Posted on 10/13/2011 8:30:53 AM PDT by Watchdog85
Vision for Economic Growth
•The natural state of our economy is prosperity. Freedom ensures that. •We must get the government off our backs, out of our pockets and out of our way in order to return to prosperity. •Policy uncertainty is killing the economy.
Economic Guiding Principles
1.Production drives the economy, not spending. ◦We can not spend our way to prosperity. ◦Government spending IS taxation. ◦Government spending is like taking a bucket of water from the deep end of the pool, pouring it in the shallow end. Then they HOPE that the water level will CHANGE. 2.Risk taking drives growth . ◦Business formation and job creation are dependent on entrepreneurs taking risks. ◦Investors who fund those entrepreneurs likewise take risks. 3.Measurements must be dependable. ◦A dollar must always be a dollar just as an hour is always 60 minutes. ◦Sound money is crucial for prosperity.
We Must Unite Not Divide
•When one party seeks to spend so that the other party must focus on cutting, we must unite around economic growth. •Unite all tax payers, don’t divide them into “income” tax payers vs. “payroll” tax payers. •Unite those wanting to eliminate deductions with those seeking lower rates. •As a first step, unite the “Flat-Taxers” with the “Fair-Taxers” Economic Growth is the Key •This is the worst recovery since the Depression. •If the President’s goal was to tie for last place with the previous worst recovery, he failed by 6 million jobs. •If we had a typical recovery, 13 million more Americans would be employed today. •That means more tax revenue, less government spending and 13 million less people opposed to reasonable spending cuts. •The Super Committee must deliver a robust growth solution. •America can’t wait for 2012, we need growth NOW Phase 1 - 9-9-9 •Current circumstances call for bolder action. •The Phase 1 Enhanced Plan incorporates the features of Phase One and gets us a step closer to Phase two. •I call on the Super Committee to pass the Phase 1 Enhanced Plan along with their spending cut package. •The Phase 1 Enhanced Plan unites Flat Tax supporters with Fair tax supporters. •Achieves the broadest possible tax base along with the lowest possible rate of 9%. •It ends the Payroll Tax completely – a permanent holiday! •Zero capital gains tax •Ends the Death Tax. •Eliminates double taxation of dividends •Business Flat Tax – 9% ◦Gross income less all investments, all purchases from other businesses and all dividends paid to shareholders. ◦Empowerment Zones will offer additional deductions for payroll employed in the zone. •Individual Flat Tax – 9%. ◦Gross income less charitable deductions. ◦Empowerment Zones will offer additional deductions for those living and/or working in the zone. •National Sales Tax – 9%. ◦This gets the Fair Tax off the sidelines and into the game.
Phase 2 – The Fair Tax
•Amidst a backdrop of the economic boom created by the Phase 1 Enhanced Plan, I will begin the process of educating the American people on the benefits of continuing the next step to the Fair Tax. •The Fair Tax would ultimately replace individual and corporate income taxes. •It would make it possible to end the IRS as we know it. •The Fair Tax makes our exported goods and services the most competitively internationally than any other tax system.
Phase 1 Enhanced Plan – Summary
•Unites all tax payers so we all pay income taxes and no one pays payroll taxes •Provides the least incentive to evade taxes and the fewest opportunities to do so •Lifts a $430 billion dead-weight burden on the economy due to compliance, enforcement, collection, etc. •Is fair, neutral, transparent, and efficient •Ends nearly all deductions and special interest favors •Ends all payroll taxes •Ends the Death Tax •Features zero tax on capital gains and repatriated profits •Lowest marginal rates on production •Allows immediate expensing of business investments •Eliminates double taxation of dividends •Increases capital formation. Capital per worker drives productivity and wage growth •Capital formation will aid capital availability for small businesses •Features a platform to launch properly structured Empowerment Zones to revitalize our inner cities •We all know the Fed has tripled the money supply since 2008. They have been printing money out of thin air to finance the Obama spending machine. While true Fed reform that restores sound money may have to wait for my election, the best thing we can do now is to pursue policies that increase the DEMAND for dollars to help mitigate the risks associated with the increase in the supply. •Pro-growth economic policies equal a strong dollar policy
This is Herman Cain:
