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TMFFlushDraw (83.17)

Thoughts on Perry's Tax

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October 25, 2011 – Comments (19)

I'll admit off the bat that I don't particularly like any of the Republican candidates, the Tea Party, or most of the Republican Party's agenda, which may I remind you is actually what got us into this mess (not Obama, who hasn't helped but also inherited $1 trillion in deficits and a terrible economy). 

With that said, I do like Herman Cain and Rick Perry changing the conversation about taxes. Simple is good and the tax code has become rediculously complicated. Here are my thoughts good and bad.

Perry's Plan

I like the idea of a flat tax, I like the idea of no repatriation tax (which never made sense to me), I like the idea of no dividend or capital gains tax (which seems like double taxation after corporporate tax. Rick Perry, I like the idea. 

The reality however is terrible. There is no way this increases revenue, which is what we need to do even though no one wants to admit it. It's also a very regressive tax and as such, low and middle income Americans would chose to stay on the old tax plan (which Perry allows).

A better idea would be to have a simple three phase tax rate. 0% on the first $10,000, 20% on everything else up to $1 million, and 30% on everything over $1 million. Under the TMFFlushDraw plan the ultra-rich would pay more than the capital gains rate they pay now, corporations would pay less and have more incentive to invest in the U.S., and people making $100,000 to $2 million who pay the highest rate would get a bit of a break.

Admittedly, I haven't run the numbers on how this affects each section of society or how much revenue it raises, but it seams more fair than Perry's plan.

Cain's Plan

I also like the simplicity of 9-9-9, but Cain's tax is more than regressive, it's evil. This plan helps the rich the most and hurts the poor the most. How does that make sense? 

But again, a simple fix can be made. Keep the 9% sales tax, that seems fair. Keep the 9% corporate tax rate, that seems fair. But tier the 9% income tax rate a 0%-9%-15% at the levels of $10,000 and $1 million, like above. This would make it much less regressive. 

Someone else do the dirty work

If you want to calculate the numbers, please do. My head hurts from listening to politicians and coming up with a better plan on a napkin.

Travis Hoium 

TMFFlushDraw 

19 Comments – Post Your Own

#1) On October 25, 2011 at 2:55 PM, TMFHousel (91.39) wrote:

I've never understood how a capital gains tax can be depicted as a double corporate tax. If I buy a stock for $10 and sell it for $11, there is no coprorate tax tranaction anywhere to be seen. 

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#2) On October 25, 2011 at 2:56 PM, TMFHousel (91.39) wrote:

Transaction*. (tranaction .... now there's an unfortunate typo). 

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#3) On October 25, 2011 at 3:16 PM, TheDumbMoney (45.26) wrote:

1) I like this plan as to the basic income tax rates and cut-offs. 

2)  I echo Morgan that a capital gains tax is just fine.  I think it's preferred.  Tax capital gains at the same rate as the highest bracket into which a person falls, under you plan.  Reasons:  Capital gains are not double taxation.  And capital gains come from the last increments of original capital, investable after all spending, which means from the "top."  (At least theoretically.)

3)  Repatriation tax should match the world average, not be eliminated.  Reason -- otherwise corporations are incentivized to offshore profit-making capability in order to reduce taxes.  Currently our repatriation tax is higher than developed-world average, as far as I know. 

4)  Dividend taxes are double taxation, and, worse, they encourage profligate, ill-timed stock buy-backs that are not taxed.  Either tax stock buybacks equally, or reduce or eliminate dividend taxes, particularly on long-term holders.

5)  Get rid of almost all, if not all, tax deductions. 

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#4) On October 25, 2011 at 3:24 PM, TMFFlushDraw (83.17) wrote:

I'll accept that modification. I think I overlooked that when I reworded that section. Tax capital gains as regular income!

So then the option becomes should we eliminate corporate taxes but tax dividends at a higher rate or eliminate the dividend tax and just have corporate taxes. That should be a was if we follow the cash flow (although it would impact dividend rates). 

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#5) On October 25, 2011 at 3:29 PM, TMFFlushDraw (83.17) wrote:

the same (not "a was")

my brain is giving up on the day. 

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#6) On October 25, 2011 at 3:34 PM, Teacherman1 (52.52) wrote:

Even though I am from Texas, I am not particularly a fan of Rick Perry, but if I read the news "snippet" correctly, I think he said he would increase the standard deduction to $12,500 for individuals and dependents.

