 1.1 percent, the combined rate would add up to 10.1 percent.

The five states that would have the highest combined sales tax rates would be Tennessee at 18.4 percent, Arizona and California at 18 percent and Louisiana and Washington state at 17.6 percent.

Among the other key states, the sales tax rates would be 17.5 percent in New York, 15.9 percent in Florida and 15.8 percent in Iowa. The nation's capital would have a combined rate of 15 percent.

The Tax Foundation’s study is based on the assumption that Cain’s sales tax would be applied in the same way as the other sales taxes in each state and jurisdiction. But that won’t necessarily be the case. States vary greatly in how they collect their sales taxes and what items they tax. Cain has not released all the details on his plan yet, making it impossible for a comprehensive analysis. But his plan would scrap the current tax system for a 9 percent tax rate on income, businesses and sales that would apply to all purchases. In turn, there would be no more payroll tax and no more estate tax.

It's hard to tell how this new tax code would benefit or hurt taxpayers in the long run. But without more specifics, the Tax Foundation's analysis seems to confirm what some critics have been saying about the plan, which has helped propel the former pizza chain executive to the top of the GOP presidential field: the 9-9-9 plan amounts to a double or even triple whammy of taxation when local and state sales taxes are included.

The other reason I would oppose this plan is simple cynicism. While the plan may well lower taxes and make things fairer in the near future, I do not for a second believe that our lawmakers in Washington would keep their "tax and spend" hands off of it. I am certain that before long we would see these taxes creeping up and within a few years it would look more like the 20-20-20 plan....

Live Long and Prosper....

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