Posted on 10/18/2011 12:28:10 PM PDT by Brookhaven
Economist Stephen Moore, one of the architects of presidential contender Herman Cain’s 9-9-9 tax plan, said Cain needs to rework a critical component of the plan.
Cain’s plan would replace the current tax structure with a 9 percent corporate tax rate, a 9 percent personal income tax rate and a 9 percent federal sales tax. But speaking on Larry Kudlow’s radio show on Saturday, Moore said the sales tax should be replaced with a 9 percent payroll tax.
“I’ve come to the conclusion that the American people and the voters do not want a national sales tax,” he said. “[Cain’s] going to have to replace that national sales tax with a 9 percent payroll tax. And if you do that, it’s a total winner.”
The plan has been under fire from both the left and the right since Cain’s recent surge in the polls. Democrats say the plan would lower the tax burden on the wealthy while increasing the burden on the middle class, and Republicans say the sales tax opens an additional revenue stream for the federal government to abuse.
“I’m surprised how hostile people are to the sales tax,” Moore continued. “When we designed this plan, I thought people would go along with the 9 percent sales tax. But the point is they won’t. And why not just do a payroll tax? It’s the devil we know.”
At the last Republican debate, in New Hampshire, Minnesota Rep. Michele Bachmann said that if you turn the 9-9-9 plan upside down, “the devil is in the details.”
Moore, who developed the plan with economist Arthur Laffer and Wells Fargo wealth manager Rich Lowrie, said he would advise Cain to drop the sales tax, but that the plan was solid otherwise.
“I want to be very, very clear on this,” he said. “I am not bearish on this plan. If you could put in place the 9-9-9 plan, oh my God, it would be like steroids in the economy. … You would have a million jobs a month if we put this in place. … I love the concept of it … but the American people will not go for a national sales tax. They’re just afraid of it.”
I'm not sure. The article is the only info I've seen on this suggestion, but I thought it was worth discussing.
The fact that we're even seriously discussing throwing out the tax code and simplifiying it is a huge plus, imho.
One of the problems is to target people with a lot of money and I don’t care what system you use they will evade the tax one way or the other.
As Cain pointed out, that's not a criticism of the 999 plan, that's a critisicm of politicians. Politicians could raise the rate under any plan (even the current one). If you don't want the tax rates raised, work to elect politicians that won't raise the rates.
I am not a “dude”.
And no one should allow the VAT argument to stand anywhere it is posted.
It IS relevant to this thread because the reason people are against the sales tax is:
1) It is being misrepresentated as a VAT
2) People don’t understand the concept of embedded taxes going away.
Also - 999 is a bridge to the Fair Tax which is 23% sales tax. If you take out the 9% because it’s too regressive - how are you going to EVER sell the Fair Tax?
Both of you quit sidetracking this thread.
We’re discussing the modified version of 9-9-9 that does not contain a sales tax.
If you want to talk sales tax vs VAT, go to another thread.
Wouldn’t that make it an 18-9 plan instead of a 9-9-9 plan?
I much prefer the Fair Tax. We desperately need to stop taxing labor (current taxes are not “income” taxes, they are labor taxes) and start taxing consumption. Moving the point of taxation from labor to consumption removes costs from American goods which are exported, and taxes goods which are imported. Given our trade imbalance, and the shift of most manufacturing overseas, we should be collecting taxes at the end of the value chain, not at the beginning.
Labor taxes are in fact value added taxes, since it in effect requires labor to add value. Taxing once at the end point is radically simpler.
Those who complain the business tax in the 9-9-9 plan is in effect, a value added tax, because it does not allow the deductability of labor costs, need to realize labor is already taxed at a 7.65% rate (business payroll tax). Net profits are taxed at 35%. I cannot see a situation where this is a significant tax hike for business. Likewise, individuals are taxed at minimum of a 7.65% payroll tax, and a minimum income tax of 10%.
It amazes me we have people screaming about “the rich” not paying taxes, etc., but if we had the Fair Tax “the rich” would have to pay taxes on everything they spent money on, including yachts, jets, Rolls Royces, etc.
