Posted on 10/13/2011 2:31:28 PM PDT by La Enchiladita
So what about Herman Cain's 999 tax plan? Turns out it has some very good aspects -- and some others, not so good. I'd give it two rousing cheers and one bronx cheer.
...But here we come to a problem.
Cain doesn't get rid of the income tax. Instead, he reforms it. And then he adds a new levy -- a national retail sales tax -- on top of it.
(Excerpt) Read more at freedomworks.org ...
The more I hear the VAT argument, the less I’m impressed by it.
Europe started out with a straight sales tax, and later on they converted it into a VAT. So people fear that will happen here. I see two reasons it won’t:
(1) We have the disastorus example of the VAT in Europe. It is an absolute bog on their economy. VAT’s don’t work.
(2) America, unlike Europe, already considers VAT to be a 4 letter word. Any attempt to institute a VAT would be met with screams of bloody murder.
Still, I understand the fear, and I think there is a simple solution: an amendment with two provisions.
(1) Prohibit the federal government from ever instituting a VAT.
(2) Require a 2/3 vote of the senate to raise taxes.
Given the countries mood, it would be ratified quickly (imho).
If that isn’t good enough to have it out there in the process of being ratitifed, than add a provison to Cain’s plan that the sales tax portion only becomes effective upon ratification of this amendment. That means until it is ratified, Cain’s plan would work as a 9-9-0 plan.
If we can get past the point of just bashing the plan, and do some creative thinking, we can come up with something most conservatives at least would buy into.
Cain’s plan is a starting point, not the end product. Heck, we all know it will go through the sausage factory. But it’s a lot better starting point that the other plans out there that just want to tweak the current system (which just marches us towards the cliff at a slower speed).
We would need it to be clarified and I believe it will be. I do not believe he is looking for things to be multiple taxed.
I agree. Not just in 'empowerment zones'.
9% income tax needs to be on just 50-75% of income to be at the same level vis a vis middle americans.
I would say that the first $20,000 is not taxed at all - for anyone. Everything after that is a 10% flat tax. So if you earn $18,000, you pay nothing. If you earn $30,000, you pay $1000. If you earn $100,000, you pay $8000.
One of the problems withe the progressive tax system is that it screws you when you barely slip into a new tax bracket.
9% sales has to have a staple foods exemption.
I agree. I would also add an exemption for all medications.
The big thing is that it get us started and it's only temporary anyway. After two years, this system should be replaced with the Fair Tax and this won't matter anyway.
I think that we'd all survive for the two year transition, especially if the economy is doing well.
Will there still be mortgage interest deduction? If not, I’m thinking that high priced homes might drop in price.
Some rich guy with a million dollar house and $5000 per month payment does without the $400 monthly federal subsidy.
A regular family with a $1500 payment does without $125 per month.
But they save far more than that in other areas.
The argument would be that the 9% sales tax is too much a “burden” on the poor and would be “unfair”. Republican congressmen would likely go along because there would be story after story in the MSM about how the huge sales tax would "hurt" families. Congress-critters like to be re-elected and wouldn't want to appear “mean”.
Then where is the argument for everybody having “skin in the game”.
Beware the rule of unintended consequences.
Cain is clearly going to have to clarify all of this.
“So I have a Fed gasoline user tax that I NOW pay at the pump along with a state tax, so I just add on another 9% tax....”
As I understand it, the federal gas tax goes to the 9% tax. The 9% isn’t in addition.
Why is everyone so myopic about this? I have a couple questions for you to ponder.
1. When you buy a good or service, what hidden factors are incorporated into the retail price outside transit cost and vendor markup?
2. What do you think happens to the cost of that good or services when those hidden factors are eliminated?
You are already paying far more in taxes than your payroll and income tax suggest...you just don’t know it because it’s all hidden in everything you purchase. ALL COSTS associated with producing a good or service (payroll, taxes, compliance, etc.) are handed to the customer in the form of higher prices. Raise corporate taxes and you are essentially raising the cost of the product and indirectly raising taxes on the consumer. Why do you suppose it cost so much to make anything in the US and why companies flee offshore in order to remain competitive?
