Gypsies, Tramps and Thieves

When Herman Cain's 9-9-9 plan is analyzed, it's not such a good deal for the self-employed

By Alberto Marrero Salas
Published on LatinoLA: October 13, 2011

Gypsies, Tramps and Thieves

Watching the Republican debate (desperately hoping for some light to shine through) about a third of the debate dealt with Herman Cain's 9-9-9 plan.

The Cain 9-9-9 plan consists of the following:

A flat income tax of 9% regardless if you recycle bottles and plastics for a living or if you are Warren Buffet.

Then there is a 9% federal sales tax imposed even on food and services. Again regardless of you income level.

To finish it off 9-9-9, there would be a flat corporate tax of 9%.

To be fair, John Huntsman said that he thought that the 9-9-9 plan was a pizza pricing gimmick. (Herman Cain was CEO of Godfather's Pizza).

Michelle Bachman also made light of it by stating that 9-9-9 plan if turned around would be 6-6-6.

There were other critics who claimed that the 9-9-9 plan would reduce tax revenues by half a trillion dollars.

But the damage of the 9-9-9 would be a disaster for the majority of Americans and especially so for the self-employed.

In the case of the self-employed. Herman Cain would have you pay the self-employed social security tax, which is 15%. In the case of those who work for others, the social security withholding tax is 7?¢ %. Your employer pays the other 7?¢ %.

In the case of the self-employed, you are both the employer and the employee. Therefore, you pay both ends of the social security tax, hence the 15%.

So, as a self-employed person you already start out 15% behind the eight ball.Now if Cain is elected and 9-9-9 gets somehow miraculously passed the average self employed person in California would face the following.

A 9% income tax. Add that to the 15% that you pay for social security taxes so at this point you are at 24%.

Then add a 9% federal sales tax and your effective rate as a self-employed Californian is up to 33%.

Then there is that pesky California sales tax which is over 9%. Therefore a self-employed person in California under the Cain 9-9-9 plan would pay a total of 42% in federal and state taxes. That is 42% tax rate, not counting the State of California income tax rate which is the 2nd highest in the nation.

On top of that you have that 9% corporate tax. The truth is that corporations do not pay taxes. They pass them on to the consumer. So forget taxing big oil. the truth is you are taxing yourself every time you fill up.

So when you take everything into account, those of you who are self-employed are looking at a tax rate of 50% or better.

This is amazing, as Cain is supported by the tea baggers who claim that they support small government and lower taxes. They call Obama a socialist. Cain makes Obama look like a libertarian.

About Alberto Marrero Salas:
Worked on Wall Street with Merrill and Pru Bache during the go go years of the 70's and 80's, when yuppies were cool.
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