no, I have it exactly right. a tax increase on consumption will trigger a decrease in actual consumption which will decrease production which will increase unemployment and; thereby, fuel the downward economic spiral that we are caught in. Cain's plan, by adding 9% to the cost of every purchase, has the distinction of exacerbating both inflationary and deflationary pressures which makes it the worst plan I have ever heard. The solution is simple, CUT SPENDING!
That is economic insanity. It is economic suicide.
Continuing to blow air into the bubble of hyper-consumption only feeds the Chinese economy and impoverishes us as a nation.
Cain’s plan doesn’t just add 9% to the cost of every purchase. The 9% is offset by lowering the prevailing prices of all domestically-produced goods by eliminating a large portion of the embedded taxes in the current prices of domestic goods.
And both domestic goods and imported goods would be subject to the 9% tax, leveling the playing field whereas as it is now we collect higher taxes from only domestic producers through high corporate income taxes. So domestic prices come down, imported prices stay the same and both are subject to the same sales tax.
This will help reverse the madness that is our trade imbalance and create decent manufacturing jobs in the United States.
Your type of mindset produces jobs only in China and condemns our grandchildren to poverty.
Of course we need to cut government spending, all conservatives agree on that. But we will still have $17 trillion of government debt when Zero is kicked out.
We desperately need to raise our savings rate and encourage domestic capital formation.