>> Under Cains plan your sales tax will go up %9 and the FEDs will be on you for it.
Not only... but also consider this.
Since the plan is revenue neutral, for every “winner” (say, corporate tax is reduced) there *has* to be a “loser” (for example, a low-compensated person now pays more income tax).
This MUST be, as surely as night follows day, if the plan is indeed revenue neutral.
So, a business “winner” that employs low compensated “losers” may WANT to reduce prices, but will be unable to because the “losers” clamor for more money in salary to pay their increased taxes. And, remember, competition works both ways. If business “A” refuses to raise salaries, they will lose workers to business “B” who will increase salaries to market level, and so “A” will go out of business.
Sure, this is a contrived example, but so is the simplistic scenario where businesses suddenly drop prices 9% or more. My scenario is more sophisticated; it takes more variables into account and deals with the zero-sum nature of the issue.
For me, 9-9-9 is a gimmick. BECAUSE it is revenue neutral, it won’t have the stimulative effect that so many attribute to it — and the downside (a new federal revenue stream) is a HUGE liability.
If Cain’s plan was revenue-adverse and coupled with a plausible plan to cut SPENDING and REGULATIONS to the bone, I’d be all in. But that’s not the case.
Since the plan is revenue neutral, for every “winner” (say, corporate tax is reduced) there *has* to be a “loser”
A smart tax plan that puts the incentives in the right place can allow the economy to grow, so there is more money. People get wealthier, so they are better off after taxes under one plan than another.
Reagan drastically cut tax rates, and revenue went up.
We could increase income tax rates to 90%, and the amount of revenue generated would probably not go up, but people would be a LOT worse off.