Posted on 10/17/2011 11:08:56 AM PDT by RockyMtnMan
Do you know why candidates for office tend to be reluctant to propose detailed plans? Because they know the plans will be flyspecked and picked apart by just about everyone. Inviting criticism doesn’t help you to get votes.
But fear of criticism prevents you from conceiving solutions to problems. So even if avoidance of criticism helps in propelling you to an election victory, how are you supposed to effectively govern? How are you supposed to fix the problems you told everyone you were going to fix? That’s why I’m happy to see so much criticism of the 9-9-9 plan I’ve proposed. It shows that people are thinking seriously about a substantive idea. When people stop obsessing over “gaffes” and campaign strategy, and start honing in on fixing the country’s economic problems, we are getting somewhere. This is not to say, of course, I’m going to leave poorly founded criticisms of the plan unanswered. Certain objections to the plan are circulating in the usual places, driven by the same kind of thinking that has left us with a stagnant economy, $14 trillion in debt and mounting entitlement obligations. These criticisms deserve responses, and here they are:
Claim 1: The 9 percent sales tax, which is one third of the formula, is regressive and hurts the poor, many of whom pay no federal income taxes now. Response: This claim ignores some important aspects of the plan. One is that we eliminate the 15 percent payroll tax, which allows for no deductions at all – not even for charitable contributions. Some critics have argued that the poor still come out behind because employers pay much of the payroll tax. That demonstrates a basic misunderstanding about how compensation works in the business world. An employer decides to accept a certain cost-of-employment for each employee, and the employer’s share of the payroll tax is part of that cost. It comes out of your compensation whether you realize it or not. Also, a flat tax is not – by definition – a regressive tax. Everyone pays the same rate. And it is not an added tax, but a replacement tax, whose total burden is determined by the consumer’s spending decisions. Finally, the best way to help the poor is by spurring economic growth, which the current tax code will never do, and which the 9-9-9 plan is specifically designed to do.
Claim 2: Creating a new tax is merely setting the stage for higher rates on all taxes, as untrustworthy politicians will surely raise them. Response: First of all, that is not a criticism of the 9-9-9 plan. It is a criticism of politicians. If you don’t want the rates raised, don’t elect politicians who will raise them. Even if we repealed the 16th Amendment and eliminated the income tax, as some demand in return for establishing a consumption tax, politicians could raise that rate too. What’s far more important here is the fact that the very simple, flat-rate structure of the 9-9-9 plan, which allows no deductions, loopholes or exemptions (with the exception of charitable contributions for the income tax), is a far more growth-friendly tax structure than the mangled mess of rates, taxes, exemptions and ill-conceived incentives we have today. It virtually eliminates the massive compliance costs of the current tax code, and it restrains the size of government. By taking away the politicians’ gateway drug of loopholes and deductions, we make it much more difficult for them to mess with the tax code. Having said that, any plan could be criticized for what it would look like if someone messed it up. The plan as I’m proposing it is a huge improvement over the status quo.
Claim 3: The plan redistributes wealth from the poor to the rich. Response: It does no such thing. It is fair and neutral, taxing everything once and nothing twice. What’s more, we are getting ready to propose empowerment zones for economically struggling areas in which the rates will be even lower. That will allow the poor to benefit even more from the plan than they already would.
Claim 4: The plan should have included a pre-bate to offset the sales tax. Response: The last thing we need is to establish another federal entitlement, which the proposed pre-bate would quickly become. And it’s not necessary. The consumption tax replaces ones already embedded in prices. It’s not the prices that would increase, but the visibility of the taxes being paid. Right now, money is deducted from your paycheck and you never see it, so it doesn’t feel like you paid a tax. But you did. With the 9-9-9 plan, you feel it, and I suspect a good many people who clamor for higher taxes will start to feel differently as a result. But they won’t be paying more than before. They’ll just be more aware of it.
Claim 5: The business tax represents a new tax on labor. Response: Paul Krugman of the New York Times makes this claim because we do not allow businesses to deduct the cost of labor from their taxable revenue. But the claim is bogus for several reasons. First, we are reducing the corporate tax rate from 35 percent to 9 percent, so the tradeoff is a much lower rate paid on more of a company’s income. Second, we treat capital and labor the same, both with the corporate tax and with the income tax. That is fair and neutral. What’s more, the current system taxes both capital investment by business and capital gains by individuals. That’s a double tax, and the 9-9-9 plan eliminates it.
