Posted on 10/15/2011 3:46:42 PM PDT by justsaynomore
Art Laffer (the originator of the Laffer Curve, and inspiration of Reagonomics) breaks down Herman Cain's plan
(Excerpt) Read more at video.foxnews.com ...
Most of the criticism of the 999 plan is crap. The poor would not pay more for food especially if you define ‘the poor’ as those on assistance. Foodstamps and EBTs are exempt from taxation. Also Social Security recipients would get COLA(cost of living adjustments). So all the poor will suffer crap is silly and just not true.
The other objections are just as phony. I do worry myself about it becoming a VAT something which I would never support but worry does not change the fact that the current tax code is worse than any such worries. We have are first real chance to possibly fix the tax code and why in the hell would be squander it? It may not get us all the way there but it is light years ahead of our current tax code with its hundreds of thousands of pages bureaucratic nonsense.
I’m glad Art and Paul Ryan are supporting it.
I must be honest: the support people have here for the introduction of a national sales tax IN ADDITION to, not in lieu of, the income tax makes me wonder if naivety is not in greater quantity here at FR than I have ever thought in all my years here.
Every Liberal in America is drooling over 9-9-9, because they know that within a decade it will be 12-15-18.
Romney is not even an option, but Cain is not the answer, either. If Mitt Romney had proposed, it would be UNIVERSALLY understood as a socialist act by everyone at FR.
Gingrich, Perry, Santorum: YES!
Cain: No!
Romney: HAHAHAHAHAHAHAHAHA!
I must be honest: the support people have here for the introduction of a national sales tax IN ADDITION to, not in lieu of, the income tax makes me wonder if naivety is not in greater quantity here at FR than I have ever thought in all my years here.
Every Liberal in America is drooling over 9-9-9, because they know that within a decade it will be 12-15-18.
Romney is not even an option, but Cain is not the answer, either. If Mitt Romney had proposed 9-9-9, it would be UNIVERSALLY understood as a socialist act by everyone at FR.
Gingrich, Perry, Santorum: YES!
Cain: No!
Romney: HAHAHAHAHAHAHAHAHA!
-—”Most of the criticism of the 999 plan is crap”-—
The introduction of a national sales tax IN ADDITION to, not in lieu of, an income tax is the real crap.
It takes a person of colossal historical ignorance to not understand how quickly it will become 12-15-18, or worse.
I favored the Reagan tax cuts; they saved a crippled economy. It took ONE election to raise rates back up, and one more election to raise them even more.
9-9-9 would last one election, and we would never, EVER get rid of the national sales tax. The current system is an abomination, but that is no excuse to commit 999-icide. These are not the only two options.
>>>>>Every Liberal in America is drooling over 9-9-9, because they know that within a decade it will be 12-15-18.
The emotional euphoria over Cain's candidacy and his 999 tax plan trumps any intellectual exercise in objective analysis and that covers a whole lot of FReepers.
Frankly, I think Gingrich is looking better than Cain for me. Cain is a political neophyte with no record whatsoever.
Cain has the right idea – create a flat sales tax and do away with income tax. The key is quickly passing a bill that contains BOTH but allows for gradual implementation AFTER an immediate drop in overall taxes.
The "tyranny of the status quo" says if you're going to launch a major change, likely to be met with fierce resistance, you do it quickly in the first 100 days or so in office. Reagan and Obama both understood this, especially Reagan because he had a hostile majority in Congress. Obama had a little more time because he had a leftist-friendly Congress.
Getting a law quickly is the key – implementing the law can be gradual. The key is to get the bill passed in the first 100 days and it must have a new flat sales tax AND complete elimination of income tax and all other taxes and most of the IRS. Implementation would of course be time-phased but it must concurrently phase in sales tax and phase out income tax and most of the IRS.