•Chief Executive Officer and President of THE New Voice, Inc., a business consulting company, and Head Coach of HITM (Hermanator’s Intelligent Thinkers Movement) •Former Chairman of Godfather’s Pizza, Inc. after serving as CEO and President for ten years, 1986 - 1996. In 1988 he bought the company from The Pillsbury Company •Former President of the Tax Leadership Council, the public educational component of Americans for Fair Taxation •Past Chairman of the Board of the National Restaurant Association (1994-1995), and former full time CEO and President of the Association (1996-1999) •Member of The National Commission on Economic Growth and Tax Reform (1995), chaired by former Republican Vice-Presidential candidate, Jack Kemp •Former Member, Strategic Air Command (STRATCOM) Citizens Advisory Board, Omaha, Nebraska •Radio Talk Show Host, “The Herman Cain Show”, News Talk 750 WSB – Atlanta, Monday - Friday, 7pm-10pm EST •FOX News Business Commentator and Columnist with NorthStarNational.com, World Net Daily and DailyCaller.com •At a nationally televised Presidential Town Hall Meeting on Health Care Reform (1994), challenged President Bill Clinton’s health care proposal when he said, “Mr. President, with all due respect, your calculations are incorrect…” •Served on the Boards of Directors of AGCO, Inc., Georgia Chamber of Commerce, Hallmark Cards Inc., Whirlpool, Inc.,and Morehouse College, Atlanta, Georgia •Graduated from Morehouse College with a B.S. in Mathematics in 1967. Earned his Master’s Degree in Computer Science from Purdue University in 1971. Recipient of eight Honorary Doctorate Degrees from Morehouse College, New York City Technical College; Suffolk University, Johnson & Wales University, Creighton University, Purdue University, Tougaloo College and the University of Nebraska •Author of four books, Leadership Is Common Sense (1997), Speak As A Leader (1999), CEO of SELF (October, 2001), and They Think You’re Stupid (May, 2005) •A native and current resident of Atlanta, Georgia. Married for over 40 years with two adult children and three grandchildren
Thanks Watchdog85, I didn’t pick that up in the earlier formatting of “The Plan.” But, I see that while purchases from businesses are exempt, costs of doing business are not, or at least not spelled out in the bullet points.
This thing needs some flesh, because folks will be nit picking points not spelled out and the campaign will end up debating the finer points of a plan that may never fly, versus the “grand idea”.
Lots of sarcasm-deficient folk on this thread.
NOW- there is an interesting thought !!!!!
I have tried hard to pick this “plan” apart. Other than the total lack of a chance of passing... the ONLY real concern I have is that, as others have posted, what happens if the DEMS regain all three branches of government? What stops them from jacking tax rates? Nothing short of some form of constitutional restraint (not that the Constitution means anything to the current batch of leftists).
IF this eliminates the “EARNED INCOME CREDIT” I will vote for him tomorrow!!!
This is one of the most insidious IRS scemes we have ever had.
Illegals who file an income tax return are being paid MILLIONS of dollars under the Earned Income Tax Credit.
It is just plain wrong.
I know a 35 y/o who never finished HS—won’t sit for his GED—doesn’t have a driver’s license-still lives with parents & has knocked up 2 women to produce 2 kids.
He barely works part time & when he files his income tax, he gets back over $4000 every year.
It want to strangle him.
Currently I am allowed to deduct my fuel and a per-diem according to IRS rules. Now the fuel part would be considered a business and something I need to purchase to eventually sell a necklace, lets say. But whereas, I currently can deduct meals and lodging, I dunno if that flys under this plan. Once again, perhaps its not contained in the bullet points.
Like I said above, opposite campaigns would have a field say picking apart something they either mis-read, or, something not in the bullet points. The campaign could get bogged down on these points. Either a finer document needs to be written to answer some of these many points—or a Ross Perot Flip Chart commerical needs to go on the air to explain how everyone is a king.
Now, those that pay no or very little tax will not want to use their government checks to pay any income tax, and they probably won’t. At least the fed sales tax part would pick up some of that slack.
Here is a link to a calculator for the 999 plan. Maybe this will help all concerned:
http://www.nerds4cain.com/Blog/archives/723
Cain’s 9-9-9 plan eliminates inheritance tax!
‘BRAVO’
I guess this is as good a place as any.
Problems with the 9-9-9 plan.
1. Elimination of the payroll tax. The Payroll “tax” is actually the contribution part of the contribution plan known as social security, as well as the over-65 medicare plan. It also partly covers medicaid, but really medicaid is already a government welfare program.
So, since SS is already going broke, is Cain going to simply eliminate it? Or is he converting it into a government welfare plan? How will he decide how much people get from SS if they haven’t had to pay anything in — right now my SS payments are based on how much money I paid into the system. Is he instead going to use the money paid in as income tax?
