Posted on 10/13/2011 5:19:07 AM PDT by Cincinatus' Wife
Herman Cain's "9-9-9" tax reform is attracting enough attention to become the focus of this week's Presidential debate. As a plan for overhauling revenues and unleashing the private sector, it's a bold gambit that shows Cain is willing to take chances and shake up the Capital.
The 9 percent business tax is a stroke of genius. It would give us the lowest business rates in the world and would make us the "tax haven" for investment from everywhere. The stock market would barely be able to stay abreast. The 9 percent personal income rate would eliminate all the deductions and put everyone on a level playing field. Tax collection from "the rich" would skyrocket because no one would hide income anymore, but "the other 99%" would make out as well. Cain's plan would fold in the 15 percent payroll tax so the new 9 percent rate would be an improvement - but would end the immunity that the bottom half has from paying any taxes at all. Altogether a good show.
The stickler is that 9 percent national sales tax. That's where things start to fall apart....
The sales tax has long been the preserve of the states and is now imposed in all but five of them (Alaska, Delaware, Montana, New Hampshire, and Oregon). The informal arrangement has been that the federal government gets income taxes, the states get the sales tax and local municipalities are granted the property tax. Often they poach. States and even cities have imposed income taxes and have also started trespassing on the property tax. But for the federal government to demand a 9 percent sales tax would be a whole new departure. Combined with state and city levies, it puts us near 20 percent, which is black market territory.
(Excerpt) Read more at spectator.org ...
“Finally, Cain has also indicated that the sales tax is only on “new” items. Used item sales would be exempt.”
Could you show me that on his plan listed on his website? I don’t see it there.
Do you pay sales tax on lawyers and doctors fees?
Just 9% in spending cuts? hmmm...how about 12-14%. Then go after waste which accounts for another 10%.
The real focus needs to be on spending cuts and elimination of regulations and subsidies that add to the federal budget. Herman needs to look at dropping the last 9 and concentrate on 10-10 or 12-12 and taking a huge chunk out of federal spending.
I wonder what the revenues would be if 9-9-9 were like so:
9% Corporate tax
9% Personal income tax
9% Tariff on every imported item
OR
9% Corporate tax
9% Personal income tax
$.009 on every digital financial transaction
I agree with you that spending is the issue and must be addressed. However, we still have to fund the FedGov, so the question is how?
The objection that the taxes under 999 "will grow" is not unique!
Taxes can and do "grow" NOW -- except now we have very little power to stop those tax increases. Why? Because so few of us are paying taxes compared to not -- so there are many congresscritters who can get away with voting to raise and raise and raise taxes on "the other guy."
Their constiutents don't care about the tax hikes they vote for -- they're not paying the taxes!
This means that under the present system there are huge wastelands in Congress where there is almost zero accountability for a vote for raising taxes. AGain, because it's someone else constitutents, or only a small percentage of one's district, that will have to pay the piper.
Under 999, EVERY person would pay taxes and pay the same rate. So congresscritters will no longer be able to hide and fob off their spending addiction on someone else's constituents or a small percentage of their own voters (say, the "rich").
If they vote to raise taxes under 999, EVERY SINGLE PERSON will feel it and know it -- and will be able to raise hell about it if they object.
This is vastly more accountability than we have in the system now. It actually empowers us, the people who pay taxes (which would be everybody under 999), to put more pressure than we've ever been able to muster before on Congress to hold rates down.
The claim has been made time and time again, but can anyone point to any evidence that it has ever happened? It's a little dated, but a 2010 economic paper outlining the benefits of a permanent tax cut noted the following:
"Finally, some have made the argument that the benefits of a corporate rate cut would be passed along to consumers in the form of lower prices for goods and services. It should be noted that this argument is incompatible with the notion that the tax cut will increase stock prices. To the extent that a tax cut resulted in lower consumer prices rather than higher corporate profits, the tax cut would not increase the willingness of investors to buy stock and the predicted stock market boom would not occur. A corporate tax cut is unlikely to lower consumer prices, however. Most economists believe that the benefits of changes in corporate taxes flow to the owners of stocks, bonds, and other capital and not to workers or consumers, a conclusion reflected in papers issued by both the Congressional Budget Office and the Treasury Department. Even if some portion of the benefit did flow to consumers, $900 billion would be a very high price to pay for what could only be a few billion dollars in short-term stimulus."
