The Cain 9, 9, 9 Tax Systems
This tax plan has been proposed by Herman Cain who is a Republican Party member and a presidential candidate for the 2012 presidential elections in the United States of America. This newly proposed tax regime aims at replacing the federal tax system with a 9% personal income tax, 9% retail sales tax, and another 9% value-added tax. The most appealing element of this tax plan is that it addresses issues related to economic resources. Gravel (2008) observes that an effective tax plan should be able to address the importance of economic resources. The present tax system should be done away with largely because it is retrogressive towards economic growth (Gravel, 2008). So far, some economic critics are foreseeing mischief in this tax plan. They have dismissed it as a mere campaign tool.
This tax plan has been applauded by various groups. Those who support it argue that it can enhance transparency and simplicity. It is capable of revolutionizing the economy of United States of America. So far, the proposals by Herman Cain can provide a tax burden relief to the American public if followed by the letter. Basically, it is being perceived as a significant shift from the retrogressive tax systems that have continued to load more financial burden on taxpayers. Indeed, one of the outstanding attributes of this tax plan is that it attempts to level down all major tax deductions. Grouping all the taxes into three main categories is important instead of having numerous cuts in an individual’s income.
However, some critics have argued that this tax plan is only suitable for rich people. The Democrats have pointed out that this tax plan is for those who are rich. Similar claims have been put forward by a section of the Republicans. The focus is on how this kind of leverage would benefit low-income earners. He argues that most people would be able to pay less tax. At face value, the tax plan sounds quite fine. However, questions are emanating from this kind of leverage.
Perry Tax Plans
Rick Perry is another presidential aspirant under the Republican Party. His tax plan aims at instituting a flat tax rate of 20%. It also allows taxpayers to choose whether to continue with the current tax regime or go to a simpler flat tax. According to Perry, this kind of balance on the budget will not only be fair to the taxpayers. It will also be simpler and less complicated. Perry’s tax plan has identified several weaknesses in the current taxation system. For instance, some people are exempted from high taxes because they belong to the lower levels of earning. A good tax system must be cost-effective (Lambert, 1993). In other words, taxpayers should be cushioned against paying higher taxes that are not commensurate to their incomes.
The good element in this tax plan is that it brings about total change to the payment of tax. Individuals who are earning more than the US $1 million would have their tax payment slashed to 20% only. In addition, this tax plan may not be compulsory. In essence, it gives people a chance to choose the tax rate they would most prefer. For this reason, therefore, the poor may opt to remain with the existing tax system if they feel that they would be oppressed. On the other hand, high-income earners would have an option of going to this flat tax rate.
However, this tax plan may be retrogressive at some point. For instance, the tax plan is seen to be targeting those within the high-income brackets. If the tax plan is to be used to benefit all, only millionaires would benefit from it. Even though it gives an option to the poor to remain with the current tax system, it does not cushion them against the current challenges in taxation.
References
Gravel, M. (2008). Citizen power: A mandate for change. Bloomington: Author House Publishers.
Lambert, P. J. (1993). The distribution and redistribution of income. New York: Manchester University Press.