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Posted on 10/19/2011 8:42:05 AM PDT by rbmillerjr
Full Text of Article (less graphics) follows:
Laffer Shoots Down Critics on Cain 999 for WSJ
In an Opinion piece for the Wall Street Journal, Supply Side economist and Reagan advisor, Art Laffer, looks at the number and concludes it is real stimulus for the American economy.
Cain's plan will bring in the same revenue as the current tax code on a "static basis." This means that given no assumptions for extra "dynamic" growth, the 999 Plan will meet revenue needs. But, Laffer strongly believes that the Cain Plan will bring in more due to the intrinsic economic positives of the Plan and the resulting growing of the private economy.
"Mr. Cain's 9-9-9 plan was designed to be what economists call "static revenue neutral," which means that if people didn't change what they do under his plan, total tax revenues would be the same as they are under our current tax code. I believe his plan would indeed be static revenue neutral, and with the boost it would give to economic growth it would bring in even more revenue than expected.
Laffer gives macroeconomic support for his above belief and addresses the "low income will pay more" myth:
"the three tax bases for Mr. Cain's 9-9-9 plan add up to about $33 trillion. But the plan exempts from any tax people below the poverty line. Using poverty tables, this exemption reduces each tax base by roughly $2.5 trillion. Thus, Mr. Cain's 9-9-9 tax base for his business tax is $9.5 trillion, for his income tax $7.7 trillion, and for his sales tax $8.3 trillion. And there you have it! Three federal taxes at 9% that would raise roughly $2.3 trillion and replace the current income tax, corporate tax, payroll tax (employer and employee), capital gains tax and estate tax."
Laffer continues and points to wealth creation and the supply side theory that resulted in Reagan's largest peacetime economic recovery at the time.
"With lower marginal tax rates (and boy will marginal tax rates be lower with the 9-9-9 plan), both the demand for and the supply of labor and capital will increase. Output will soar, as will jobs. Tax revenues will also increase enormously—not because tax rates have increased, but because marginal tax rates have decreased."
Laffer explains the over-regulation and cost of tax compliance under a complex tax system.
"By making the tax codes a lot simpler, we'd allow individuals and businesses to spend a lot less on maintaining tax records; filing taxes; hiring lawyers, accountants and tax-deferral experts; and lobbying Congress... for every dollar of business and personal income taxes paid, some 30 cents in out-of-pocket expenses also were paid to comply with the tax code. Under 9-9-9, these expenses would plummet"
Many in the poverty class will benefit and be brought out of poverty.
"even on static terms those below the poverty line will be better off—period. Once the dynamics take hold, many of those below the poverty line will find good jobs and thus will rise above the poverty line and start paying taxes."
...and what does Laffer have to say to conservative critics who say it opens up a new tax route?
"They argue that...the retail rate could be raised to the moon. They are correct, but what they miss is that ANY tax could be instituted in the future at a higher rate...Until then, let's not make the perfect the enemy of the good."
He also gives his macro numbers breakdown for the Cain 999 Plan.
—But the plan exempts from any tax people below the poverty line.—
That is what kills this for me. I want to see the guy that makes $1 a year pay nine cents in income tax.
I want it to be THAT flat.
Well, technically they will be paying a sales tax, but net net they won’t be paying taxes.
It’s just not politically feasible to do otherwise.
BTW, you’d be surprised at all of the “concern” on the regressive issue here on FR. lol
I want to hear more about it in the next few months. The libs are already howling about him planning on eliminating SS and Medicare BENEFITS. Such misinformation so early on. To scare the seniors, of course.
They hate his supply side policies, no doubt. Just wait to they hear more about the Chilean model for retirement systems.
But what really kills the libs is they can’t stand that he literally came off of the Leftist Plantation.
They’ll be sending the Overseers out to put him in his place now. They are so transparent. They despise him because he could be a long term death blow to the current Leftist Democrat Coalition...he’s a lot like Palin in that regard...it’s all about demographics for Leftists...because they don’t value individualism.
Art Laffer is backing the Cain 9-9-9 plan because Art Laffer was one of the architects of it. Can you say vested interest, lol?
“One of the architects of Herman Cain’s 9-9-9 tax plan, economist Stephen Moore, said the contender for the GOP presidential nomination needs to drop his proposed 9 percent national sales tax.
Moore, who developed the plan with economist ARTHUR LAFFER and Wells Fargo wealth manager Rich Lowrie, said he would advise Cain to drop the sales tax, but that the plan was solid otherwise.”
—It’s just not politically feasible to do otherwise.—
I agree. I also don’t think any of it is politically feasible, though I like it a lot. Nothing remotely similar to what Cain is proposing will ever be voluntarily enacted by our country. You’ll see civil war before they start moving in that direction.
