In the discussions about Mr. Cain's 9-9-9 tax plan, critics are trying to tell us that this plan will INCREASE taxes paid by everyone, especially lower paid workers. Detractors of the plan claim that the 9% federal tax on all retail sales of NEW goods will represent an increase in the cost of those goods to the purchaser.
They fail to consider the fact that Americans already pay about 22% of the price of goods in tax. We don't see that price because it is not labeled by the seller as a tax. There is, however, a the cost of tax added into the price of every item by every person along the chain of manufacture or production: miner, farmer, manufacturer, transporter, warehouse men, distributor, deliverymen, retailer. All of these entities (companies) pay up to 35% tax on their income. This cost of taxation is passed along to the next in the supply chain embedded in the cost of the goods. These forms ARE NOT CHARITIES. They do not simply swallow the costs they pay in taxes, they pass the cost onward.
When these embedded taxes are removed or reduced, competition in a free capitalist system will cause sellers to reduce the prices they ask, in an effort to capture more business. We can expect that very shortly, prices will reflect the removal of those hidden, embedded taxes.
Thus, although Mr. Cain's 9-9-9 tax places a federal tax of 9% on the sale of all new goods, the price upon which that tax is levied will be substantially less than previously by the amount of embedded tax removed.
[clipper]
Read more about EMBEDDED TAX COSTS HERE.
Read more about TAXING THE RICH HERE.
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