If that is each, than I don't see that as being as regressive a tax as it might at first appear.

I guess it would depend on whether one was single, married, or married with kids.

For example, a couple making $50,000 a year, with 2 kids, would pay no tax at all.

An individual making $50,000 a year, with no kids, would pay $7,500 (before other exemptions mentioned), which comes out to 15%.

An individual making $25,000 would pay $2,500, which is 10%.

A couple making $25,000 would pay no taxes.

There are, of course, too many possible scenarios to run all of them, but if there was a provision for some sort of credit for a catostrophic event (medical, storm, etc), then it might be something to consider.

For the highest earners, it is probably more than most of them pay now.

Again, since there is little detail in what has been stated so far, it is really hard to tell.

JMO and worth exactly what I am charging for it.

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#7) On October 25, 2011 at 3:42 PM, goldminingXpert (29.57) wrote:

"but Cain's tax is more than regressive, it's evil."

Strong words (and I entirely disagree about the evil part, though I am not a big fan of the 9-9-9 plan). 

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#8) On October 25, 2011 at 3:52 PM, TheDumbMoney (45.26) wrote:

OMG I just looked at this analysis of Perry's plan. 

http://www.businessinsider.com/rick-perrys-tax-plan-is-another-campaign-blunder-2011-10

Saints preserve us, what a mess.

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#9) On October 25, 2011 at 4:00 PM, BillyTG (29.50) wrote:

goldminingInfant,

aren't you a big fan of any plan that helps your hedge fund bosses?

Got any more hot stock tips for us??

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#10) On October 25, 2011 at 4:03 PM, turdburglar (43.45) wrote:

Perry's an idiot.  People from Texas tend to know that but I don't think the national media got the memo and now they're slowly catching on.

It's garbage like this that makes it clear Obama will get re-elected.  Here we are wasting time debating a flat tax and a 9-9-9 plan that won't do much other than fail in congress once they do the math on them.  It's pandering and nothing more. 

Or maybe we'd be better off to stand around and debate the technical feasibility of an electric fence to keep Mexicans out. 

Obama is going to win in a walkover.  Yes, he's an idiot and an empty suit, but he'll win because the Republican clowns burned down the tent before the show even got started.  It's a total fiasco and it became evident early on that things weren't going to go well when Donald Trump threw his hat in the ring.

I don't think the Democrats could have written a better fantasy script for the Republican primary than what has happened.  Newt Gingrich comes out of the woodwork to remind everyone he's not dead and then some pizza man shows up blithering about upgrading that ridiculous fence on the Mexican border to be electrified.  I guess maybe we could have Phil Graham run and just tell us we're a bunch of whiners in a mental recession.

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#11) On October 25, 2011 at 4:28 PM, Teacherman1 (52.52) wrote:

No offense, Dumberthanafool, but: 

Where is the link that goes to the "analysis"?

When I clicked on that one, it was simply an unsupported, opinionated article written by someone who obviously doesn't like Perry.

Again, I am not fan of Perry, and don't know enough about his plan to know if I like it or not, but that was certainly not an analysis of it in any way shape or form.

JMO and worth exactly what I am charging for it.

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#12) On October 25, 2011 at 4:33 PM, WikiCPA (62.50) wrote:

As a conservative libertarian, Turdburglur you are right on the dot. With the vast amount of articles giving Obama the credit for pulling the troops out (Bush signed an order to end all US troop presence by the end of 2011) and executive orders to hire veterans, he is well back on his way to win 2012.

 Back in 2008 I didn't like him, but I do now since he's just following the 1%. And if i follow the 1%'s investments, my returns will skyrocket (hehe jk.... only a little bit). Looking at the amount wall street has donated to Obama's side so far, it's looking pretty bright for democrats. That's why i don't pay attention to any romney/cain/perry. But michele is nice to look at

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#13) On October 25, 2011 at 4:36 PM, TheDumbMoney (45.26) wrote:

Teacher, forget the analysis.  The numbers and policies are on point.  This is a guy who is going to let people opt for the current code, and who wants to keep the mortgage interest rate deduction.  The businessinsider article didn't make that stuff up I think. 

It's the substance I object to; I'm not just emotionally revving off the things BI said about that substance.

