Cain Responds to August Job Numbers

(Stockbridge, GA)- Republican presidential candidate and longtime business leader Herman Cain responded to the release of the August 2011 jobs report, saying:

"We learned today that not a single job was created during the month of August in the United States of America. In the land of endless opportunity and abundant freedom, the very promise that has inspired generations of industrious and innovative people seems to be dwindling away.

After trillions in government spending and empty promises, 14 million American workers are unemployed, with millions more underemployed. These are people, not statistics. They are families struggling to put food on the table, send their kids to school and keep the lights on. They are our family members, friends and neighbors.

Sadly, the fact that zero jobs were created last month is only fitting for this administration, which is led by a President with zero leadership, zero plans, zero results and zero understanding of basic economics. And the American people are worse off because of it."

Cain released his own economic plan in August 2011, also known as the "9-9-9 Plan." In it, Cain proposes instituting a personal income tax rate of 9 percent, a corporate income tax rate of 9 percent and a national sales tax rate of 9 percent. "Cain's Vision for Economic Growth" also calls for an elimination of the capital gains tax, the payroll tax, the estate tax and the taxes on repatriated profits. To learn more, click here.

Cain has held several executive roles in the private sector: as a business analyst for Coca-Cola; as Vice President of the Pillsbury Company, leading the turnaround of 450 Burger King restaurants; as Chairman and CEO of Godfather's Pizza, taking the company from the brink of bankruptcy, returning it to profitability and leading his management team in a buyout in just 14 months; and as the Chairman, President and CEO of the National Restaurant Association, leading the nation's single largest private industry. He has served on the boards of directors of several major American and multinational corporations, including Whirlpool, Nabisco, SuperValu, AGCO, Hallmark Cards, Reader's Digest and Aquila. Cain's professional record as a job creator and "turnaround artist" sparked the interest of the late Secretary Jack Kemp, who selected him as a member of his "Economic Growth and Tax Reform Commission."

IMHO...

I like Cain, but not repatriated profits need to be taxed the same as profits made in the U.S.

Allowing U.S. companies to build businesses in foreign countries and make tax-free profit will be an enormous job-killer in the U.S. There would be absolutely no incentive to build business operations in the U.S. if a corporation could incorporate here but operate elsewhere and then be able to pay no tax to the U.S.

Also, short-term capital gains and regular W-2 income should be taxed at the same exact tax rate, with a a preferential low rate for long-term capital gains, which is the way the code works now.

This creates an incentive to hold investments over one year and thereby reduces speculation to those who do this for a living - most ordinary folks and most professional investors want to hold over one year, not go in and out of holdings on a daily basis. Trading in and out is an excellent way to go bankrupt if you do not carefully develop knowledge and techniques and discipline before devoting your entire net worth to such trading activities.

Eliminating tax on capital gains completely would drive up the stock market artificially very fast, otherwise known as a bubble.

If taxation continues to be set up as I describe, it provides a little extra incentive to invest and thereby capital for business growth.

If we simply made taxes a flat rate per dollar with no deductions, which is part of what Cain describes, everyone would be paying taxes, which would give EVERY voter SKIN IN THE GAME, i.e., everyone would be faced with the proposition of helping to pay down our $15 trillion in government debt. Suddenly everyone would be interested in getting the government to stop stealing from the honest hard workers to give to the lazies and the opportunists.

Herman Cain’s proposals would boost economy and create jobs: economist

Herman Cain’s 5-step plan would boost the US economy and create jobs, according to Daniel Mitchell, an economist and senior fellow at the Cato Institute.

Mitchell said in the 21st century, globalization has made it easy for businesses to shift their money (investments) and operations (jobs) internationally. Therefore, it’s of the utmost importance for the US to have the right policies and economics in order to win those operations and monies.

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Mitchell said the Obama administration’s policies do the opposite. Cain’s proposed policies, however, would work to achieve those goals.

Below are his comments on each of Cain’s 5 proposals.

1) Lower the corporate tax rate to 25 percent from 35 percent.

Mitchell: The US has one of the highest corporate tax rates in the world, which is a very self-destructive policy in a globally competitive environment. I think it should be lowered to 15 percent, but 25 percent is a good start.

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2) Take the capital gains tax rate to zero.

Mitchell: The capital gains tax is a form of double taxation (businesses already get taxed on profits, so taxing the gains of investors would be doing it twice). Many of America’s trade partners have no capital gains tax, so it would be beneficial for the US to join them in that policy.

3) Take the tax rate on the repatriation of foreign profits for US companies to zero.

Mitchell: Almost every nation in the world taxes their companies on a territorial basis. The US is one of the few countries to tax on a worldwide basis.

4) Cut the entire 6.2 percent payrolls tax for workers and employers for 1 year.

Mitchell: I’m not a big fan of this approach. Generally speaking, people only respond to permanent change in incentives. If you permanently eliminate taxes on workers, you’ll increase their incentive to work and be more productive. A 1-year holiday doesn’t help that much, but it certainly doesn’t hurt, either.