What if I have no income, but I’m paying my sales taxes every year. Will that count toward my SS now?
SS is currently 12.6% of wages. How do you replace that money with a maximum rate of 17% for everything, much less cover medicare and medicaid (another 3.5%?) Or are we getting rid of medicare and medicaid under the Cain plan?
When we pull SS into the general funding stream, it pretty much breaks the compact. Won’t the democrats then mean-test the program and convert it into another big payout for their constituents at the expense of the people who really work?
Empowerment zones are a great example of how someone can SOUND conservative, but when they are given the power to act, they act in very liberal ways. Nobody can look at a 9-9-9 program with “empowerment zone exceptions” and not see the liberal tendency at work, the “I have to do SOMETHING for the poor people” concept, the “compassion”. You’d argue with Cain about it, but you’d be afraid he would just call you heartless for not caring about the people in these depressed areas.
Who decides what is an “empowerment zone”? The people who give the most money to your political campaign? The democrats who want to pay off their constituents? Government will be picking winners and losers again.
Why does Cain insist that our economic difficulties are due to our tax code? We’ve had the current tax code for my entire lifetime, and for MOST of that lifetime, we’ve had solid period of economic growth. We grew just fine under Ronald Reagan without throwing out a tax system.
When did “conservative” become “radical”? Part of being conservative is to conserve, to keep things predictable, to change things in small increments so that people can judge the results and make corrections.
If you believe, as I do, that the REAL problem now is the uncertainty caused by an Obama administration throwing regulations left and right, with Obamcare coming or going, with taxes maybe rising or falling — businesses are paralyzed because they can’t plan for a future that is so up in the air.
How does a 4-year battle to fundamentally change the tax code NOT contribute to that paralysis? Business won’t know if this plan is going to pass or not. They won’t be able to plan for the future, and they will just wait. Which is killing us already.
Cain insists that 9-9-9 raises exactly the same amount of money as we do today. There are obviously strong disagreements with that in some quarters. But one thing is certain — we aren’t raising enough taxes right now, because of the economic failure of the Obama administration. We’d expect unemployment to drop back to 5%, and our current tax code would then have much greater money coming in. How will 9-9-9 do if it actually improves the economy?
I find it hard to imagine that the change from 35% to 9% in corporate income tax, and the change from up to 39% to 9% in personal income tax, can be made up with a 9% tax on new items sold. Especially when Cain is throwing out all these “special exemptions” through empowerment zones, and is not taxing any used items, which will be great for re-use and re-cycle, but will be disastrous to businesses trying to sell us new things. If you think not, remember that Amazon.com considers it a critical part of their business strategy to be able to sell items without a state sales tax averaging 5%. If Amazon sees that people make critical purchase decisions based on a 5% sales tax, imagine what people will do confronted with a 9% sales tax.
How will Cain’s 9-9-9 plan compensate savers? Under the existing tax code, I save money post-tax. Later, I can spend my money without the feds touching it.
But imagine under the Cain plan. I have worked 30 years, and decide I’m ready to quit. I don’t have a “retirement plan”, instead I simply threw half my money into a checking account every year. I’ve got a million dollars to live off of, all post-35%-tax.
Now, Cain comes along, and he’s going to tax my already-taxed savings at 9%, when I go to spend it. How is that “fair”?
Why is Cain keeping the charitable contribution deduction? One deduction makes no more sense than ANY OTHER deduction. On the other hand, is anybody who owns a home going to put up with eliminating the mortgage deduction? It will immediately drop the value of all homes, which is great for new purchasers, but again an attack on people who have saved money and invested it in a house.
The reason: People by homes based on the monthly payments. You sit down and figure out how much money you can pay each month, run the current interest rates through, calculate the mortgage deduction, and that gives you the loan amount you have to buy a house. Since everybody can do this, and housing competition is pretty elastic, the price of homes is set by that loan amount. Without mortgage interest deduction, the principal you can borrow drops for everybody, and so the amount people can pay for houses drops, so the home values will all drop, by up to 35%.
On the plus side, the MI deduction gives richer people a leg up because they get a bigger MI deduction since they have a bigger marginal tax rate. So maybe that is a good thing.
