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?
“Although since Cain actually does NOT have a detailed plan, or even much of a plan at all, I’m not sure what exactly is taxed and not taxed under the Cain tax proposal, except what he tells us from time to time.”
Actually he has the only plan that throws out the present status quo plan of failure and replaces it.
The 999 plan is dominating the political conversation and Cain now leads Romney in most national polls and in several state polls, including Iowa.
“With a national sales tax every products tax rate will be at the whim of the next Congress. Think about it. “
You should think about it...because that is the case in every election with or without the Cain Plan.
“Let’s hear an argument from Herman Cain himself that he wrote last November.”
I know you are not a liberal but you just used a liberal media tactic. You took Cain’s words out of context...here is what he said in entirety for those who have the time to discern truth from your fiction:
Don’t be VAT stupid
November 21, 2010
By Herman Cain
There’s one message from the 2010 elections that many so-called policy makers, political elites and analysts did not hear. Namely, the American people are not as uninformed and stupid as they think we are.
President Obama’s Debt Commission and the Bipartisan Policy Center’s Debt Reduction Task Force have both floated its ideas for reducing our nation’s runaway national debt. As CNNMoney.com reports, both sets of ideas echo each other in broad strokes. And both sets of ideas could confuse and confound the leaves off a tree.
These ideas are a long way from becoming law, but they are generating, as intended, much discussion about the merits of each idea.
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. The Commission claims their goal is to reduce the deficits by $4 trillion over the next decade. The task force says its plan would save $6 trillion by 2020. It’s sort of like dueling promises that would never happen, because when has a proposed cut in Washington D.C. ever produced the intended savings over 10 years? Never!
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. After discovering many of the tax grenades in the recently passed health care deform bill, which is already driving costs up and access down, it would be real easy for an overzealous bureaucrat to insert the language in the legislation “national retail and wholesale” tax.
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.
Both the Commission and the Task Force say very little about how costs would be contained, because that’s the real big bodacious problem. Even if their plans could achieve their stated goals over the next 10 years, the current administration and Congress have increased spending nearly $4 trillion in the last two years. And the only hope that it will slow down is the new change of control in the House of Representatives.
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.
The third reason the national retail sales tax on top of all the taxes we already pay is a bad idea, is that there is already proposed legislation that replaces all of the federal taxes we pay. It replaces all current revenue. It supercharges our national economic growth, and puts the power of taxation back into the hands of the people who spend their money.
It’s called the Fair Tax. It’s as easy to understand as ABC!
That’s the problem. It’s fair. It is simple and understandable. But the politicians and bureaucrats do not want to give people more control of their own money. That’s why even though the legislation has been introduced in every session of Congress since 1999, it has not advanced.
People are not stupid. Maybe they will hear us in 2012.
My wife likes Cain but, the 9-9-9 plan has turned her off.
The thought of a 9% Nat’l sales tax is the killer.
Her logic is 9% Nat’l + 8% State, no deal.
I could likely sway her with logic but it points out a huge problem for Cain.
Plus the MSM is doing their best to discredit 9-9-9 and its author.
IMO the best thing Cain could do is to say something along the lines of..
‘I like my 9-9-9 plan because we must have a new tax code but I’m willing to listen to other ideas.’
I’ve got problems with the Fair Tax so that’s a non-starter for me.
But it's not the sales tax that is like VAT, it's the corporate tax that is like VAT. The corporate tax is on the revenue of each company that sells, whether to an end user or another company. That revenue isn't just profit, because almost every business deduction has been eliminated, so there aren't any real expenses being subtracted, just the cost of the goods purchased, which were already taxe by the business selling them.
There isn't enough of a plan published to know exactly how this corporate tax is structured, or a corporation buying goods avoids the end-user sales tax, or if they even can. If they can't, you can see how the tax spirals out of countrol (if every business pays 9% on 100% of all the parts that go into their manufacturing, and pays 9% on all the equipment they buy to do their manufacturing, and then they pay 9% on the new profit they get when they sell, and the next buyer pays 9% sales tax again, etc.).
But at it's base, given the elimination of deductions, it is pretty certain that the entire cost of an item will have been taxed, in bits and pieces, at the 9% corporate rate. The guy that pulls the raw material out of the ground, not being able to deduct the wages of the workers or the depreciation of their assets, pretty much pay 9% on their entire sale. The next guy probably doesn't have to count the cost of materials, but they also pay 9% on all their "added value". Hence the charge that it looks like a value Added tax.
The National Review explicitly calls the plan out on this -- that it has both a VAT, AND a Sales Tax, meaning it has the worst of both worlds. I certainly disagree with those who claim there is an 18% VAT, but I can see the argument that it's a 9% corporate VAT and a 9% user sales tax. IN any case, it's equivalent to paying 18% on the entire value of the item, because the corporations don't get deductions (we don't know if they get any or not, the plan isn't in place yet).
What I know for certain is that Cain doesn't think his plan is the best idea. I know that because under his vision, the 9-9-9 plan is temporary, an will be replaced with the FairTax. So he obviously thinks Fairtax is better than 9-9-9. I agree, although I don't like Fairtax either.
This reminds me of a football team that has 10 winning seasons under the same coach, and then loses one year and the owner claims that the problem is the coach and a new coach will fix it. Clearly, the previous 10 years show the coach isn't the reason they suddenly started losing. Maybe a better coach would do even better, but the problem that caused the losing season is something else, and replacing the coach won't fix that.
“Like I said, it was Cain in this very article that said it was OK to call it a vat:”
You are misrepresenting on a good day or lying on a bad day.
and the lie exposed:...
