Cain's Stimulating 9-9-9- Plan

Wall St. Journal Opinion ^ | 10/19/2011 | Art Laffer

[SueRae]

It used to be that the sole purpose of the tax code was to raise the necessary funds to run government. But in today's world the tax mandate has many more facets. These include income redistribution, encouraging favored industries, and discouraging unfavorable behavior.

To make matters worse there are millions and millions of taxpayers who are highly motivated to reduce their tax liabilities. And, as those taxpayers finagle and connive to find ways around the tax code, government responds by propagating new rules, new interpretations of the code, and new taxes in a never-ending chase. In the process, we create ever-more arcane tax codes that do a poor job of achieving any of their mandates.

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CloseDavid Klein Republican presidential candidate Herman Cain's now famous "9-9-9" plan is his explicit proposal to right the wrongs of our federal tax code. He proposes a 9% flat-rate personal income tax with no deductions except for donations to charity; a 9% flat-rate tax on net business profits; and a new 9% national tax on retail sales.

Mr. Cain's 9-9-9 plan was designed to be what economists call "static revenue neutral," which means that if people didn't change what they do under his plan, total tax revenues would be the same as they are under our current tax code. I believe his plan would indeed be static revenue neutral, and with the boost it would give to economic growth it would bring in even more revenue than expected.

[SueRae]

Maybe we can have a discussion that won't get zotted. I didn't get to read the thread last night that got pulled (Hat tip to FightinJAG)

[ngat]

“These include income redistribution, encouraging favored industries, and discouraging unfavorable behavior.”

So, again. the Republican proposal is to control peoples behavior, but this time in a positive way, by tinkering with the tax code.

[SMARTY]

A first step HAS to be made, and I commend ANYONE who is realistic and objective enough to SAY SO ... and to provide a plan, even if it is a partially articulated or empbyonic plan requiring further debate and refinement!!

Also, and THIS is significant, Cain is NOT some kind of howling “O” demagogue who will walk into the WH with a cast in stone (AND secret) plan for the revision of the tax code....and then proceed to force it down the craw of taxpayers irrespective of ANY debate. We saw THAT movie and have the script in our back pocket.... ‘we have to pass it to see what’s in it’...ain’t gonna happen with Cain. Period.

Cain is OK with his plan, in my book.

[SMARTY]

A first step HAS to be made, and I commend ANYONE who is realistic and objective enough to SAY SO ... and to provide a plan, even if it is a partially articulated or empbyonic plan requiring further debate and refinement!!

Also, and THIS is significant, Cain is NOT some kind of howling “O” demagogue who will walk into the WH with a cast in stone (AND secret) plan for the revision of the tax code....and then proceed to force it down the craw of taxpayers irrespective of ANY debate. We saw THAT movie and have the script in our back pocket.... ‘we have to pass it to see what’s in it’...ain’t gonna happen with Cain. Period.

Cain is OK with his plan, in my book.

[ASA Vet]

Herman Cain

born December 13, 1945 in Memphis, TN (Meets the Jus Soli Requirement)

Parents were
Luther Cain Jr., born March 16, 1925 in TN, died March 29, 1982 in Atlanta, GA
Lenora Davis, born July 27, 1925 in GA, died August 20, 2005 in Atlanta, GA

Both parents were US Citizens at the time of his birth (Meets the Jus Sanguinis Requirement)

Herman Cain is a NATURAL BORN CITIZEN

Barry Soetoro aka Barack Hussein Obama ISN'T!

[PapaNew]

I like Herman Cain and I like the idea of a sales tax that is not a VAT replacing the income tax (less intrusive and malevolent). But until the 16th amendment is repealed, the sales tax will and ADDITIONAL NOT REPLACEMENT tax to the constitutionally-protected income tax. The 16th amendment must first be repealed before a sales tax is created.

In the meantime, go ahead and abolish the convoluted tax code and simply have a flat 9-10% income tax for individuals. I hate corporate tax, but maybe some kind of flat-rate temporary corporate tax as well.

[Watchdog85]

Herman needs to emphasize the hidden tax in goods and services. People are not getting that they will save money on goods and services by removing 22% hidden taxes and replacing with 9% sales tax at final point of sale.

Also since they already pay 22% plus their state sales tax now, they are saving money.

He should use more examples like “Do you want this car under the current plan or under mine” something like that to emphasize the savings.

He needs to repeat often that social security and savings plans will not bet taxed.

Empowerment zones need to be explained in more detail.

He also needs to stress that foreigners (illegal’s) and criminals will also be paying the sales tax.

I have sent an email to his website to put this link on there to help people understand.

http://999calculator.net/

[MNJohnnie]

Try actually reading the article for a change Perrybot. You could not be more wrong in your post if you tried.

[sodpoodle]

Retired for the night and missed the zotted thread.

Got up early this a.m. to check comments on the Live Thread.

What happened? It turned into a rabid religious rant!!!!

Some FReepers must have been drinking into the early hours.

[myself6]

I do not support having the following concurrently:

- state sales tax
- federal sales tax
- state income tax
- federal income tax

Honestly, I do not support having an income tax at all. Make the F’ing federal sales tax 18% and make income taxes illegal with a clause that any elected official who tries to implement one, EVER again, instantly forfeits their life and the lives of their family.

[SueRae]

Ari Fleischer had some good suggestions for Cain last night in the after debate session on CNN. He said Herman should break the 999 down into three speeches, outlining each of the 9’s in detail. I liked it...but when I hear a lot of words around math (ESPECIALLY math), I get lost. Maybe a chart presentation (shades of Perot...but I really like those)I need the visual.

