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Sorry, Wrong Number 9-9-9
The American Spectator ^ | Ross Kaminsky

Posted on 09/30/2011 8:42:11 AM PDT by Cincinatus' Wife

....Of Mr. Cain's many ideas, the most well-known -- in part because of its clever sound-bite name -- is his 9-9-9 plan which aims to replace most current federal taxes (including income tax, death tax, payroll tax, capital gains taxes, and double-taxation of dividends) with a 9% flat tax for business income, a 9% flattax for individual income, and a 9% national salestax. The plan would eliminate almost all deductions.

While Mr. Cain's consistent results-oriented approach is admirable -- not least for its contrast with the other candidates -- voters should be wary of the 9-9-9 plan despite its initial appeal. In short, it is somewhere between folly and economic suicide to implement a national salestax, even at a modest rate, without simultaneously repealing the 16th Amendment to the Constitution (which permits a national income tax.)

There is in economics a relatively new concept known as Hauser's Law, named for its creator, economist Kurt Hauser of the Hoover Institution. Hauser's law posits that the federal government cannot take more than about 19.5% of national income through taxation and that soaking the rich (or those whom President Obama defines as rich) will not generate the tax revenue..........

• United Kingdom: 36.1% total taxes/GDP, with a VAT rate of 17.5 percent taking 6.8% of GDP. (The UK's VAT rate has since been raised to 20 percent.)

• Germany: 36.7%, with a 19 percent VAT taking 6.7% of GDP.

• France: 43.7% total taxes/GDP, with a 19.6 percent VAT taking 7.3% of GDP

In other words, governments of these countries which have national sales taxes take far more of the national wealth than we do in the United States. There are several European countries with even more punishing VAT and income taxes, with Denmark's government confiscating an astonishing 48.8 percent of national income.

(Excerpt) Read more at spectator.org ...


TOPICS: Business/Economy; Extended News; Government; Politics/Elections
KEYWORDS: incometax; nationalsalestax; revenue; taxation
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1 posted on 09/30/2011 8:42:12 AM PDT by Cincinatus' Wife
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To: Cincinatus' Wife

[In short, it is somewhere between folly and economic suicide to implement a national salestax, even at a modest rate, without simultaneously repealing the 16th Amendment to the Constitution (which permits a national income tax.) ]

I agree completely!


2 posted on 09/30/2011 8:45:50 AM PDT by KansasGirl
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To: Cincinatus' Wife

I don’t like articles that compare our tax rates and Europe’s tax rates. European tax rates cover their healthcare, and lots of other social amenities...not saying it’s right to have the gov’t give those perks...just saying comparing our tax rates and European tax rates is like comparing apples and oranges.


3 posted on 09/30/2011 8:48:10 AM PDT by dawn53
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To: Cincinatus' Wife

I’d probably end up paying more taxes under his plan, but would probably end up with more money because my employer and our clients would pay fewer taxes.

Never looked at the details but it seems logical.


4 posted on 09/30/2011 8:48:26 AM PDT by demshateGod (The fool hath said in his heart, There is no God.)
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To: Cincinatus' Wife

You must give Mr. Cain credit.

At least he is not responsible for the
Gardasil-PerryCARE fiasco or the RomneyCARE fiasco,
or the open border RINOs.


5 posted on 09/30/2011 8:48:39 AM PDT by Diogenesis ("Freedom is never more than one generation away from extinction. " Pres. Ronald Reagan)
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To: Cincinatus' Wife

He should change it to a 999—9+9 plan. The last 2 nines when added together equals 18, symbolizing a constitutional amendment limiting federal spending to 18% of GDP.


6 posted on 09/30/2011 8:48:52 AM PDT by grumpa
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To: Cincinatus' Wife

The only real way to get tax reform is to eliminate all “Hidden” taxes and outlaw withholding from paychecks. If the citizen had to save up money to pay taxes quarterly, no politician would ever dare raise taxes ever again.


7 posted on 09/30/2011 8:49:14 AM PDT by GraceG
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To: Cincinatus' Wife
Until 'spending' is addressed and curbed,
tax schemes are not going to resolve anything.

8 posted on 09/30/2011 8:50:11 AM PDT by TomGuy
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To: Cincinatus' Wife
Oh, brother. This idiot assumes that a VAT tax and a national sales tax are the same thing. They're not even close. A VAT tax is a Value Added Tax, which means that the value added at each stage of the production process is taxed based on the incremental value produced. As Friedman pointed out decades ago, this is one of the most inefficient taxes you can have. He goes on to say that something as simple as a loaf of bread has 67 steps to produce. As a result, the bureaucracy created to administer the tax would be huge, much larger than the current IRS.

I think the 999 Plan is a good one, provided the current IRS Code goes out the window when it's implemented. Indeed, US taxpayers should insist on this as a precondition to its acceptance. Otherwise, you'll have both.

9 posted on 09/30/2011 8:50:46 AM PDT by econjack (Some people are dumber than soup.)
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To: Cincinatus' Wife
Once again an author with a welded shut mind deliberately misleads to avoid rationally discussing Cain's plan As the author knows, comparing it to a VAT which taxes at every level of production and the 9-9-9 plan which only taxes it at point of sale is completely dishonest.

In addition the argument that you "must repeal the 16th Amendment 1st" is nonsense.

What is to prevent Congress from raising tax rates 20-30-50% right now?

