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Posted on 09/30/2011 8:50:12 AM PDT by SeekAndFind
Herman Cain's supporters know their part by heart. On the campaign trail, at the point in Cain's stump speech when he begins to discuss his plan for economic growth, they're always ready to join the chorus: "Nine! Nine! Nine!"
They're referring, of course, to the Republican presidential candidate's proposal to throw out today's tax structure and replace it with a 9 percent income tax, a 9 percent business tax, and a 9 percent national sales tax. Cain would eliminate capital gains taxes, the payroll tax and the estate tax.
For Cain, a Georgia businessman, 9-9-9 is a perfect platform. It's specific, but it doesn't bury people in details, like Mitt Romney's 59-point, 160-page plan. And it's not a vague promise like Rick Perry's look-what-I-did-in-Texas position. To a lot of voters, 9-9-9 is an enormously appealing proposal that is easy to grasp.
It's audacious, too. "I had a kind of pivotal moment in this," says Rich Lowrie, the head of an investment firm in Cleveland who serves as Cain's top economic adviser. "I was with Mr. Cain and I asked him, 'How bold do you want to be?' and he leaned toward me with his big, booming voice and said, 'BOLD.' "
So bold it was. But is 9-9-9, for all its boldness, a good idea?
I talked with a number of conservative economic policy experts who don't want to take sides in the campaign and thus asked to remain anonymous. They found some important things to like in 9-9-9. They favor its low rates, and they like its elimination of various types of double taxation. Most agree it would stimulate growth and create jobs, at least in the short run.
But they have two serious objections. The first is that 9-9-9 might not raise enough money to fund the government even if it creates growth and federal spending is reduced. Over the years, the government has taken in tax revenues equal to about 18 percent of gross domestic product. "I'd be surprised if 9-9-9 raises as much money as current policy," says one expert. "I'd be really surprised if it raises 18 percent of GDP."
Cain's advisers have put together a detailed analysis, or score, to argue that 9-9-9 would be "revenue neutral," that is, would raise the same amount as today's system. "We used 2008 as our baseline, and not accounting for any growth effect, it would have generated to the penny the same revenue," says Lowrie. So far, though, the numbers have not been crunched by many experts outside the campaign.
The second objection is that 9-9-9 would add a national sales tax on top of current income and business taxes, and would thus give Congress another tax to raise. Why couldn't 9-9-9 become 12-12-12? Or 15-15-15? The rates would still seem fairly low. "In the long run it leaves the door open for politicians with the wrong motives to push it upwards, and then we're stuck with something worse than what we had before," says a second expert.
"All taxes over time tend to rise to their highest sustainable point," says a third expert. "So one of the general things you don't want to do, if you're concerned about limiting the size of government, is to introduce a whole new type of tax on top of the current structure."
Lowrie rejects the argument. First, he points out that 9-9-9 would eliminate some major taxes, like the payroll tax. As for the sales tax, he argues that some politicians will always want to raise taxes, and "I don't think they would be any more likely to raise this." Finally he believes that citizens' movements like the Tea Party will keep up the pressure against tax increases. Still, the fact remains that under 9-9-9, there would be a new tax on top of existing taxes.
This week Cain's team came to Washington to explain the plan to conservative economic analysts at Americans for Tax Reform, Club for Growth and other institutions. Those experts are starting from scratch; they haven't really seen anything like Cain's plan before. And for all the problems they have with it -- they're also flummoxed by Cain's inclusion of "empowerment zones" for inner cities -- they still admire Cain for trying to find a new solution to today's problems.
"It's not an entirely coherent set of proposals," says a fourth expert. "I do worry about the end game. But I hate to rain on it because there's no perfect tax system in the world, and this is another person stirring the tax reform debate, and that's a good debate to have."
Byron York, The Examiner's chief political correspondent, can be contacted at byork@washingtonexaminer.com.
the one thing that is certain is that the plan used today is an absolute failure. So, that is the starting point.
When you starve the beast, it forces Congress to make tough choices. Right now they can always deficit spend thinking once the debt gets bad enough, we will cave and give them more taxes.