Claim 6: The numbers don’t add up. The 9-9-9 tax wouldn’t generate enough revenue. Response: Several groups apparently “ran the numbers” and came to this conclusion, including Bloomberg News and the Center for American Progress. Our report, which they do not appear to have read, demonstrates that it generates the same revenue as the current tax code, and our methodology is visible for anyone to see. Those who are making this claim should release their scoring so their methodology is as visible as ours.
Claim 7: The 9-9-9 plan is a really an 18 percent value-added tax plus a 9 percent income tax. Response: That’s an argument? That some might be able to give it a disagreeable label? What we have done is split the incidence of the tax so it is harder to evade – since you’d have to dodge two taxes, not just one, to save the 18 percent. And by eliminating loopholes we’ve made that virtually impossible to do anyway. I don’t really care what people call it. What matters is how it works.
Claim 8: Some people (like Herman Cain) who may live off capital gains, would pay no income taxes. Is that fair? Response: First, one of the benefits of the 9-9-9 plan is that, even if someone doesn’t pay much or any of one of the taxes, he or she is still likely affected by the other two. More to the point, though, everyone has the same opportunity to work hard, earn capital and put that capital at risk. Whatever I have earned has come from hard work, good decisions (and some bad ones), a willingness to take risks and a constant honing of strategy. Nothing is stopping anyone else from doing the same thing. I realize many are being told there are no opportunities available to them, but that is not true and I wish people – for their own sakes – would stop listening to such doom and gloom and come to understand all the opportunity that truly exists, and learn how to access it.
Claim 9: It won’t pass. Response: Politicians propose things that can pass. Problem-solvers propose things that can work. One of the worst instincts of Washington types is to judge an idea not on its substantive merits, but on their perception of its political viability. I do not underestimate the challenge of getting any good idea through Congress, but I have said all along that if you propose a good idea, and the people understand the idea, they will pressure Congress to pass it. So there. I welcome the robust discussion and the many questions that are being raised about the 9-9-9 plan. Asked and answered. What else do you want to know?
If my top tax rate is 15% I am really paying something less because of the current 10% bracket (from the Bush cuts), so my rate is about 12%. Take away my simple deductions and exemptions and it may come up to 15%. So you're suggesting that I'd like to pay 9% income tax and 9% sales (all is spent), for a new total of 18%. [A lower cost of products won't help because everybody gets it.] Again, I PAID PAYROLL TAXES on all I put into the 401k (and all workers are currently paying it). It might be a great deal for those starting work after the plan is implemented but (I've read all the promise ladden replies) its not a good deal for anyone older. I like CAIN, and I know the plan would never get implemented as stated, but this is a problem.
I would suggest he set up an official, and more sophisticated, calculator and address the concerns of those who pay more. He should either say, "This plan is perfect!", and lose my vote, or state, "There may be some issues and it may need some tweaking or temporary tax limitations on previous earnings, but the basic goal of simplicity can still be maintained."
I’m not opposed to elimination of most deductions, including the mortgage deduction (I would oppose eliminating them in one step, but would phase them out over time).
I was simply saying that you have to take that into account when you are comparing total taxes paid before and after the plan takes effect. Everybody defending the plan talks about reducing taxes from 35% to 9%, while ignoring that the 9% tax will apply to a lot more income, because of the loss of deductions.
I do support deductions for marriage and children (in general, deductions for dependents within a legally defined family). Government exists for the common good of society, and has a compelling interest in “guarding the commons”. A stable family unit is the backbone of our society, and without it government as we formed it cannot survive. So setting the tax code so it does not discourage the family unit is a good thing.
The tax code should not favor two unmarried people living together over two married people living together (current code does that, even with the marriage deduction). But the tax code should take into account the cost of the family unit. A person who has to provide for 4 people should pay less in tax than a person who only provides for themselves.
Cain lets people take deductions for charitable contributions. What is more charitable than raising a child who cannot care for themselves? Under the Cain plan, you get no deduction for raising your own kid, but if you put your kid into foster care, and donate money to the foster family to raise your kid, you get a deduction. That is messed up.