“The 9-9-9 plan is a really an 18 percent value-added tax plus a 9 percent income tax. Cain...Response: That’s an argument? That some might be able to give it a disagreeable label?...I don’t care what people call it”
So, Cain’s sarcasm by saying, “that’s an argument?...I don’t care what they call is beyond your ability to comprehend?”
lmao Charles....you Romney people are really desperate. You should get a room with Joe Scarborough.
“The National Review explicitly calls the plan out on this — that it has both a VAT, AND a Sales Tax, meaning it has the worst of both worlds.”
Yes, the NR if firmly entrenched in the Romney camp as well and their analysis in faulty. It is not a VAT. That is a clear lie. There argument that the corporate tax is also a VAT is also ridiculous, since the corporate tax rate is much lower. This will allow the small and medium sized companies who can’t hide beyond 100 Tax Attorneys pay much less in taxes.
I’ll side with Reagan economic advisor Art Laffer who knows a thing or two about turning bad economies around, who prefers Cain’s 999 Plan.
1) How’s he going to get around the Constitutional issues (the Sixteenth Amendment authorizing Congress to tax income and no amendment authorizing Congress to tax sales)?
2) A sales tax has looked better to many than an income tax because, among other things, supposedly it would be a one-time-only tax for something, less wasteful than having to file income tax every year, and less intrusive than having the IRS policing your income or returns. However, many critics say that the 9% sales tax will apply through the entire supply chain, taxing the same thing over and over again as value is added and as it moves from producer through distribution and retail. What’s in here to guarantee only retail sales are taxed?
3) If somehow he’s able to get around the Constitutional issues and the value-added issues, you've got another problem - the "tyranny of the status quo" which takes over about 100 days after the new guy is in office. Why not just get a bill passed immediately after taking office that features time-phased implementation such as: 1) immediately lowering both income and sales taxes to 9% as proposed (NO OTHER TAXES) and 2) mandating BOTH a gradually and complete phase-out of income tax while creating and phasing in a sales tax? Otherwise he risks getting us bogged down midstream with a sales tax without having passed a bill abolishing the income tax - a Socialists dream.
4) He needs spending cut plans to sell a 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.
I hope Mr. Cain is listening and can make necessary adjustments to his proposals even if it means adjusting the catchy phrase “999” itself. The point is tax cuts are most essential, followed by huge cut in government spending, and let's not forget to ABOLISH OBAMACARE.
I don’t think Hillary is a factor in any way. As I have said before, women are the majority of registered voters and no person shall sit in the oval office without the vote of American women. If American women wanted Hillary Clinton for president she would already be president. I cannot even imagine a credible way to refute that statement.
Has something changed in the past four years to make Hillary more attractive as a presidential candidate?
The noob is history: “This account has been banned or suspended.”
Watch the videos and pay attention to what Cain says, at least you will then know what he claims to be proposing. The “news media” are deliberately distorting what Cain is saying. I am not here to argue for or against Herman Cain’s plan, I am just saying that you must listen to Cain and ignore what people are claiming that Cain said. Herman Cain says that social security and retirement plans will NOT be taxed under his plan.
The interview with David Gregory was a disgraceful attempt to distort the Herman Cain message. First it starts with a summary of the opinion of “experts” who claim the the Cain plan would be ON TOP OF existing taxes! This is so absurd that I cannot imagine anyone believing it. Cain would have to literally be an idiot to run as a CONSERVATIVE Republican candidate for president on a platform of piling a huge set of new taxes ON TOP OF what we already have. The idea that someone would try to sell that idea shows just how bad the political climate is now. It gets worse when they then go on to say that under Cain’s plans “the poor would pay more and the wealthy would pay less”. If they were right about adding this on top of the existing tax code the poor would indeed pay more but it would be idiotic to think that more taxes added on would mean the rich pay less than they do now!
Herman Cain is human and imperfect and his plans will be imperfect as all human plans are but there is a huge amount of lying going on to try to discredit Herman Cain, don’t believe it.
“The problem is that people who have SAVED money did so under the old income/payroll tax rates. When you spend money you previously saved, you will now get hit with a new 9% tax that you didn’t before, but you don’t get any of the “savings” from the 9% income tax. You DO get savings from the drop in corporate tax rates, but it’s not enough to offset the 9% sales tax.” <<
I assume that these are your words because you are against a national sales tax. I don’t like it too much either except for the fact that EVERYONE pays it but answer me this: Doesn’t inflation bring about the very same problem? The money I have in the bank today will be worth a lot less two years from now under the present system. Isn’t there a chance that with a booming economy (that the 999 plan will stir up) inflation will be kept in check?
They were the words of the person that I was quoting.
Check the links.
Too bad they can’t seem to do it to the rest of the attack trolls.
There is so much false crappola being posted here about Cain...
This attack Cain Troll had been on FR a little over a month, and basically every reply he posted was an attack on Cain. He had posted a lot of attack Cain bs replies.
I’m not a Romney person. I’m not a Perry person. I don’t know who I’m supporting yet. But it ain’t Romney, and one of my big problems with Cain is that he would support Romney over Perry.
Do you agree? If it is between Perry and Romney, will you support Mitt Romney?
Given how nice Cain is to Romney, I don’t see how you could think ANY Mitt supporter would be saying anything bad about Cain. Right now, Cain is the best thing to happen to Romney in a while. Cain is the least likely to get elected, the least likely to have the money to launch an effective campaign, is the most likely to be nice to Romney while Romney tries to win the nomination, the most likely to pick ROmney as VP if he happens to win.
If Cain can keep Perry down, Romney will be ecstatic.
Probably a party shill.
A reduction in taxes will not guarantee an equal reduction in prices.
Think again pal, there is no national sales tax and the federales can't stick their noses there currently.
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