5) Make the tax rates permanent or indefinite.

Mitchell: Permanent tax reductions are positive. In 2013, we have a potentially damaging automatic tax increase. It’s a threat to the economy and presents investors with uncertainty.

Mitchell said there are plenty of US companies that have money right now. However, they can’t spend or invest their money profitably in the US because of current tax burdens and the threat of future tax burdens. Meanwhile, many developed countries and US trade partners offer them a better deal.

To rectify this problem and better compete with foreign countries, the US should therefore implement something similar to what Cain proposed.

Mitchell said he knows Cain from serving together in the National Tax Reform Commission in the 1990s. He described Cain as a “bright and dedicated” person “who has a genuine desire to make the country better.”

http://www.ibtimes.com/articles/144224/20110511/herman-cain-economy-jobs.htm

Unions are a big reason why manufacturing operations have been moved out of the U.S. over the past 40 years.

Another reason is intense regulation.

Another is intense legal liability.

America has literally seen children’s lemonade stands shut down by local authorities. I mean, really.

Granted, regulation and liability are necessary: some companies would be run deplorably if there were no regulations and if their neighbors could not sue them for polluting and their employees could not sue them.

It’s all a question of balance; the “devil is in the details”, like everything else in life.

Changing tax policies does absolutely nothing to change the above.

Changing tax policies does absolutely nothing to slow down government spending, since if government outlays are greater than tax receipts, the government simply borrows the difference, shifting the burden of their expense into future requirements for tax revenue to pay what is spent by them today.

Eliminating capital gains taxes is ONLY wanted by the wealthy, who will proceed to then have NO regular income, but take all their income as capital gains. This was actually a joke on an old Cheers episode where Robin Colcort bet Sam a “week’s pay” on a chess game. Robin lost the game, but he said his week’s pay was only approximately 1 cent. Of course, this is the Hollywood version, but everyone knows this.

This is Cain’s way of getting votes from those who can shift their income, even people like professionals such as engineers, lawyers, accountants, doctors, etc., who are near retirement and have lucrative private practices, stock portfolios and own shares in closely-held corporations that they operate their businesses out of. All these people can put all their assets in their corporations and take little to no W-2 pay from their corporations and can also borrow from their corporations. The corporations then will grow that much faster without paying them W-2 salaries, and as they retire they can sell out to partners and the capital gain on their shares would be tax-free.

The tax code is neither here nor there in terms of getting the economy going. Why ?

A) the tax code can be changed again by future Congresses to slant against business - all tax code changes are temporary.

B) the theory is that the “economy will grow”, the tax base will increase, and tax revenue will increase. Wrong answer. Government spending is utterly insane. There are hundreds of redudant programs. If you actually went through what every agency does in complete detail, it would boggle the mind how ridiculous the spending is. It is a government completely out of control. It is absolute tyranny, funneling trillions to buy votes. It places a regulatory burden on society, promotes unions, promotes immorality - to a point of absurdity. Lowering taxes does absolutely nothing to fix any of that. Every time a Republican gets in, the best theory they have is to “starve the beast”, i.e., lower taxes and provide less revenue. Well, we’re closing in on $15 trillion in debt. Our lower taxes have only made the Interest Expense that the government must pay every year higher and higher. Government growth FAR outpaces the growth of population and the economy. It is strangling our economy.

C) Businesses try to avoid unions, as unions make doing business virtually impossible in the long run. There was the Boeing case - look at what they were trying to do - get away from unions. It takes real guts to face down gangs - I mean unions. If a candidate is not talking about standing up to unions in their campaign, if they are elected they will not have the knowledge that they were elected by an electorate which gave them the political mandate to stand up to unions. Therefore, they will tiptoe around unions. That’s why the blowhard Christie can bloviate about unions after he’s in office - because he said that he would do that in his campaign, so everyone in Trenton knows that Christie has the political mandate to do so.

D) Many Judges in America are severely lacking in morals and brains but our instead chock full of political correctness and left-wing wackoism. They make living in America as a citizen and doing business in America much worse than it has to be. However, the foundation of our legal system is far and away the best in the world. So we need to, IMHO, improve the morals and the thinking of American Judges in general. This is a very long-term problem which requires a very long-term solution.

I think Cain shares a lot of these ideas, but it’s not so clear where he is on them. I understand that candidates early on have to pick and choose what their talking points will be rather carefully so they do not alienate too many groups. Also, they try to have some dramatic plans, and tax rate of zero sounds dramatic.

I just would like to see Cain speak on all these things and recognize (out loud verbally) that we need a long, tedious way back to reality in order to escape the nutty situation we’re in. Whipping up the economy through tax cuts and not working on all our other problems with (at this point) extreme diligence and determination, IMHO, is just going to make the bubble of immorality in America even bigger, since everyone will think our problems are over and there’s no need to worry about little old-fashioned things like morality and common sense any more.

IMHO...

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