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 ...
right on, that’s the key, elect someone who represents the simple folks and not the elites
Good thread! I have to be offline now, but will be back to see what’s happening here later.
“It empowers us to pay less in taxes because we control our discretionary consumer spending.”
I am sure businesses will be simply delighted that you buy less of their products to save on the taxes. Then of course, those businesses will make less and less money, which I’m sure will stimulate the economy./s
So, businesses will save on corporate taxes, but have a heck of a lot less customers who will turn to the black market or under the table deals to buy goods. Sounds like at most a wash to me.
Oh, and don’t have a family, as that family will need all sorts of goods, especially younger families with kids and needing big ticket items, like homes, stoves, fridges, furniture, household items, etc., not to mention electricity, water, gas, fuel, etc. And not having a payroll tax to pay isn’t going to help them out a lot as half of that payroll tax is paid by their employers, so the savings to the employee is only about 7-8 percent, not the 15% as Cain proclaims. This ain’t what its made out to be folks. No panacea here.
Cain has indicated that a provision of the plan, required for its passing is that it would take a 2/3rds vote of congress to raise any of the rates.
If this were possible, why wouldn’t the Dems have done this with Obamacare?
I’m a Cain supporter, and think the 999 plan is a good start, but I think this would require a Constitutional amendment. A 999 law could include a provision that it takes effect upon ratification of a new amendment.
Under the current system, if you buy a wooden chair, the person that sells the wood includes what he pays in taxes in the price of the wood when he sells it to the mill. The mill includes what it pays in taxes in the price of the wood when he sells it to the manufacturer. The manufacturer includes what he pays in taxes when he sells it to the store. The store includes what it pays in taxes in the price for the chair. So the price of the chair includes roughly 20% in taxes.Whew! It's a good thing there aren't more people involved in the production/sale of that chair or it would exceed 100% tax.
You are discounting the fact that taxes can ALWAYS be raised and, historically, ALWAYS have been raised.
“It empowers us to pay less in taxes because we control our discretionary consumer spending.”
I am sure businesses will be simply delighted that you buy less of their products to save on the taxes. Then of course, those businesses will make less and less money, which I’m sure will stimulate the economy./s
So, businesses will save on corporate taxes, but have a heck of a lot less customers who will turn to the black market or under the table deals to buy goods. Sounds like at most a wash to me.
Oh, and don’t have a family, as that family will need all sorts of goods, especially younger families with kids and needing big ticket items, like homes, stoves, fridges, furniture, household items, etc., not to mention electricity, water, gas, fuel, etc. And not having a payroll tax to pay isn’t going to help them out a lot as half of that payroll tax is paid by their employers, so the savings to the employee is only about 7-8 percent, not the 15% as Cain proclaims. This ain’t what its made out to be folks. No panacea here.
“even low-income voters will be more eager to lower that “9” by cutting spending.”
The poor can always by ‘used’ food./sarc
If Laffer gave it the thumbs up that’s good enough for me.
Personally I think it's because Cain is making this stuff up as he goes along. I watched a clip of him vs. Chuck Todd, which I guess was on MSNBC yesterday some time, and Cain was all over be board. He claimed everyone pays a 15% payroll tax, which is not true. He claimed a family of 4 making $50000 and taking standard deductions pays $10,000 in income tax, which is flat out wrong. He admitted that there was no way that they could definitively say that prices would go down just because business taxes were reduced, which he has claimed in the past and which he contradicted himself on less than a minute later. He said that business would be able to deduct purchases and capital investment - but only if they are made or invested with companies here in the U.S., which is something new right out of the blue. How can anyone accurately predict what the effects of his plan is on the average person if he's changing it every time you turn around?
The COST OF LIVING will DROP folks. The 9% sales tax will merely level that out. Any other criticism that AVOIDS the embedded tax portion of the arguement is DISHONEST.
I agree. The Fair Tax folks have done extensive research on the concept of embedded tax. It is one of the foundational points of the Fair Tax. The HR 25 Fair Tax bill shows embedded taxes make up 22% of the cost of a product.
A bogus claim right off the bat. The overwhelming majority of people in this country are not self-employed so they don’t pay a 15 percent payroll tax.
You’d have to be pretty naive to think that your employer would try to keep this for himself any more than he’d lower your salary if federal tax rates declined. Employers who did that would be unattractive to the best workers, in comparison to employers who behaved more rationally.
The law would have to be passed, making it part of the law itself, requiring a 2/3rds majority for change to that law. Then, for this law, in order to change it, and to obey the law, they would have to have a 2/3rd majooity.
I think that could work. Otherwise, Congress would themselves violate the law.
That’s the intent...I am sure if that is not possible, someone real soon will bring it out in law why it cannot. But if congress, who has the responsibility for making la2ws does it, unless that particular provision was found to be unconstitutional, I believe it would work just fine.
Some existing congress people think it could not be passed, and with the existing congress that may be so. But cain is confidant that if he wins, there will be a new congress in 2013 that will pass it.
As for the argument that a NST would hit “the poor” and those on fixed incomes the hardest:
By this reasoning, state and local sales taxes already hit “the poor” and those on fixed incomes the hardest. What is different about how a NST would operate?
Where I live “the poor” are said to also be hit harder by a variety of other taxes, such as we have a special tax (and it’s high) on food ordered at a drive-thru. Yes, you pay more tax on your burger if you get it in your car. We also have special taxes on junk food and soda, etc.
The fact is that when you’re “poor” and on a fixed incomes ALL price increases affect you perhaps more than someone with more money.
Plus there are ways to address that (that conservatives have been pushing for decades).
“Unless you believe that the free market operates for labor (workers could switch to the companies that don’t make the short-sighted mistake of keeping the tax reduction).”
Oh yeah, like in a major recession, or depression, depending on your point of view, you can just up and switch jobs at the drop of a hat. Heck, if you haven’t noticed, there aren’t many jobs around to switch to. What a joke.
What needs to be analyzed here is what is the principle that Cain is trying to implement by the national sales tax? I see it this way:
1. EVERY American pays the tax.
2. EVERY American pays the same tax rate.
3. EVERY American is empowered to control how much tax he pays by regulating his purchases (beyond necessities). If he sees the need to Go Galt, the FedGov will feel it directly.
4. EVERY politician’s constituents will be affected by ANY tax rate increase. They will not be able to get away with voting to raise taxes on “the other guy.”
5. ANY tax rate hike will be clearly visible to EVERY taxpayer — it would be right there on your receipt for purchase. Congresscritters could no longer raise and raise the tax burden (as they have on the cost of gasoline) without people realizing it and raising hell.
Any tax that accomplishes the implementation of those principles would be a great thing for our country.
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.
Harry Reid did put that in Obamacare, he required a 2/3 majority to change the death panel section. Another time it was done historically is with a Medicaid bill.
I say if Congress doesn’t want to do the 2/3 fine let’s use that as one more strike against Obamacare.
Anyway the 999 is only temporary. It won’t last until the next Congress, because phase two of the plan is the Fair Tax.
That highlights one of the things ignored by people who clamor for tax increases to increase revenue. Federal revenue over the past 50 years or more has always been between 18% and 20& regardless of what Congress does to change taxes and tax rates. When Congress makes a change the markets adapt.
I read it before responding, which is why I know calling for a carbon tax is funny.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.