Oops. It was a 2001 paper, not 2010.
Aren't you talking about the same group of people there? I didn't realize only Buffett and Soros and his pals owned stocks.
a conclusion reflected in papers issued by both the Congressional Budget Office and the Treasury Department.
There's a hell of a source for you.
I haven’t been to his website, just hearing what his supporters are saying the plan is. I have seen many of his supporters say that used items won’t be susceptible to the sales tax because the tax has already been paid on that item. So that isn’t true? So, then that will be a case of where it’s taxes upon taxes again.
I think a lot of Cain supporters are floating ideas that are not true - a lot of them are under a misconception that Cain’s plan is radically different than what we are paying now. It’s not - it just has a catchy name. I guess when people are drowning, they will grab onto anything with the hopes it will save them.
The 999 plan will not hold up under the intense scrutiny it is going to get.
Flim-Flim-Flam
I agree with you that we need to actively consider solutions, not kneejerk reactions to words such as “carbon.”
I wrote upthread that my main concern about this author’s proposal is that the tax would once again be hidden. The point of a national sales tax is to make it OPEN and NOTORIOUS. This is the way to make Congress accountable if and when they do try to raise the rate.
Since everyone would be paying it, and since everyone would be aware of the rate (it’d be right there on every receipt), Congress would have to do a very good job to sell a tax hike to the entire nation at once and get away with it.
I’m also not sure I agree with the author’s view that a national sales tax would be so difficult to implement and cause corruption and so on. Times have changed with how everything is accounted for by computers, with credit cards, etc.
Good grief, California apparently has had no problem tracking Amazon purchases for purposes of imposing state income tax.
Just saying I don’t think “process problems” should be the determining factor in evaluating a bold proposal such as this one at this point. Yes, they matter. But they should lead as to whether the idea itself is worthy of pursuit.
TexasFreeper2009,
Our family is in exactly the same position you are.
Beware the unintended consequences of any 999 plan.
“Cain is a modern day flim flam man.”
Not to dispute this but tell me, which politician isn’t or hasn’t?
Not well thought out and not ready for prime time.
But the claim was made that a cut in corporate taxes would result in a reduction in the prices that corporations charge. And the paper notes that corporations are more likely to direct the cost savings to things that improve their stock and bond prices. That may benefit individuals who own those investments, no doubt about that. But it does nothing to help the individual buying their goods. The corporate tax cut Cain proposes will help businesses and investors an a number of ways. It will not result in large scale reductions in the price we pay for goods on a daily basis.
There's a hell of a source for you.
Then by all means please direct me to studies that show that reductions in corporate tax rates result in price reductions for consumers. Europe went through a whole rash of tax reductions in the last decade - Ireland alone slashed their rates by 50%. Surely you can find evidence that such reductions resulted in price reductions can't you?
It's what people currently pay. Obama is trying to get it extended. Is there anyone who thinks that the GOP will vote for a tax increase by refusing to extend it?
Libs also do not want We The People to have more power over how much we send in to the FedGov — and that’s exactly what a plan such as 999 does.
It empowers us to pay less in taxes because we control our discretionary consumer spending.
Libs hate that if we all got mad about what the FedGov was doing we could go on a consumer strike and make a dent in FedGov revenues, such that FedGov may even have to start listening.
The fact is that the 999 plan has deep roots in the types of massive tax reform (e.g., Fair and Flat taxes) that conservatives have been pushing for decades.
Should we keep on massaging 999 to make it the best possible reform? Yes. But yapping against it from the get-go seems incredibly short-sighted: as conservatives, we have been waiting for someone to throw out the tax code, get rid of the IRS, and make everyone a stakeholder for decades!
These are all things 999 are intended to accomplish.
Nope, in my cynical, sleepy haze I was incorrect. The author had it right.
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