Sales tax works best with no exemptions at all. If you exempt food and gas, what happens is that this distorts the market in favor of both. Demand for food and gas is inelastic. Decreasing the price won’t have the concamitant increase in demand. Producers will shift to food and gas until there is an oversupply.
I’m not understanding how producers would “switch” to gas and food... For instance, my husband is a machinist - are you suggesting that his employer would find some way to produce gas or food and abandon his profitable business?
I do understand the forces of supply and demand, and I understand what you are saying about demand of those two commodities being inflexible.
I guess I just have to educate myself a lot more on our tax structure as is, and how Cain’s plan would work. I’m VERY much open to it - just not educated enough on the details, and I think I’m pretty typical of the kind of people that will have to be sold on the sales tax portion of the plan. That’s the only downfall I see with the plan (besides making sure there are strict rules regarding any future increases). Average folks who are not particularly educated regarding our tax system might not look further than thinking about paying an extra 9cents per dollar on everything they buy. With the increases in costs over the last couple years it could be a bit of a hard sell. Plus, you KNOW the Dems are going to bring up the poor and how this will likely be a hardship on them (particularly in places where food is not already taxed). I’m just trying to look ahead and understand so that I can educate others who may be worried about the same things.