The same political pressures that keep that from happening right now, apply even more so to the 9-9-9 plan

Since everyone pays the 9-9-9 tax it is impossible to demagogue raising it as "making the rich pay their fair share". Everyone know raising it means they will pay more

So rather then cling to their preconceived dogmas out of an emotional attachment to a certain candidate, the critics of 9-9-9 might want to try actually ADDRESSING THE FACTS for a change instead of engaging in this baseless demagoguery and fear mongering.

10 posted on 09/30/2011 8:53:50 AM PDT by MNJohnnie (Giving more money to DC to fix the Debt is like giving free drugs to addicts think it will cure them)
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To: Cincinatus' Wife
The purpose of the 9-9-9 Plan is to provide a transition to the Repeal of the 16th Amendment and transition to the Fair Tax. It does this by making Federal taxes more visible and simple. Employees will get used to having more in their paychecks. The paperwork and time spent calculating what to do based on the tax code goes away. It is a real “Change” that everyone will notice. It can't be implemented unless small-government citizens are able to shape the legislative and executive branches in 2012. The ruling class will not do this. I liked “Fed Up!”, but Rick Perry is still to close to a ruling class member for my tastes. Herman Cain is the only one in the race now that fits the bill. If he had Sara Palin for a VP we would really be able to do some “changing and abolishing!” Also, I could recycle my McCain-Palin bumper stickers with a pair of scissors! ;-)
11 posted on 09/30/2011 8:55:02 AM PDT by SubMareener (Save us from Quarterly Freepathons! Become a MONTHLY DONOR!)
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To: Cincinatus' Wife

So far as I’m concerned, the VAT tax is the crack cocaine of the statist bureaucracy, insidious in that it is so hidden, and economically deadly in that it can be raised to such high rates. One of my major fears with the Obama cabal is that they would be able to introduce a VAT, which I’m sure they’d do if they were able to.

Nonetheless, I might be willing to support a 9-9-9 since it is a nice balance of taxation of income and consumption, and since it affects everyone equally (how does one keep income taxes at reasonable rates if 47% of the population pays no income tax?).

However, in order to get my support for 9-9-9, Cain (or anyone else) would have to come up with an ironclad process that would make increases in the VAT portion extremely difficult, if not impossible. I don’t know if you can bind a future Congress by requiring a 75% super majority to increase the VAT part, but if something like that could be done, I’d probably go along with it.


12 posted on 09/30/2011 8:55:34 AM PDT by Stosh
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To: econjack

I agree, a VAT and a sales tax are totally different.

People don’t see the VAT when they buy. People do see a sales tax.

If 9-9-9 adds up to the revenue we need for a smaller government, it is a great idea.


13 posted on 09/30/2011 8:56:15 AM PDT by LowTaxesEqualsProsperity
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To: TomGuy
You got it completely backwards.

As long as you make virtually limitless steams of revenue available to the Feds, they will spend it. UNTIL you remove the possibility of tax hikes at will, they will spend it. Reforming the tax code to starve the beast is the 1st step to reigning it in.

For 70 years we have tried it your way, the spending is never cut. How about we try something different this time?

14 posted on 09/30/2011 8:56:26 AM PDT by MNJohnnie (Giving more money to DC to fix the Debt is like giving free drugs to addicts think it will cure them)
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To: Diogenesis

He has never held office, so of course, he is not responsible for any legislation or government activity. Cain has simply not been tested and we have no idea how he will actually govern, all we have is speculation based on his business record and his speeches.


15 posted on 09/30/2011 8:57:02 AM PDT by HerrBlucher ("It is terrible to contemplate how few politicians are hanged." G.K. Chesterton)
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To: Cincinatus' Wife

Don’t ever confuse how taxes are collected with how much taxes are collected. If we don’t control overspending, in the long run it won’t matter. We’re on an unsustainable trajectory right now.


16 posted on 09/30/2011 8:57:12 AM PDT by umgud
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To: grumpa

You are starting to sound like Calypso Louie.........


17 posted on 09/30/2011 8:57:28 AM PDT by Red Badger (We cannot defeat an enemy that the president and hence his administration cannot name.......)
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To: Stosh
t would make increases in the VAT
18 posted on 09/30/2011 8:57:33 AM PDT by MNJohnnie (Giving more money to DC to fix the Debt is like giving free drugs to addicts think it will cure them)
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To: Cincinatus' Wife
Hauser’s Law better stated is that no formula for taxes will generate a sustained netting of more than 19.5 percent of GNP. Super-confisacatory taxes will shrink the GNP and a one-year windfall should be compared as a percent to the previous larger GNP.

Big Bro can only tax so much before the big money scrambles for cover. The gov gains nothing from that gold buried in the backyard and the gov gains nothing from unreported sales and transactions of a growing off-paper economy.

19 posted on 09/30/2011 8:57:58 AM PDT by Monterrosa-24 (...even more American that a French bikini and a Russian AK-47.)
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To: KansasGirl
This argument that you “must repeal the 16th Amendment 1st” is nonsense.

What is to prevent Congress from raising existing tax rates 20-30-50% right now?

The same political pressures that keep that from happening right now, apply even more so to the 9-9-9 plan

Since everyone pays the 9-9-9 tax it is impossible to demagogue raising it as “making the rich pay their fair share”. Everyone know raising 9-9-9 means they will pay more taxes

20 posted on 09/30/2011 8:59:27 AM PDT by MNJohnnie (Giving more money to DC to fix the Debt is like giving free drugs to addicts think it will cure them)
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