I have a question about 9-9-9. I currently run a small business out of my home. I am not incorporated. Under the current tax code I get to write off all of my expenses to run my business, milage, copies, phones, fax, and computer, business supplies, etc. Will I get to do this under 9-9-9 if I am not incorporated. I was told not to incorporate when I opened my business since I would be the only stock holder and any complaint filed would come after me anyway. Also, I did not want to deal with the hassels that the Fed and State place on anyone that is incorporated.
I totally support Herman Cain, and I truly believe in my heart that he is the only candidate that can beat Ocommunist (don't you love that name!).
Answer:
Janis, this is a tricky question, not from the perspective of 9-9-9, but from one that is legal. I am in no way expert in all the legal ins and outs of incorporation, and the particular advantages of that for you particularly, nor do I think the campaign should, or would give those answers. However, there are feature of 9-9-9 that will effect you, and positively so. First, let's look at the "first 9". the Personal Income tax of 9%. At the present time, as you indicate, you are paying tax on your income after expenses are deducted. The 9-9-9 plan does not recognize deductions of this nature. However, when you reduce the marginal rate from even the lowest amount of 15% down to 9%, that means that, were you to claim 40% of your income as deductions, you would break even. Now, I'm asking myself, and I'd bet you are asking yourself, if you deduct more than 40%. It doesn't matter yet, because as a self employed person, you are required to pay your own payroll taxes, FICA and FUICA. Those are completely abolished under 9-9-9. Betcha a steak dinner that after you stop paying that 16% of every dollar you earn, you will be saving money.
But, let's not stop there. Under the "second 9" you'd be paying 9% tax on all those supplies for your business right? That'd make costs go up, right? You'd be paying sales tax on your household goods as well, right? That'd make costs go up, right? This is the most commonly held misconception about the 9% consumption tax. In fact, hidden in the cost of every sheet of paper you buy for your business, or every sheet of paper towel you buy for your home are embedded corporate income taxes of 35% of profits, 16% payroll taxes for employees (matching) and a bevy of what Mr. Cain calls "Sneak-a-taxes." When these cost are removed, economists believe that the cost of goods will go down significantly more than 9%, actually saving you money.
Whether or not incorporation is, in toto, a good idea under 9-9-9, you will need to speak to your attorney. However, all things considered, if everything you do stays the same, I think this would indicate that you'd be paying less. Mr. Cain has said consistently throughout his campaign that small business is the engine of our economy and that his administration would reward the entrepreneurial spirit. It seems, in your case, he means what he says!!!
And thank you for taking the time to send us this question. And most of all, thank you for supporting Mr. Cain. He is our next best, and possibly our last best, hope for our free market economy.