All the 9-9-9 plan does is make how you are taxed transparent and easily paralleled to the economy instead of the giant boondoggle it is now.
Prices go down. Economy goes up. Corporations come home. Businesses hire more people. GDP explodes. Individual optimism and moral takes off. Standard of living goes up. It’s the 80’s all over again…without the cheesy hairdo’s and bangle bracelets.
I read the original Cain plan...no VAT mentioned.
Considering the are a few bad points among the good, I would be more inclined to look at the rest of Cain (and other candidates) positions. Cain looks pretty good over all. How about your candidate? BTW, I would not be unhappy with a Perry candidacy but he is not as inspiring as Cain.
9% corporate needs to allow deduction of wages (less bonuses and buyouts) from gross income.
“The Fair Tax has been proposed numerous times and failed, chiefly because of substituting a 23% or thereabouts national sales tax for varying income tax rates.”
Apparently people are just fine paying insane taxes as long as they can’t see them. Keep ‘em buried in the retail cost of the item and we’ll go along for the ride.
WOW, just saw your post. I was hoping Paul Ryan would weigh in. Art Laffer was just on with BRet Baier on Fox. He likes it very much.. Thanks for the links!
If a parts manufacturer buys raw material from a supplier, doesn’t sales tax apply?
When that parts manufacturer sells the parts to Dell Computer (for example), isn’t there a sales tax on that sale?
When the computer is sold retail, another sales tax, no?
The question you ask was solved a century ago in the state sales tax systems. It’s not a problem to worry about.
(1) I make swingsets to sell to customers.
I buy wood from Home Depot. I show them my tax-id number and tell them this is a wholesale purchase. They do NOT charge sales tax.
(2) I make a swingset to put in my backyard.
I buy wood from Home Depot. I tell them it is for my personal use; it is not a wholesale purchase. They charge me sales tax.
Only retail purchases (purchases by the person that is actually going to use the product) are taxed.
Wholesale purchases (purchases that will be sold to someone else, or incorporated into a product that will be sold) are NOT taxed.
It’s not a good starting point. It is essentially more taxation and more bureaucracy, raises more questions than it answers and does not solve problems.
Cutting spending should come first, then trimming of government revenues, but punishing the little guy over and over is a bona fide liberal tack.
The “plan” needs to be exposed as a sham and we move on to other issues, such as the areas of foreign policy and U.S. Constitution in which Mr. Cain is incredibly weak.
He is good at the sound bite and the catchy phrase but I sense little of substance and absolutely no statesmanship.
9% on a 200,000 dollar house is 18,000. All you need is a law that requires it to be rolled into the mortgage and it gets paid over a 30 year term. The finance difference between 200 and 218 is not that great.
Reasonably? Perhaps if one tries to "run the numbers" and do an apples to oranges comparison a person might "reasonably" believe they will lose under Cain's plan.
The problem is...it's not an apples to oranges comparison, our current system is closer to a chocolate covered pile of dog doo. It might look ok, and if you don't get too close, it might not even smell too bad. But there are not enough "rich people" in the universe to prevent our present situation from collapsing into an extremely smelly mess for everyone in very short order.
Afraid of the "what ifs"? in Cain's plan? My "what ifs" if things continue as is will be exponentially worse than any bogeymen you can come up with in 9-9-9.
And anyone who uses VAT in the same sentence as Cain's plan is either not understanding the difference between VAT and NST or they are deliberately attempting to mislead.
There is nothing to clarify.
A sales tax—by defintion—is only on the end product final sale to a retail customer. It’s only applied once—period.
A VAT—by definition—is added to an item at each stage of production. It is applied multiple times to the same product.
Cain has proposed a sales tax.
9% on a 200,000 dollar house is 18,000. All you need is a law that requires it to be rolled into the mortgage and it gets paid over a 30 year term. The finance difference between 200 and 218 is not that great.
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