Mock all you want. Our government has made laws that have existed for decades, and those laws created the need for people who understood the tax code. It isn’t those people’s fault for meeting that need. Sure, government could eliminate that need tomorrow, but government does have an obligation not to destroy the lives of it’s citizens who in good faith dedicated themselves to servicing the needs of other citizens, even if that need was an artificial need created by the government.
One, we have made some profit in the past but have never regained the 2007 values. Two, "likely" has a long history of unreliability. If I were trying to push the ultimate success of Cain's plan I wouldn't want to make that argument.
"For the children" is exactly why I will actively work against the "Fair" Tax or 9% national sales tax...both are "revenue neutral" and will suppress what is left of the consumer economy. Cut spending and move towards a flat tax in the 10-15% range if you want jobs "for the children".
“Regardless, Cain is obviously nothing more than a Stalking Horse for Romney to split up the Conservative vote so that Romney can win with less than 30% of the vote.”
Whoa, whoa, Cain was running for president when Perry was still contemplating his navel. So who’s the “stalking horse”?
I don’t dislike Perry. I have a problem with his immigration position, but I would vote for him over Romney, and certainly over the idiot in chief, but dammit, I’m sick of politicians. It’s refreshing to see a real person running for office. I want term limits in congress for the same reason (see my tagline).
So far, since Palin isn’t running, Cain’s my guy, and there is no way he is running to help Mittens, he is running to be President.
Imagine how refreshing it would be to have regular, plain spoken guy in the White House.
I am glad you are working towards a flat tax, let me know when it gets some recent traction. Most anything is better than the garbage we have now. Cain says on his site the 999 came as a way to merge the flat taxers with the fair taxers...so we really arent that far apart IMO.
Under current federal income tax rules we would be paying about 5.5% on the funds withdrawn from our 401k's (we aren't "rich"), how is 9% PLUS a new federal 9% sales tax better?!?
Lots of other stuff on that thread worth looking at.
...Sure, government could eliminate that need tomorrow, but government does have an obligation not to destroy the lives of it’s citizens who in good faith dedicated themselves to servicing the needs of other citizens, even if that need was an artificial need created by the government....
You forgot your sarcasm tag, the govcenment doesn’t owe anyone a living. What school of conservatism did you go to? Thats why we are in the mess wee are in too many bleeding heart liberals. Tell me what do you say to the thousands of unemployed auto workers or those in furniture factories or other industries that lost out to China? They provided a needed service and are now gone. Doctors and Obamacare are going to take a hit. My business takes a hit due to govt action nobody helped me. Cry me a river does the govt owe everyone a living too? Sounds like communism to me. What happened to adapt, overcome, improvise?
Will the tax lawyers and preparers will be protesting with OWS...gimmee gimmee gimme. You choose your occupation and take your chances.
Its called progress, it has winners and losers. If the list tern can’t get out of the way of the D-9 Caterpillar its gone.
Now, if I know that, Cain certainly knows that. So why did he say “pass”, and why doesn’t he want debate or amendment?
FAFR (filing away for reference)
Cain will need money to win, the establishment is going to fight this
Every step. The tax code is their power source. Everyone needs to
Send Cain $9.99 he can do it with many small donations
bttt
How cute. Now we only need to control that no Democrats ever get elected.
Let's hear an argument from Herman Cain himself that he wrote last November.
That's the great thing about Cain. If you don't like what Cain says today, just wait a few days or a few months and he will then say the exact opposite.
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November 21, 2010, By Herman Cain
"The worst idea is a proposed national sales tax, which is a disguised VAT (value added tax) on top of everything we already pay in federal taxes.
Here are three of the biggest reasons the national retail sales tax is the worst idea on the table.
First, we have a spending problem in Washington, D.C. not a revenue problem. ......
Even worse is reason number two: In every country that has established a VAT with the promise of reducing their national debt, the VAT has eventually gone up or expanded on top of the existing tax structure. ....
For the liberal naysayers who say that would not happen, you lose! Just look at the Social Security system, Medicare and Medicaid. Over the years since their inception, taxes have gone up, ...."
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. A national retail sales tax on top of all the confusing and unfair taxes we have today is insane! It gives the out-of-control bureaucrats and politicians in denial one more tool to lie, deceive, manipulate and destroy this country.
This is the most substantive of the criticisms levied against 9-9-9 and he pretends it’s not important by saying essentially that “well, any plan could be twisted by bad politicians.”
Herman Cain aims to please, LibertarianInExile.