Failure to enact a law that BOTH abolishes income tax and most of the IRS AND creates a sales tax raises the spectre of getting stuck crossing the river after passing only a sales tax bill and drowning with BOTH federal sales tax and income tax - a Socialist’s dream. Implementation of course would be a concurrent phase-in and phase-out. Failure to have BOTH in the bill risks a parade of horribles.
He also seems to be missing a spending cut feature which I think he’ll need to sell this huge and essential tax cut. He might want to take a page out of Reagan's book and hire the best business minds to come to DC and noodle this and then come up with a sound proposal - shouldn't be difficult to see tremendous slashes in pure government waste.
That should all be Phase I. From there, maybe he can start pecking away at useless Cabinet departments.
His 999 is designed to be temporary (1-2 years) the end goal is Fair Tax.
Fixed income people as Laffer points out won't lose here and should come out ahead because the resulting lower total tax would create lower prices overall. Hope that helps.
Why not just get a bill passed immediately after taking office that 1) immediately lowers both income and sales taxes to 9% as proposed and 2) calls for a complete phase-out of income tax while creating and phasing in a sales tax ?
Constitutional amendments should be kept nice and simple. The one to repeal the 16th should simply forbid income taxation at all levels of government, local, state, federal, and international. The last is needed to override any treaties future libtard Senates may choose to ratify.
The neat thing about consumption taxes is that they are broad-based. So, even though there is potential to generate a lot of revenue, there also will be a lot of people voting not to have to pay the cost of a too-large government.
We need to repeal the 16th for sure. But I would point out that the only thing that keeps them from introducing a VAT now is Republican votes in Congress.
Capitation refers to person or individual. For those reading, this Art. 1 Section 9 provision refers to the DIRECT TAX whereas Section 8, Clause 1 refers to the INDIRECT TAX.
The United States was funded primarily by INDIRECT taxes and the DIRECT taxes were used for large public work projects such as the Erie Canal and for War.
The INDIRECT taxes were levied on businesses or intermediaries that were expected to increase their prices by the tax and pass on the tax to their customers, much the same as a sales tax. Hence, the taxes were ‘indirect’ meaning not to the end point but rather to someone or something inbetween the tax source person and the government.
The National RETAIL Sales Tax (NRST) of the FAIRTAX Code is an INDIRECT tax and never business to business (B2B) but only to the end point, the consumer, the retail customer. A VAT is an indirect tax because it taps into business and is B2B. A VAT inflates the cost/price of goods and services where it is applied and so is hidden to the end point consumer as it is ‘embedded’. Payroll taxes and Corporate or business taxes are direct taxes in the sense that the employee or business pays directly to the government but they also inflate the ultimate cost/price of goods and services and hence they are also ‘embedded’ and hidden.
Note that the difference between a VAT and a Corporate/Business Income tax is that the VAT is indirect whereas the Corporate/Business tax is direct. A VAT is collected by a business from a customer be it a business or consumer on behalf of the government. For example, a plumbing supply store can charge its trade contractors a VAT and send the VAT to the government, hence it is indirect (Contractor—>Supplier—>Government). For example again, as to the Corporate/Business Income tax, one never sees on a receipt from any business “Business Tax” charged to its customers, so it is direct to the government(Corporate/Business—>Government).
The Founders concern about taxation in the United States was focused on FAIRNESS. The word FAIRNESS has lost its meaning today. It was at one time a simple concept implemented by making taxes UNIFORM. Today’s taxes are anything but.
The DIRECT taxes were made fair by apportioning to the census and allowing collections to go direct to state governments. In the Constitutional sense, there are three direct taxes, a head tax, a tax on personal property, a tax on income from property. There is a large body of case law surrounding these categories of direct taxes, so the clarity of what is and what is not directly taxable is tax lawyers and tax historians.
But the way to handle Section 9 is to tap directly into state tax revenues according to census figures for each state. So if say 140 billion dollars is voted by Congress as a direct tax appropriation, then the 140 billion is going to be divided by 140 million tax filers for an average $1000 head tax and California with 14 million tax filers is going to be responsible for collecting 14 billion dollars of the total appropriation. How California collects that amount is up to them. There is nothing in the US Constitution that bars California from using a direct income tax in whatever manner it chooses, but each state has its own Constitution and is restricted thereby.
