Herman Cain 9-9-9 sticker shock? 18% sales tax possible in some states.
Under the Herman Cain 9-9-9 tax plan, a new federal sales tax would be added on top of existing state and local sales taxes. That means 9-9-9 could yield large sales taxes in some places.
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- In New York at the Lord & Taylor department store, a non-label cashmere sweater was priced at $179.99. Adding on New York’s 8.48 percent sales tax, it would cost $195.25. With Cain’s 17 percent tax rate, it would total $211.45, or $16.20 more.
- At Best Buy in Boston, a flat screen 55-inch, flat-screen TV sells for $2,549. With local and state sales tax, that totals $2,708.31. Under 9-9-9, it would cost 2,937.72, or $229.41 more.
- At a Barnes & Noble bookstore in Boston, Herman Cain’s autobiography, "This is Herman Cain!" would retail with 6.25 percent tax for $26.56. Adding the candidate’s own sales tax, it would cost $28.81, or $2.25 more.
The extra tax would be especially noticeable on a significant purchase such as an automobile. For example, at Commonwealth Honda in Lawrence, Mass., a salesman quoted a price of $22,673.49 for a 2011 four-door Honda Accord LX. Under Cain’s tax proposal, the car would cost $24,553.32, or $1,879.83 more.
The higher sales taxes could encourage the practice of crossing state lines to buy products in places where sales taxes would be lower. For instance, some South Dakota residents buy food and clothing in Minnesota, which does not tax those items.
“The disparity between the states and commerce would be pretty widespread,” says Shawn Lyons, chairman of the board of the Council of State Retail Associations.
Sales taxes in Delaware would be at 9 percent under the 9-9-9 plan, while they would hit an average of 16.03 percent in neighboring New Jersey and 15 percent in Maryland.
Retailers would be particularly unhappy if e-retailers did not have to pay the sales tax. Under current law – upheld by the US Supreme Court – online retailers are not responsible for collecting taxes in a state where they do not have a physical presence. There are currently two bills before Congress to try to make retailers such as Amazon.com pay state sales taxes.
Presumably, e-commerce would have to pay the federal sales tax under 9-9-9, but neither Cain’s campaign office, nor his senior economic advisor, Rich Lowrie, returned phone calls or e-mails.
“If they don’t have to pay the tax, it will kill us,” says Arizona's Ahlmer.
If the 9-9-9 plan were enacted, the most expensive sales taxes in the nation, according to the Tax Foundation, would be in Tuba City, Ariz., where there is currently a combined rate of 13.73 percent, including a 6 percent tax for the local Indian government. With 9-9-9, the small town (pop. 8,225) would have a sales tax of 22.73 percent.
• Geoff Johnson contributed to this report