That is what the Democrats are counting on. That once the Debt got bad enough, we would panic and sign off on massive tax hikes "on the rich".
Create a 9-9-9 program, remove all power from Congress to punish foes and rewards friends with the tax code a whole lot of "Solyndra" style pork barrel spending become political unfeasible. Everyone KNWO their money is being used on such corrupt spending. Congress people will no longer be able to brag about how much pork their are "bringing to the district" since everyone will know how much they personally are paying for it.
The basic problem right now is everyone figure someone else is paying their share of the taxes. 9-9-9 makes it clear that NO YOU are paying it. Instead of hiding in it behind thousands of business fees and taxes, you make the tax code much more transparent.
My Bad
“I don’t really buy much other than food or clothes, so I like the idea of paying less income tax. Most big things I buy are used..”
Ditto, but we are supporting Herman Cain!
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.
Right now there is more ability to corruptly use the tax code for political ends then there would be under 9-9-9. So the same critical comments being made about 9-9-9 apply MUCH more to the current tax system..
So if 9-9-9 "will not work" based on the standards being applied to it, our current taxsystem is even more unworkable.
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It these people in the "news media" who are supposed to be "economic experts" knowingly misleading by using the term VAT like this who are at fault.
1. Taxing/Stealing and Borrowing/Printing money to produce revenue
2. Spending that revenue in order to buy votes
3. Bankruptcy and Ruin
0-0-15 will work just fine.
Great explanation.
That is why we need to discuss all of this.
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.
Right now there is more ability to corruptly use the tax code for political ends then there would be under 9-9-9. So the same critical comments being made about 9-9-9 apply MUCH more to the current tax system..
So if 9-9-9 “will not work” based on the standards being applied to it, our current taxsystem is even more unworkable.
As I think Boehner pointed out, government accounting is fundamentally dishonest and needs to be reformed (most likely return to pre-Nixon era standards). But Boehner’s excuse for not addressing that issue is the senate. Giving the government a new way to tax people is a very dangerous thing to do. Cain’s resume is excellent, probably better than anyone in the race (to say nothing of the incumbent), but I’m afraid that his lack of experience with the public sector could allow him to get steamrolled by bureaucrats/Democrats/RINOs as president. Pie-in-the-sky promises are nothing new with presidential candidates, but Cain should consider proposing smaller reforms to the income tax before using up political capital on a Fair Tax or hybrid sales tax idea. The situation is going to be a long hard slog for whoever is the next president until the economy turns around.
That's the problem, everyone wont pay it. See “empowerment zones” for inner cities.
That is the foot in the door for liberals to make sure “their people” pay nothing and the rest are stuck with a brand new tax that can be raised at will.
“But they have two serious objections. The first is that 9-9-9 might not raise enough money to fund the government even if it creates growth and federal spending is reduced. Over the years, the government has taken in tax revenues equal to about 18 percent of gross domestic product. “I’d be surprised if 9-9-9 raises as much money as current policy,” says one expert. “I’d be really surprised if it raises 18 percent of GDP.”
This expert does not substantiate his claims by saying things like “I’d be surprised”. Why say this? The 9-9-9 plan as I understand it, removes the loopholes for corporations to skip out on taxes. It even outs the playing feild by getting rid of deductions and “earned income tax credits thereby making everyone equal as tax payers. It actually creates anotther wholle class of tax payer, the drug dealers and people who work “under the table” by making them pay a 9% sales tax with the rest of us.
So unless these so-called experts you talked to Mr. York, know exactly what drug dealers and “under the table” employee’s spend on purchases, I’d argue that they are no more experts on the subject than I am.
Looks more to me Mr. York that you have an agenda. Maybe a Romney, agenda. Hmmmmmm
By the way, no one government body can change the “progressive tax” system in this country without amending the constitution.
To abolish the 16th amendment and change it with a new amendment would require super, super majorities. Even with a majority of Rupublicans I believe there would be far too many RINO’s to ever get this done. I hope I am wrong because I sure would love a simpler & fairer tax code. God knows it takes far too long to do my taxes.
Taxpayers could earn a type of tax credit for living in an “empowerment zone,” which Cain has described as inner cities needing revitalization.
You know...
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