Peter Schiff exposes the Achilles heel of Herman Cain's 999 plan

Schiff's bottom line: under Cain's 999 plan, the 15% payroll tax is NOT eliminated but is instead replaced with an effective 9% payroll tax b/c businesses can no longer deduct employee wages from their own tax burden. Because this 9% falls entirely on the employer, where will he get the money to pay for this tax? By reducing employee wages by 9%. Schiff says Cain's plan should therefore be called the 18-9-9 plan: 18% (9% income + 9% effective payroll) + 9% sales tax + 9% business tax. I have presented his view in the youtube graphic.

Though I'm a huge Ron Paul supporter and don't have 9 cents, 9 shits, or 9 rats asses worth of trust in Herman Cain, I'm not entirely sure Schiff's critique is accurate. For instance, Schiff says the employer would be taxed 9% on the wages of the employee, and instead of taking that 9% on the chin the employer will simply reduce his employee wages (I assume by 9%). But aren't employers ALREADY are paying half the employee 15.3% FICA burden, meaning they already are paying 7.65%? 9% would raise the employer burden by only 1.35%. So perhaps the employer would be tempted to reduce employee wages by 1.35%. However, wouldn't the elimination of FICA taxes that the employer himself currently has to pay more than offset that 1.35%? Don't people who are self employed have to pay 15.3% of their own income to FICA? I don't know know enough the 999 plan to say, but wouldn't that 15.3% burden be reduced to either 0% or 9%, a net gain of at least 6.3% for employer that would offset the 1.35% increase he'd pay on employee payroll tax? I don't ask this to defend Cain (I don't always post videos that I'm certain I agree with, but I still find interesting), but want to have an honest discussion - if someone spewed BS about Ron Paul for instance, the misinfo deserves to be corrected. And I've read the Fairtax book that discusses how only the final good would be taxed and gets rid of embedded taxes that are added up along production stages, so that the bottom line price wouldn't really change. A superficial look at Cain's website says that he intends to adopt the same methodology. So would the poor really have their tax burden increased 3% like Peter says? I don't know the answers to all these questions, so feel free to post your own comments or links to articles that discuss this stuff

Category:

News & Politics

Tags:

• Peter
• Schiff
• Herman
• Cain
• Ron
• Paul
• 999
• plan
• IRS
• income
• tax
• 2012
• president
• presidential
• race
• GOP
• Republican
• Fairtax
• libertarian

[SchiffReport]

The description has it wrong. Yes, a 9% payroll tax is less than the current 15.4% (thought for high wage earners, it is actually an increase, as of the current payroll tax 12.4 % only applies to the first 105K of income. Cain's 9% payroll tax applies to 100% of payroll. ) The problem is that Cain claims the payroll tax in completely eliminated. That claim is false, and 999 actually raises taxes on a lot of people Cain claims will enjoy tax cuts.

[evmazu]

@SchiffReport Do you mean my description or Cain's description is wrong? Also, can you comment on the rest of my YT description? For example, in this vid you say employers will have to cough up 9% payroll tax, but since they already pay 7.65% (half of 15.3%) for salaries under 105k, that's not a big increase in "payroll" tax? Is the salary a biz owner pays to himself subject to this hidden 9%? Also someone sent this link scr(DOT)bi/pAH7Td on pg.7 claiming "wages... WOULD be deducted" @ biz base

[evmazu]

And if youtube's 500 character limit is too short for you, we'd all be tickled pink if you posted a youtube video response instead!

[K20ej88]

I live in New Jersey which has a 7% sales tax, so I would effectively pay 16% on new items. Since most poor people spend a majority of their money on neccessities that you can't buy used ( Food, Gas, Utilities, etc ) This would be absolutely devestating for them. Herman Cain has flip-floped, and even flat out lied multiple times. Not to mention he has no experience. I can't fathom why anyone would be interested in this guy.

[luc1dox]

@akonidai I'm gonna buy used food for my family to eat and used diapers for my baby!

Federal Reserve chairman Cain was for the bank bailouts, against an audit of the secretive entity he was a high ranking member of (FED), and praised Alan Greenspan who was instrumental in creating the housing bubble!

Cain = More of the same.

[feather7624]

@pfnr37 nice. Schiff has absolutely no idea as to what he's talking about. I trust Herman Cain a million times over before I'd ever trust Schiff. Herman Cain successfully predicted the housing market bubble burst, Schiff was completely for overinvestment and backed the fed through and through. Now, I have three questions: 1. Can you tell me the definition of sarcasm? 2. Can you spot the sarcasm in my statements? 3. Are you CRAZY?

[akonidai]

@K20ej88 go to (9 9 9 calculator . net)

[akonidai]

@K20ej88 go to 999calculator dotnet

[akonidai]

@evmazu go to 999 calculator dot n e t

[pfnr37]

Peter Schiff must of flunked math

[pfnr37]

As a matter of fact in real money under the current system you would pay 15.7 % more in take home pay. So even if you payed no taxes except the payroll tax to your employees under the current plan you would still pay more. So maybe it should be the 0 9 9 Plan

[pfnr37]

Under the Herman plan you would not pay any payroll taxes for you employess. So the 30,000 dollars that you previously payed in payroll taxes would now become profit. So your profit would be 330,000 dollars and that would be taxed at 9% so you would pay 29,700 and your take home pay would be 330,000-29700 or 300,300 so you are making 40,800 dollars more than under the current best case scenario plan. Tell me how is that 18% Pure BS.

[pfnr37]

The current corporate tax is 15 to 35% so lets take the 15% scenario.

Lets say that you have a business that makes a profit of 300,000 dollars and that you paid 30,000 dollars in payroll taxes to for your employess. You can then deduct the 30,000 dollars from your profits. So instead of being taxed on 300,000 dollars you would be taxed at 270,000 dollars. Of the 270,000 dollars you would be paying 15% or 40,500 dollars so your take home pay so to say would be 300,000-40,500 or 259,500