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#14) On October 25, 2011 at 4:45 PM, goldminingXpert (29.57) wrote:

Billy: Yeah, NFLX looks like a great buy. Oh wait, no, that was you who picked it as a green thumb up at 110. Nevermind

GPL 2.33 :)

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#15) On October 25, 2011 at 4:48 PM, lquadland10 (< 20) wrote:

Congressman Obama did help with this mess. Let me point out on the fact that he did vote to take the 40% ( more or less) per year and with others in Congress said Banks could not charge more than 30% per month. So then Banks could charge over 100% per year. However that is not the point. Perry would not change Much of anything. Think. The BANK of GE would still pay 0% in taxes and The BANK of GE CEO is telling Obama what he should be doing for Business. Yep Banks are still in Charge. Left or Right I does not matter. However Ron Paul did say he would cut the budget by a Trillion. Starting with his Salary as President to 40,000 a year instead of 400,000 a year. Now that is what I call a man who walks the walk and does not just talk the talk. Oh and if he ever has money left over as a Congressman then he returns it at the end of the year instead of going out and seeing what he can spend it on. Also on the Executive Order on the New Housing Bail out how many Trillions will that put us on the hook for.

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#16) On October 25, 2011 at 7:16 PM, awallejr (81.44) wrote:

I am with #10.  I've blogged enough about my views on the subject elsewhere.  Flat taxes in and of themselves will always be regressive unless you start giving tons of exemptions in which case you are no longer at a simple system.

Cain is nothing but a charlatan grifter enjoying celebrity status who threw out a simple concept.  But start asking him details and effects and he sidesteps.  And sorry Flush, a 9% national sales tax is NOT fair.  Be on a fixed income like social security and tell me how paying 9% more on spending is the same as for a millionaire paying 9% from an impact point of view.

Perry's plan is really no different.

When will people realize that you simply can't treat people in such wide disparity of incomes equally.  This is nothing but another con job for the rich to lower their taxes even more.

Congress is simply not focusing on where the real work needs to be made, that is aiding and encouraging entrepeneur startups.  THOSE create jobs, not the IBMs or the other large cap companies.  Make more money available to SBA.  Allow BDCs access to a "startup" fund pool.  And many regulations really do need an overhaul.  Keep their tax rates low.  Low rates for low caps.  How's that for a jingle?

But stop with this flat tax nonsense.  I am tired of hearing a bunch of fatcats keep telling the poor that they still have to make sacrifices while the fatcats make even less.

I really don't think Obama deserves a second term.  But the Republicans are just making it so much easier for him.

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#17) On October 26, 2011 at 10:30 AM, Turfscape (37.85) wrote:

Travis, you are spot on that this conversation needs to happen. Our tax code has been tweaked, bent, twisted and clipped so many times that it is not even recognizable as a tax code anymore. That is as good a definition of a broken process as has ever been.

It's nice to believe that we can find easy fixes, but...it's really not realistic. There needs to be some major changes in order to clean up the entire federal budgeting process. Try this thought experiment: plan your family budget for next year, but as you make assumptions about your income, pretend that your boss now has over 400 options for NOT paying you on any given week, or paying you less than you expected, or defferring that week's pay until next year. You still have the same bills to pay every month, though. Where do you think you're bank account will be at end of the year?

Whether it's eliminating major deductions and loopholes, changing to some form of flat tax, instituting a national sales tax; whatever it is, it won't come without some pain. And that's something that politically active groups just won't allow. Whether it's Americans For Prosperity or Progressives for Change or North American Train Remodelers For Democracy And Freedom, someone will scream loud enough to derail the conversation.

But, this much is clear: The status quo cannot survive.

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#18) On October 26, 2011 at 2:02 PM, russiangambit (29.37) wrote:

>  Perry's an idiot.  People from Texas tend to know that but I don't think the national media got the memo and now they're slowly catching on.

-------------------------------------------------

True.))  Perry couldn't put two words together on his own. He is nothing but a puppet for oil&gas lobby. Sort of a Sarah Palin in male form.

 

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#19) On October 26, 2011 at 2:45 PM, DJDynamicNC (27.18) wrote:

FlushDraw, I have to agree - though I'm not at all impressed with either of the plans on offer, it's good to see tax reform on the table. Reforming the tax code - preferably in such a way that the wealthy pay a reasonable amount on their earnings - would be a positive step for the US to undertake.

First priority, of course, has to be jobs and employment, but we definitely ought to keep this in mind once we have things in hand.

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