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 oilÔÇª. 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.