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Cain's 9/9/9 and Johnson's sales tax

Posted by TheCapitalist on September 25, 2011 at 12:07pm

Subject: 9/9/9 taxes as proposed by Cain


Annual national Corporate Profits: 1.68 Trillion 4th quarter annualized 
                              add back 329 billion taxes paid and true profits= $2.009 Trillion

                              9% = $181 billion

  

Annual national Personal Income  = $13 Trillion

                               9% =   $1.17 Trillion

 

National Consumption  =  71% of GDP = 71% of 14.74 $Trillion = $10.47 Trillion

                               9% =  $942 billion

 

Total taxes in 9/9/9 = $181 billion + $1.117 Trillion + $942 billion = $2.29 Trillion

 

Current Annual Government expenses = $3.7 Trillion

 

Cain Deficit = $2.29 Trillion - $3.7 Trillion = -$1.4 Trillion

 

Current Deficit = $1.07 Trillion

 

Conclusion;  Cain's 9/9/9 taxes still leaves an even larger deficit.  However, this is assuming everything stays the same and my belief is that it won't. Read on please.

 

Cain will need to cut expenses, but not by $1.4 trillion

 

Because the tax burden shifts from production to consumption, corporations, small businesses and enterpeneurs will hire more.

 

Let's assume a 20% increase in corporate profits due to increase in business and increased demand by lower personal income taxes:

 

Now Corporate tax = 1.2 times $181 billion = $217 billion

 

Unemployment drops to 4 % as businesses need to hire more to keep up with production due to increased demand. This drop in unemployment from 9.1% current to 4% represents an additional 7.8 million  more people working and paying taxes.  With an average USA salary of $48,000 this 7.8 million additional workers now represent  an additional $374 billion of taxes.

 

Now personal income taxes at 9% = $1.17 Trillion + $374 billion = $1.54 Trillion

 

Consumption tax .  Since 7.4 million are now working and can actually spend money, consumer confidence increases and people actually buy things despite a 9% sales tax. We will now increase spending by 5% ( 5 % more people employeed) = 1.05 * $942 billion = $989 billion.

 

Total revenues now equal $217 billion + $1.54 Trillion + $989 billion = $2.75 Trillion

 

Current deficit now equals $3.7 Trillion - $2.75 Trillion = $949 billion.

 

Gary Johnson promises a balanced budget in 2013. He proposes a 43% redution in expenses and replacing the corporate and income taxes with a national sales tax. In my opinion, this is the economic equivalent of shock and awe.  It shifts 100% of taxes from production to consumption.  Result: We make more, save more and pay off debt. It will shock and awe both the world and ourselves, but an economic shock and awe is what we need.  We fear China, not for its military might, but for its economic standing.  They hold us hostage, not by missiles, but by holding our credit card.  This bold move will set America as the unequivocal world superpower for the next 50 years and give americans a standard of living not seen since post WW2 when America represented 50% of the world's GDP.  We are currently 25%.

 

I hope this sheds light on why republicans and libertarians want to balance the budget not by increasing taxes but by increasing the number pf people that pay taxes. Taxes are lower and more revenues come in.

 

He will need to cut expenses, but not by $1.4 trillion

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