Posted on 09/30/2011 8:42:11 AM PDT by Cincinatus' Wife
....Of Mr. Cain's many ideas, the most well-known -- in part because of its clever sound-bite name -- is his 9-9-9 plan which aims to replace most current federal taxes (including income tax, death tax, payroll tax, capital gains taxes, and double-taxation of dividends) with a 9% flat tax for business income, a 9% flattax for individual income, and a 9% national salestax. The plan would eliminate almost all deductions.
While Mr. Cain's consistent results-oriented approach is admirable -- not least for its contrast with the other candidates -- voters should be wary of the 9-9-9 plan despite its initial appeal. In short, it is somewhere between folly and economic suicide to implement a national salestax, even at a modest rate, without simultaneously repealing the 16th Amendment to the Constitution (which permits a national income tax.)
There is in economics a relatively new concept known as Hauser's Law, named for its creator, economist Kurt Hauser of the Hoover Institution. Hauser's law posits that the federal government cannot take more than about 19.5% of national income through taxation and that soaking the rich (or those whom President Obama defines as rich) will not generate the tax revenue..........
United Kingdom: 36.1% total taxes/GDP, with a VAT rate of 17.5 percent taking 6.8% of GDP. (The UK's VAT rate has since been raised to 20 percent.)
Germany: 36.7%, with a 19 percent VAT taking 6.7% of GDP.
France: 43.7% total taxes/GDP, with a 19.6 percent VAT taking 7.3% of GDP
In other words, governments of these countries which have national sales taxes take far more of the national wealth than we do in the United States. There are several European countries with even more punishing VAT and income taxes, with Denmark's government confiscating an astonishing 48.8 percent of national income.
(Excerpt) Read more at spectator.org ...
[In short, it is somewhere between folly and economic suicide to implement a national salestax, even at a modest rate, without simultaneously repealing the 16th Amendment to the Constitution (which permits a national income tax.) ]
I agree completely!
I don’t like articles that compare our tax rates and Europe’s tax rates. European tax rates cover their healthcare, and lots of other social amenities...not saying it’s right to have the gov’t give those perks...just saying comparing our tax rates and European tax rates is like comparing apples and oranges.
I’d probably end up paying more taxes under his plan, but would probably end up with more money because my employer and our clients would pay fewer taxes.
Never looked at the details but it seems logical.
You must give Mr. Cain credit.
At least he is not responsible for the
Gardasil-PerryCARE fiasco or the RomneyCARE fiasco,
or the open border RINOs.
He should change it to a 999—9+9 plan. The last 2 nines when added together equals 18, symbolizing a constitutional amendment limiting federal spending to 18% of GDP.
The only real way to get tax reform is to eliminate all “Hidden” taxes and outlaw withholding from paychecks. If the citizen had to save up money to pay taxes quarterly, no politician would ever dare raise taxes ever again.
I think the 999 Plan is a good one, provided the current IRS Code goes out the window when it's implemented. Indeed, US taxpayers should insist on this as a precondition to its acceptance. Otherwise, you'll have both.
In addition the argument that you "must repeal the 16th Amendment 1st" is nonsense.
What is to prevent Congress from raising tax rates 20-30-50% right now?
The same political pressures that keep that from happening right now, apply even more so to the 9-9-9 plan
Since everyone pays the 9-9-9 tax it is impossible to demagogue raising it as "making the rich pay their fair share". Everyone know raising it means they will pay more
So rather then cling to their preconceived dogmas out of an emotional attachment to a certain candidate, the critics of 9-9-9 might want to try actually ADDRESSING THE FACTS for a change instead of engaging in this baseless demagoguery and fear mongering.
So far as I’m concerned, the VAT tax is the crack cocaine of the statist bureaucracy, insidious in that it is so hidden, and economically deadly in that it can be raised to such high rates. One of my major fears with the Obama cabal is that they would be able to introduce a VAT, which I’m sure they’d do if they were able to.
Nonetheless, I might be willing to support a 9-9-9 since it is a nice balance of taxation of income and consumption, and since it affects everyone equally (how does one keep income taxes at reasonable rates if 47% of the population pays no income tax?).
However, in order to get my support for 9-9-9, Cain (or anyone else) would have to come up with an ironclad process that would make increases in the VAT portion extremely difficult, if not impossible. I don’t know if you can bind a future Congress by requiring a 75% super majority to increase the VAT part, but if something like that could be done, I’d probably go along with it.
I agree, a VAT and a sales tax are totally different.
People don’t see the VAT when they buy. People do see a sales tax.
If 9-9-9 adds up to the revenue we need for a smaller government, it is a great idea.
As long as you make virtually limitless steams of revenue available to the Feds, they will spend it. UNTIL you remove the possibility of tax hikes at will, they will spend it. Reforming the tax code to starve the beast is the 1st step to reigning it in.
For 70 years we have tried it your way, the spending is never cut. How about we try something different this time?
He has never held office, so of course, he is not responsible for any legislation or government activity. Cain has simply not been tested and we have no idea how he will actually govern, all we have is speculation based on his business record and his speeches.
Don’t ever confuse how taxes are collected with how much taxes are collected. If we don’t control overspending, in the long run it won’t matter. We’re on an unsustainable trajectory right now.
You are starting to sound like Calypso Louie.........
Big Bro can only tax so much before the big money scrambles for cover. The gov gains nothing from that gold buried in the backyard and the gov gains nothing from unreported sales and transactions of a growing off-paper economy.
What is to prevent Congress from raising existing tax rates 20-30-50% right now?
The same political pressures that keep that from happening right now, apply even more so to the 9-9-9 plan
Since everyone pays the 9-9-9 tax it is impossible to demagogue raising it as “making the rich pay their fair share”. Everyone know raising 9-9-9 means they will pay more taxes
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