You cannot extricate that from the discussion since it’s one of the reasons why people are criticizing the sales tax in the first place prompting the modification of formula.
“I’ve come to the conclusion that the American people and the voters do not want a national sales tax,” he said. “[Cain’s] going to have to replace that national sales tax with a 9 percent payroll tax. And if you do that, it’s a total winner.”
Just what I've been saying for the last two weeks! I didn't have a hand in designing 999, but Moore did and he is right. Still won't be a total winner. Drop the fair tax idea in place of a flat tax. People will buy it.
These are Cain's own words in Cain's own article.
"The worst idea is a proposed national sales tax, which is a disguised VAT ..." ..... Herman Cain
Cain brought up VAT to come up with a catchy title;
"Don't be VAT Stupid" = "Don't be THAT Stupid"
"Giving the administration and Congress another tool to tax us and confuse us is like giving an alcoholic a key to the liquor store with no supervision, only to discover that he locks the door after he is safely inside. ..... Here are three of the biggest reasons the national retail sales tax is the worst idea on the table. ..... ..... one more tool to lie, deceive, manipulate and destroy this country" ...... Herman Cain
Did you get that?
Was it clear enough?
Cain was talking about a "NATIONAL RETAIL SALES TAX".
Repeat.
A "NATIONAL RETAIL SALES TAX".
Is a "NATIONAL RETAIL SALES TAX" not the exact same thing as a "a Point of Sale tax"?
Your reaction, (I should have said over-reaction), to the 999 plan escalating to higher numbers is moronic.
You act as if it could raise on it’s own, without congress increasing it. They can raise any taxes anytime they think it would be politically expedient.
What if we’d belly ached about Reagan’s lowering the tax rates in the 80s, saying there was no point to lowering them they’d just to 20/20/20. Your “straw-man” rants on this seem to be the results of a simple mind.
“I’ve come to the conclusion that the American people and the voters do not want a national sales tax,”
And how did this genius conclude that? Last time I checked Cain wasn’t doing too badly in the polls.
If he thinks he has such a good barometer for popular sentiment maybe he should run for president himself.
It’s rather difficult to have a discussion around this without all the CLEAR specifics because it’s too open for interpretation as all the other threads have proven.
Anyway this is a bad if not worse than the original 9-9-9 as it is now guaranteed that the almost 50% who under the current tax code do not pay any federal tax after filing for all the deductions and credit for the minimum earned tax would under the new 9-9-9 pay 18% of their income in taxes and without any deductions. This is called political suicide.
“The danger with 9-9-9 is that it will become 20-20-20”
And what’s to prevent the same from happening with every other existing tax?
That’s the lamest excuse so far.
The problem with any tax plan is that it can go up. That isn’t any reason not to adopt a plan that will actually help with the current boondoggle we are in.
“The American people don’t want it” is a bad reason to ditch the plan. The reason the American people fear the sales tax is they don’t understand that reducing the costs of goods and services sold by virtue of the reduction in income taxes and the elimination of payroll taxes EVERY STEP OF THE WAY, would result in some unknown and in my view, unquantifiable reduction in the price of everything they buy.
I am a small business owner. The sales tax portion of the plan is the part I like the most. The sales tax would eliminate the underground economy, that is the millions who derive income via cash payments, and in the end don’t pay taxes. Also the sales tax would collect from the tourists who come here from all countries.
If there is no sales tax component, then the plan does not become a stepping stone toward a national sales tax, which in my view has tremendous benefits, the first being the elimination of the IRS and the income tax totally. Just my two cents.
I hope Herman sticks to his guns.
NO on the 9% consumption tax. It’s really a nonstarter and once people actually understand it they will oppose his plan. Sure hope Cain has some other issues to bring to the forefront quickly, because 999 is a dead duck.
Once Cain ditches this dumb plan, he’ll just be the same as the rest of the conservatives in the race, other than his lack of political experience. It’s a bold plan, but shows a naivete that is indicative of his lack of political smarts.
All the Perry and Romney RINOs rejoice.
I have been opposed to the 9-9-9 plan mostly due to the new sales tax hurting retired people with no income.
I like this much better. Still need some time to look into the details.
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