I am a small business owner and I think it important to point out the value to 9-9-9 to both you as a consumer and me as a business owner. Going to explain the effect of 9-9-9 to our customers and to us as a business. First I owned a computer repair business and our labor rate is currently $75 <a title="Labor Rate is $75 per hour charged not per hour worked project plan.” href=”https://savethegovernment.com/labor-rate-is-75-per-hour-charged-not-per-hour-worked/”>(See our reference article) and I think it important to DEMOSTRATE how 9-9-9 would have an effect on a local business like mine.
As per our reference article on labor rates and current tax burdens that is built in layers on small business. The effect of the current system is as a business we deliberately try not earn money but to build wealth into the business. Frankly it’s the old adage you need money to make money. Our ability to survive without income from the business allows us to build up its worth and sell it off in 5 years. This is bad for the economy I know but don’t tell me explain it to Liberals running Washington and the Rhinos who love power in the Republican Party. Most conservatives are familiar with the Laugher curve attributed to Arthur Laugher in the 70’s but even he admits it was “borrowed work” from the 14th century. My contention is not that the math is wrong but the concept is warped by the Math being INCOMPLETE.
The Laugher curve is correct in that you can obtain the same result with fewer burdens. In other words lowering tax rates broadens the base and increases revenues (taxes collected) to Government. Let’s restate that our government takes MORE MONEY from the Economy to central spending zone called Washington D.C. The Tea Party movement is to REDUCE the size of government I don’t think anyone believes we can do that by sending them MORE money. So there is some background information and the point of view in which I am reviewing this plan and offering a positive alternative.
So in our reference we demonstrate our $13 per hour bill out of $75 due to our Government burden on our business and personal income. Under the Candidate Cain’s 9-9-9 plan ALL government taxes get removed and replaced and this means a removal of what we have called Shadow Taxes. The taxes you pay with every dollar that is not declared as taxes but called fee’s as well as taxes. For the purpose of argument we just will not get into these because they vary from industry to industry. Under the Cain plan we would reduce our billing per hour from $75 to $50 (Why? You ask) because it will INCREASE MY PROFITS. 27% reduction in service pricing would be a 238% increase in our profits. $50 the customer’s burden is $4.50 in the 9% federal Sales tax PLUS our State sales tax would $3.60 for a total of $58.10 That same service under the current system is $80.39. This is a gross reduction in Cost to my customers $22.29. So my customers (also known as tax payers) see a 27% lower bill.
What about me the evil business person. Well My burden goes to 18% of the $50 dollar gross. Leaving me with $32 that I have to pay state tax on of 4% that’s $1.28. Under the Cain plan given the fact that I will lower my cost per hour my profit goes from $13 to $31 a 238% increase in profits. My customers have 27% MORE money to spend at other business’s This means that given a frugal market which may save 10% of their income its and immediate Stimulus of 17% without having to borrow any money from China. It’s this Stimulus that his plan counts on to close the deficit gap. With my business plans this may just work because we will have to change our model of business valuing to business sales. I don’t believe that a customer who comes in my store to buy a $900 computer will just simply settle for the same computer for only $600 they will buy the better computer that was $1500 and is now only $900 or since we sell Big Screen TV’s I will GUARANTEE that most people will opt for the 70 inch Sharp that is now the same price as the 55 inch Sony. Customers in my experience opt for better quality when it’s in an affordable range of their budget.
So there are the positives of the Cain 9-9-9 and that’s how my company is going to react to a structure change of that manner.
Now my problem with the 9-9-9, Flat tax, and/or a Fair Tax and why it’s not a FIX to global economy problem, China is a cheating bastard. They counterfeit more goods than what is most likely legitimately sold by the companies who designed the products. In fact if you’re unaware MORE THAN A MILLION counterfeit electronics products made in China have been found in the US Military Supply system. That is a national security issue. But it should be the shining light of what is going on at EBay and Amazon stores where no one is double checking ever if something they buy is real.
Also the hard sale on Cain’s plan is there are states that don’t have a Sales tax so even Republicans are acting like the 27% reduction in pricing just wouldn’t offset by KNOWING there is a 9% tax at each sale. I will state yes there entire states of people who are bad at math. But I WILL NOT VOTE FOR A CANDIDATE THAT LIES ABOUT THE RESULTS. Math is an exact science. Less is less more is more. But to the point that was made by both liberal and conservatives alike sounding questions like “what prevents the government from making it 20-20-20 down the road? “ . The answer is NOTHING, That’s why when Reagan took office the Tax rate on wealthy (Anyone making more than $60,000 per year) was 70%. The problem in its core is that when a politician uses the word Economy you never know if he means OUR economy or Washington’s Economy. It’s the Dual meaning in politico speak that has us fighting for the same thing with ideology camps using both sides against each other.
We need Trade, Exports, less of our labor leaving the country in the form of a product or commodity and less Cheap labor entering our country in the form of a counterfeit product. Slavery is alive and well in America and we have a Billion Chinese chained up overseas doing our work for us. I ask folks to look ahead at that pressure to grow by not just China but even whatever 3rd world country that wants growth in the future. We went from Japan, to Hong Kong, to Taiwan, to India, Malaysia, now it’s just China. How do we put in a tax system that addresses TRADE. I believe I have the Answer.