I think it’s a pretty good plan though. Maybe something to be used by the Phoenix that rises from the ashes.
“I agree. I also don’t think any of it is politically feasible, though I like it a lot.”
Remember that Paul Ryan gave his “seal of approval” to Cain’s 999 Plan.
He will be the guy that will usher in the new Republican President’s Economic Recovery Plan...so I think with a few refinements it has a very good chance of passing in large fashion.
The class warfare arguments won’t work...Reagan increased the taxes for the lowest tax paying Americans from 11 to 15 percent as part of an effort to flatten taxes...those taxpayers did much better under Reagan due to the expansion of the economy and much better jobs.
—...with a few refinements it has a very good chance of passing in large fashion.—
I don’t, and I articulate it here: http://www.freerepublic.com/focus/bloggers/2794987/posts?page=7#7
” That bureaucracy is legion and includes very powerful people in both the public and private sector. They would tear this country to shreds in a fight to the death to preserve their livelyhood/industry.”
No doubt the vested interests are not going down without a fight...that is why you will see increasing attacks on Cain.
But in the debates, Cain can look at Romney and say, “you support the status quo...my Plan is a game changer and it can transform America back to its rightful place as the Economic Superpower that it is.
Reforming the Tax Code is basically reforming the Establishment...so yeah it won’t be easy.
But I noticed that Cain is now up in Iowa by 8, South Carolina and is only 2 down in Florida....
If he wins Iowa, which with Bachmann in decline, it looks like he may...game on.
Thanks for the article.
________________
Herman Cain’s 999 Plan:
Cain’s Stimulating 9-9-9- Plan (Laffer)
http://online.wsj.com/article/SB10001424052970204346104576637310315367804.html?mod=WSJ_Opinion_LEADTop
Reagan Economist Breaks Down 999 Plan
http://video.foxnews.com/v/1217420754001/reagan-economist-breaks-down-999-planReagan
Club for Growth President Chris Chocola called the 9-9-9 “an outline for a more prosperous and globally competitive America,” saying it is “both pro-growth and a good starting point on the way to a flat or fair tax.
Backing for Cain’s plan also came from Kevin Hassett, senior fellow at the American Enterprise Institute also praised the Cain’s proposal for moving towards a flat tax. “If someone’s going to attack the 9-9-9 plan, I would say they should be careful because you are talking about the Republican holy grail,” he told the Associated Press.
http://www.newsmax.com/InsideCover/Cain-999-tax-plan/2011/10/14/id/414487
Rich Lowrie Discusses Herman Cain’s 9-9-9 Plan
http://www.youtube.com/watch?v=9iKkDcDmf7I
Paul Ryan Likes Cain’s Plan
http://www.humanevents.com/article.php?id=46850
Dick Morris Defends 999
http://www.youtube.com/watch?v=RuikrVmN6Yo&feature=feedu
How is Herman Cain’s 9-9-9 Plan Good for America
https://sites.google.com/site/giveemcain/home
Club for Growth defends Herman Cain, 9-9-9 plan
http://www.politico.com/news/stories/1011/65967.html#ixzz1alhFr6NM
Can Herman Cain’s Plan work?
http://axdwhiteman.info/index.php?option=com_content&view=article&id=102%3Acan-herman-cains-999-plan-work
Why We Need Herman Cain’s plan:
http://www.nerds4cain.com/Blog/archives/759
Office of Tax Analysis for the U.S. Treasury Gary Robbins analyzed and scored his plan. Cain said the analysis shows that his plan will “initially create 6 million jobs and that it will bring the unemployment rate down initially to about half of what it is today.”
http://politics.blogs.foxnews.com/2011/09/22/fox-first-cain-reveals-his-economic-secret-kitchen-cabinet#ixzz1aaTbfWLN
What do these numbers mean for me?
http://www.nerds4cain.com/Blog/archives/723
53% of People Favor Tax Code that Treats Taxpayers Equally
http://www.rasmussenreports.com/public_content/business/taxes/october_2011/53_favor_tax_code_that_treats_all_taxpayers_equally
Embedded taxes
http://www.ipi.org/ipi%5CIPIPublications.nsf/0/3F31DF6F0D040EE986256AB700630B84/$File/PR160-HiddenTax-FINAL.pdf?OpenElement
Ultimately, even thought the Cain 999 has much support in the business community and supply side conservative sector, that is not what is driving the Cain phenomenon.
If the plan gets refined to more of a Flat Tax type of plan...the glue that is bringing in Cain supporters is they want an alternative to RINO Romney.
Cain is seen as an effective Leader who is a solution finding problem-solver who will jump start the Economy and actually Cut the Budget. Business people actually do this all the time and Cain’s status as the Outsider is going to give him a serious shot at winning this thing.
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