[stillafreemind]

Thanks for the link. That is VERY interesting.

[SueRae]

Agreed on the hidden tax/markups. I did take a couple of courses in economics..and sales, so I understand how that works..but many won’t see that if it isn’t demonstrated. Mr. Cain is a mathematician after all, so this is all academic to him. He’ll have to be able to bring ‘crayon-level’ discussion to the term ‘sneak a taxes’ (which is a great line).

I’m hoping others (like a Paul Ryan or Simpson) could review the plan in detail and get some thoughts on specifics out there. All of the organizations scoring the plan either with a thumbs up or thumbs down) are adding to the discussion but not getting anywhere.

[Scotsman will be Free]

The point Laffer made was that the current tax code is used to control behavior.

[newzjunkey]

Those interested in much more detail, can get it from the official scoring report of 9-9-9. You'll want both documents:

999 scoring report (Acrobat PDF)

999 scoring tables (Acrobat PDF)

I notice some very good information there as I skimmed through.

In order to exempt food and medicine from the sales tax, you'd have to add 0.5% to the sales tax rate to make up the difference.

The 9-9-9 rates themselves assume a "refundable credit equal to the tax rate times the poverty level" as relief for low income earners.

In theory, at least, the rates could be as low as 7-7-7, if the poor got no offset.

The dynamic analysis says GDP would grow 15% above the 2008 baseline or by $2 trillion.

It would create 6 million new jobs and 10% higher wages too.

If that projected growth happened, the rates could actually drop a few percentage points and maintain 2008 revenue levels.

[9YearLurker]

Herman gives those living or working in “empowerment zones” (read: primarily black areas) massive, and I mean massive, tax advantages.

Any employer outside of such a zone will have to pay a 9% tax on all wages, but those within the zone won’t have to pay it at all. In addition to that, individuals either living or working in such a zone will receive additional deductions against their individual income taxes.

I hate to say it, but Cain is proposing reparations on a larger scale than Obama has dared to attempt.

http://www.hermancain.com/999plan

[C. Edmund Wright]

>>> Herman needs to emphasize the hidden tax in goods and services. People are not getting that they will save money on goods and services by removing 22% hidden taxes and replacing with 9% sales tax at final point of sale. Also since they already pay 22% plus their state sales tax now, they are saving money. >>>

Amen, you are right. It was breathtaking to see Perry, Romney, Santorum and Bachmann all pretend to be absolute bozo’s in their misunderstanding of this simply because Cain is now a front runner. It shows they must think all voters are too stupid to ever figure this out. I admit, a lot of knee jerk reactions indicate it’s a tough sell - and forget 999 for just a moment - the fact is if we are too stupid as a society to debate this plan honestly and intelligently, then we are too stupid NOT TO FAIL.

[sickoflibs]

FROM LINK :”By contrast, the three tax bases for Mr. Cain's 9-9-9 plan add up to about $33 trillion. But the plan exempts from any tax people below the poverty line. Using poverty tables, this exemption reduces each tax base by roughly $2.5 trillion. Thus, Mr. Cain's 9-9-9 tax base for his business tax is $9.5 trillion, for his income tax $7.7 trillion, and for his sales tax $8.3 trillion. And there you have it! Three federal taxes at 9% that would raise roughly $2.3 trillion and replace the current income tax, corporate tax, payroll tax (employer and employee), capital gains tax and estate tax.

The whole purpose of a flat tax, à la 9-9-9, is to lower marginal tax rates and simplify the tax code. With lower marginal tax rates (and boy will marginal tax rates be lower with the 9-9-9 plan), both the demand for and the supply of labor and capital will increase. Output will soar, as will jobs. Tax revenues will also increase enormously—not because tax rates have increased, but because marginal tax rates have decreased.

By making the tax codes a lot simpler, we'd allow individuals and businesses to spend a lot less on maintaining tax records; filing taxes; hiring lawyers, accountants and tax-deferral experts; and lobbying Congress. As I wrote on this page earlier this year (”The 30-Cent Tax Premium,” April 18), for every dollar of business and personal income taxes paid, some 30 cents in out-of-pocket expenses also were paid to comply with the tax code. Under 9-9-9, these expenses would plummet without a penny being lost to the U.S. Treasury. It's a win-win.”
Cain's Stimulating ‘9-9-9’ Tax Reform(direct link)

Worth reading.

I still like the 9-9-9 idea but I don't think Cain is doing a good job selling it. A key to any proposal like this is to make the case that it makes us MORE competitive in a world economy where trade is a reality, and therefore helps everyone here.

[newzjunkey]

According to the scoring report on 999, an 18% federal sales tax would be too low to reach 2008 revenue levels.

It would have to be 21-28%, the rate estimates vary because of underreporting or poverty offsets.

Obviously you can't prevent income tax returning without repealing the 16th amendment. Class warfare would bring the income tax back at the top levels almost immediately and soon it would trickle down into lower brackets murdering the economy.

999's guard is visibility of the rate and everyone being made a taxpayer. I'm sure in the future, class warfare could be a problem but it always is so long as we keep electing such politicians.

[MEGoody]

I really do like Cain, but I have concerns about his 9-9-9 plan. My biggest concern is that it introduces yet another form of tax on the federal level that Congress can keep pushing up and up and up.

The national sales tax may be 9% when implemented, but how is Cain going to guarantee that it will stay there? He can't, of course, and that's my concern.