Since you did not like that answer, Herman Cain argues THE EXACT OPPOSITE in my Post 195.
===========================
November 21, 2010, By Herman Cain
"The worst idea is a proposed national sales tax, which is a disguised VAT (value added tax) on top of everything we already pay in federal taxes.
Here are three of the biggest reasons the national retail sales tax is the worst idea on the table.
First, we have a spending problem in Washington, D.C. not a revenue problem. ......
Even worse is reason number two: In every country that has established a VAT with the promise of reducing their national debt, the VAT has eventually gone up or expanded on top of the existing tax structure. ....
For the liberal naysayers who say that would not happen, you lose! Just look at the Social Security system, Medicare and Medicaid. Over the years since their inception, taxes have gone up, ...."
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. A national retail sales tax on top of all the confusing and unfair taxes we have today is insane! It gives the out-of-control bureaucrats and politicians in denial one more tool to lie, deceive, manipulate and destroy this country.
Under current federal income tax rules we would be paying about 5.5% on the funds withdrawn from our 401k's (we aren't "rich"), how is 9% PLUS a new federal 9% sales tax better?!? ...... Drago
And what about current savers, republicangel?
I just retired, on my own savings, after three decades of workaholic medical practice.
My savings have ALREADY been Income Taxed at the top rate of 35%. Once I spend my savings, under the 9-9-9 Plan, that money will be taxed AGAIN by a 9% Sale Tax.
How is that double-taxation of current savings "better"?
Cain has not though this thing through. In fact, Cain did not think of it himself at all.
=======================
From fan to The Man: How Cleveland's Rich Lowrie claimed a place in Herman Cain's inner circle
That's how Lowrie found himself this summer on a New Hampshire-bound flight with Cain, sketching the tax-reform plan that in recent weeks has become a household name and helped Cain surge to the head of the Republican field.
"I had one question for him," Lowrie said of the chat. "How bold do you want to be?"
Cain, "with his signature smile and booming voice," leaned in and replied: "Bold."
And so, "9-9-9" was born -- a proposal to replace the federal tax code with a flat 9 percent tax on personal income and businesses and a 9 percent national sales tax.
=======================
Right, Herman, all we need to do is elect politicians who won't raise taxes - and as everyone knows, they're a dime a dozen. So hey, I've got an idea: why don't you make it a $0.0000000000000000000001 tax ON EVERY HUMAN BREATH? Huh, Herman? After all, what do we have to fear, unless we irresponsibly elect politicians that will raise that rate? I mean, it's not like we're fighting a war against Leftists and RINOs, right?
Oh, and very slick, imagining the repeal the 16th Amendment, since THAT is exactly what you're NOT doing that makes 999 so lethal. So what's the difference? Well let's see - how about the fundamental difference between a Constitutional Excise Tax, versus the imposed corporate income tax system we have now? As president, would you like to at least attempt to show us that you know the difference between the two?
But why should I argue with you, Herman? Why don't I just let YOU rebut YOURSELF. Less than a year ago, on November 21, 2010, YOU WROTE:
"The worst idea is a proposed national sales tax, which is a disguised VAT (value added tax) on top of everything we already pay in federal taxes.
"Here are three of the biggest reasons the national retail sales tax is the worst idea on the table.
"First, we have a spending problem in Washington, D.C. not a revenue problem. ......
"Even worse is reason number two: In every country that has established a VAT with the promise of reducing their national debt, the VAT has eventually gone up or expanded on top of the existing tax structure. ....
"For the liberal naysayers who say that would not happen, you lose! Just look at the Social Security system, Medicare and Medicaid. Over the years since their inception, taxes have gone up, benefits have gone down and they are still on a path of insolvency.
"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.
"A national retail sales tax on top of all the confusing and unfair taxes we have today is insane! It gives the out-of-control bureaucrats and politicians in denial one more tool to lie, deceive, manipulate and destroy this country."
Thanks, Herman - I couldn't have said it better myself.
rconser - Sincer 2011-10-08:
Troll much?
“Cain SAID it was OK to call it a VAT.”
It’s not a VAT, big difference between a VAT and a sales tax. A VAT is taxed at every level of the distribution chain. Cain’s sales tax is taxed at only the end point.
To attempt to say the 999 is a VAT tax is a deception. To attempt to take a conversation out of context and imply Cain is saying his 999 Plan is a VAT is deceitful.
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