InvestWisely
Confused about dryer sheets
- Joined
- Feb 14, 2021
- Messages
- 4
I am a huge fan of Roth accounts, including judicious use of Roth conversions, so I was intrigued but also a bit horrified by the popularity of Herman Cain’s 9-9-9 plan back in 2011. The popularity of Cain’s simple but revolutionary 9-9-9 plan should be a cautionary tale for anyone planning to convert significant portions of their tax-deferred retirement savings.
Cain’s proposal was to replace current payroll, income, capital gains, and estate taxes with a “flat” 9% personal income tax, 9% federal sales tax, and a 9% corporate income tax. The idea was very popular with voters.
Some ideas and questions to consider...
What if in the future Congress significantly LOWERS personal income tax rates, however unlikely that may be, and then your Roth conversion gets taxed AGAIN with a new federal sales tax when you or you heirs spend the money?
Why do we tax income, especially wages, in the US so heavily vs consumption anyway? Many countries in Europe have a 20-24% VAT. Are we trying to discourage hard-working people from earning a living? Many people in the US are struggling financially. Income and wealth inequality are increasing. The natives are restless and some are revolting. There’s a growing sense of discontentment that the economy is rigged against the working class.
Additionally, the so-called “shadow economy” is around 10% of the US GDP. This is that neighbor of yours who gets paid under the table for his all-cash side business as well as anyone who is paid for an illegal product or service. Wouldn’t it be more fair if the money flowing through the shadow economy was taxed when it gets spent?
Cain’s proposal was to replace current payroll, income, capital gains, and estate taxes with a “flat” 9% personal income tax, 9% federal sales tax, and a 9% corporate income tax. The idea was very popular with voters.
Some ideas and questions to consider...
What if in the future Congress significantly LOWERS personal income tax rates, however unlikely that may be, and then your Roth conversion gets taxed AGAIN with a new federal sales tax when you or you heirs spend the money?
Why do we tax income, especially wages, in the US so heavily vs consumption anyway? Many countries in Europe have a 20-24% VAT. Are we trying to discourage hard-working people from earning a living? Many people in the US are struggling financially. Income and wealth inequality are increasing. The natives are restless and some are revolting. There’s a growing sense of discontentment that the economy is rigged against the working class.
Additionally, the so-called “shadow economy” is around 10% of the US GDP. This is that neighbor of yours who gets paid under the table for his all-cash side business as well as anyone who is paid for an illegal product or service. Wouldn’t it be more fair if the money flowing through the shadow economy was taxed when it gets spent?