Herman Cain has captivated the nation by adopting a 9-9-9 plan that many pundits claim just won’t work. One of my clients asked me to check out his 9-9-9 plan and asked me to "shoot holes" in it.
As an investor and accountant married to a CPA, and we’ve done a few thousand tax returns between the two of us, I felt qualified to answer.
Simply put, I liked the basic premise of the plan. Apparently I'm not alone. Paul Ryan and Art Laffer, two smart people, have also endorsed it.
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So after some thought and input, I have tweaked that plan and have come up with my own “9-9-3” plan with a few variations.
This week, I will explain the plan and I would like those who want to "make it fairer" explain in an email what you would change and why.
Next week I will explain any adjustments to my plan and why my 9-9-3 plan is optimal.
I am taxing folks 9 percent for their first $250,000 of taxable income and 19 percent of all their taxable income over $250,000.
Unlike Mr. Cain, I am keeping real estate taxes, mortgage interest and investment interest deductions, charitable deductions and letting you deduct all medical expenses for prescriptions, health insurance and to medical providers dollar for dollar.
I am eliminating all personal exemptions and tax credits.
Unlike Mr. Cain, I am taxing all your dividend, capital gains and interest income the exact 9 percent and 19 percent as stated above.
Businesses are going to pay 9 percent on the first $250,000 and 19 percent on every dollar over $250,000. All tax credits again are eliminated but generally business deductions stay as before.
My national sales tax will be 3 percent on everything you can't eat or drink. The tax will charged on new items only..Any used cars, clothes, boats or any resale items will be exempt. Also, any purchase over $100,000, but which is not your primary residence, will be taxed at 9 percent.
There will be no federal payroll taxes by employer and employee or estate taxes.
Some pundits are trying to say that this will destroy Social Security as we know it. Social Security was never invested but instead borrowed every year and it is really an unfunded liability.
Many poor and middle-class people who pay no taxes simply won’t want to pay 9 percent more for everyday items and their concerns are warranted, especially if they are retired or on disability or Social Security.
It is easy to make the argument that 3 percent is much easier to swallow and the lower tax rates will more than likely cause businesses to charge less money for the product. The purpose of the national sales tax is to get folks who are paying no tax at all — like illegal immigrants, criminals, tax evaders, etc. to "pay something."
A tax of 9 percent on all items more than $100,000, other than your main residence. Business and folks earning more than $250,000 will be pleased to pay 19 percent now, given that many people and businesses are paying more than 40 percent now when payroll taxes are factored in.
My adjustments make a great plan even easier to sell to retirees and those who presently pay no federal income taxes.
Next week, I will report to you any "ideas" that I find "compelling" to add to my 9-9-3 plan. I will also explain why my 9-9-3 plan is best for America.
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About the Author: Bill Spetrino
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