What about child tax deductions. Unlike charitable contributions, the Child tax deduction not only makes solid economic sense, it is a critical aspect of the preservation of our society, which requires we replace our population. A household ability to afford to pay government is directly related to how many people are supported by that household. That is why we have always had deductions for dependents. But under the 9-9-9 plan, the family with one breadwinner supporting a family of 7 pays the same tax as the single guy who gets his girlfriend pregnant and runs off.
Note that all tax deductions encourage behavior. Most encourage behavior we don’t need to encourage, and really just are pass-through payments. For example, the MI deduction doesn’t help those getting it, it is a pass-thru payment to people selling homes. The college grants are payments to liberals who run colleges, since the colleges raise their tuition (because again, people pay what they can afford, so if you throw $4000 more at them, they just add that to what they can afford).
But society WANTS to encourage families both to HAVE children, and to then keep together a family unit FOR the children, and to support those children in that family so they don’t become a burden on government.
And eliminating every other deduction will radically change the economic calculations that every american, and every american business, has based their strategies on. There will be major winners and losers, large chunks of the economy will be disrupted, valuations will rise and fall overnight — this goes back to the economic disruption and paralysis caused by radical change rather than small step change.
And worst of all, FairTax is itself a radical change which will overturn business models and personal financial models. And Cain says that is what we need to go do. But we are going to do that AFTER we overthrow the current system.
So a business has to plan FIRST for a new economic model where there is a large sales tax, and a large corporate tax. But they also know that sometime in the future, they have to throw out THAT model to implement a plan for an even LARGER sales/VAT tax from Fairtax.
Unless, of course, I guess they move into an empowerment zone, and then lobby congress to ensure that the empowerment zone rules cover all sales in the country of items they produce within the empowerment zones.
This will mean business will still have a keen interest in lobbying congress to change this law to their benefit, and to attack their competitors — while individuals will no longer care, since their tax is fixed at 9% and there are no deductions to lobby for.
9-9-9 is a plan that sounds great if you keep it to a sentence, but every detail makes it look more like an economic disaster and a radical disruption of the lives of all americans.
It still requires a 2/3 majority to increase the rate. Something they are unlikely to get even with a handful of RINO’s on the GOP side.
Art Laffer disagrees with you:
http://www.therightscoop.com/art-laffer-endorses-herman-cains-999-plan/
The plan is supposed to be revenue neutral. So it is impossible for everybody to be getting a tax cut from it.
So far as I can tell, my current federal tax rate on my gross income is about 16%, if I include payroll tax. With all my deductions gone, and my income and savings taxed again at 9% when I spend the money, my marginal rate under Cain will be greater than 18%. I’m sure someone will come out ahead, and a lot of us will be taxed more.
So what? Maybe if he explained HOW, rather than simply asserting his opinions, it might matter. Maybe he could address the actual issues I raise.
That's not the way I'm reading this. I figure that stuff you buy for your business that you will incorporate into a product/service or resell to another business is a deduction to taxable income just as it is now. Under the 999 plan your business tax would be 9% of the difference between what you bought something for and what you sold it for. That's really no different than it is now except that you are paying anywhere from 15% to 35% on it if you are a C-Corp, 15.3% plus your personal marginal rate if you are a sole prop or an active member in a partnership or your straight personal marginal rate if you're an S-Corp. On top of that you'd be saving the 7.65% you are now paying on all employee SS/Med as well as the FUTA. In most cases this will result in a lot less tax that you'd be on the hook for now.
The people that would lose their good deal are the ones who now receive EITC and other refundable credits but hey, what's fair for one is fair for the others, right?
That’s part of his plan that is unconstitutional. There is no way to pass a bill requiring future congresses to adhere to a 2/3rd majority vote to repeal or change the bill.
Each house of congress can set their own rules, with a simple majority vote. Since Cain would know this, and I assume the smart people who gave him this plan would know this, I have to think it’s just something he says to suppress the discussion of how congress will raise these rates at their own whims.
And of course, congress can easily come back and start adding different rates for different people. Cain has set the precedent with his “empowerment zones”, they could trivially modify the language of the “empowerment zone” exception to make them virtual, based on the income of the taxpayer. We could go right back to a graduated income tax, AND get a graduated sales tax.
They could also add deductions — Cain again sets the precedent by having deductions for charitable contributions, so they could do just modify that part of the bill to add other deductions, and to also qualify the deductions based on income.
Since 9-9-9 still has an income tax, everybody still has to tell the government how much they make, so it will be easy to grade how much money they would get by making the rich “pay their fair share”.
Scratch that, upon further investigation, I was wrong.
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