Hopefully this gives some ideas to your question of how would the government handle direct taxation under the FairTax, where the apportionment clause is brought back. Direct taxes were never easy from the Founding of the United States even under the Articles of Confederation. The Direct tax provision was really intended for infrequent appropriations such as war or very large interstate projects.
And further, most of the historical problems of direct taxes surrounded what could be considered income as directly taxable with apportionment. Under the FairTax there will be zero federal tax on income so the historical problem becomes less important.
On a last note, it is interesting to ponder why the previous generations of Americans pre-1913 did not consider a FairTax for their time, and the answer is they had no administrative and technological means to do so nor did they have a means to address and mitigate the “disproportionate burden” argument used by Marxists then and by liberals even today. The FAIRTAX addresses and solves these problems in a brilliant and innovative way using technology, and this is a big reason why the FAIRTAX is so compelling today. But that’s for another post.
“Wrong. Laffer was a member of Reagan’s Economic Policy Advisory Board from 1981–1989.”
Laffer left government service in 1979 to run his own private consulting firm. He volunteered to be a member of the EPAB, an unpaid part-time advisory committee.
EPAB volunteers were outside experts invited to periodically critique the Administration’s program. It included George Schultz, Alan Greenspan and Milton Friedman as well as the publicity loving Art Laffer.
The staff that designed Reagan’s program was the Council of Economic Advisors, a part of the executive branch. The architects of Reaganomics included long time aid Martin Anderson, William Niskanen, Martin Feldstein and various other people who lack the Energizer Rabbit public relations zeal of Art Laffer.
I agree that CAs need to be simple. But we can’t both repeal the 16th AND keep a 9% income tax. So we either need several CAs or 1 that clarifies and codifies the rules. If we are going down that route I would love to lock in the rates to prevent Congress from messing with them.
And then there’s state sales tax. I do not look forward to paying a 9% federal sales tax plus a 6% state sales tax on Christmas presents for my grandkids. And New York?? Holy cow, you’re slapping a 9% federal consumption tax onto around 15% state and local sales taxes!! That’s nuts!
You know a lot about electric fencing do you, that you’d seriously try and string one along a river?
He also obviously understands that business doesn't really pay taxes, they just pass them through to the end customer. Consumers would pay the 9% business passes along plus the 9% at the register, that's close to several of the flat tax rates I've seen. If you look at the forest rather than the trees, Cain has quite cleverly moved the "center" in the campaign tax debate a long way towards the conservative ideal and away from the usual morass of policy wonk proposals.
With 999 on the table anyone against it has to acknowledge the fact that consumers ultimately pay all those "business" taxes. Competition can sometimes force business from passing the entire 9% through to retail prices, but the consumer still pays either by shelling out cash at the register or by business holding payrolls down so they can absorb a portion of the tax. Cain has managed to put the focus where it should be, on what the long suffering individual taxpayer is shelling out. The usual schemes and scams from policy wonks are going to go over like a lead balloon now that something simple enough for everyone understand and debate is already on the table.
The democrat fascist leech thrives thanks to the complex Federal blood sucking machine built atop the income tax and Cain clearly wants to destroy that machine.
JMHO
Regards
The problem is there are a lot of us getting a free ride. I happen to know that if my boss’ taxes go down, my pay goes up, and I don’t need the credits I get from the government, but most freeloaders don’t know that.
I support Herman Cain but I don’t know if 999 is a winner. It’s more of a opportunity for demagogues.
I do NOT currently pay 13,000 a year in taxes like this calculator says. I pay nothing, even when you add SS and MC. Not saying I want my “free ride” to continue, I know I’ll make more if my bosses and clients have more cash in hand, just saying we will lose this debate if we don’t frame it right.
Agreed. At least he’s go the concept out there on the table though.
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