Posted on 09/30/2011 8:50:12 AM PDT by SeekAndFind
Herman Cain's supporters know their part by heart. On the campaign trail, at the point in Cain's stump speech when he begins to discuss his plan for economic growth, they're always ready to join the chorus: "Nine! Nine! Nine!"
They're referring, of course, to the Republican presidential candidate's proposal to throw out today's tax structure and replace it with a 9 percent income tax, a 9 percent business tax, and a 9 percent national sales tax. Cain would eliminate capital gains taxes, the payroll tax and the estate tax.
For Cain, a Georgia businessman, 9-9-9 is a perfect platform. It's specific, but it doesn't bury people in details, like Mitt Romney's 59-point, 160-page plan. And it's not a vague promise like Rick Perry's look-what-I-did-in-Texas position. To a lot of voters, 9-9-9 is an enormously appealing proposal that is easy to grasp.
It's audacious, too. "I had a kind of pivotal moment in this," says Rich Lowrie, the head of an investment firm in Cleveland who serves as Cain's top economic adviser. "I was with Mr. Cain and I asked him, 'How bold do you want to be?' and he leaned toward me with his big, booming voice and said, 'BOLD.' "
So bold it was. But is 9-9-9, for all its boldness, a good idea?
I talked with a number of conservative economic policy experts who don't want to take sides in the campaign and thus asked to remain anonymous. They found some important things to like in 9-9-9. They favor its low rates, and they like its elimination of various types of double taxation. Most agree it would stimulate growth and create jobs, at least in the short run.
But they have two serious objections. The first is that 9-9-9 might not raise enough money to fund the government even if it creates growth and federal spending is reduced. Over the years, the government has taken in tax revenues equal to about 18 percent of gross domestic product. "I'd be surprised if 9-9-9 raises as much money as current policy," says one expert. "I'd be really surprised if it raises 18 percent of GDP."
Cain's advisers have put together a detailed analysis, or score, to argue that 9-9-9 would be "revenue neutral," that is, would raise the same amount as today's system. "We used 2008 as our baseline, and not accounting for any growth effect, it would have generated to the penny the same revenue," says Lowrie. So far, though, the numbers have not been crunched by many experts outside the campaign.
The second objection is that 9-9-9 would add a national sales tax on top of current income and business taxes, and would thus give Congress another tax to raise. Why couldn't 9-9-9 become 12-12-12? Or 15-15-15? The rates would still seem fairly low. "In the long run it leaves the door open for politicians with the wrong motives to push it upwards, and then we're stuck with something worse than what we had before," says a second expert.
"All taxes over time tend to rise to their highest sustainable point," says a third expert. "So one of the general things you don't want to do, if you're concerned about limiting the size of government, is to introduce a whole new type of tax on top of the current structure."
Lowrie rejects the argument. First, he points out that 9-9-9 would eliminate some major taxes, like the payroll tax. As for the sales tax, he argues that some politicians will always want to raise taxes, and "I don't think they would be any more likely to raise this." Finally he believes that citizens' movements like the Tea Party will keep up the pressure against tax increases. Still, the fact remains that under 9-9-9, there would be a new tax on top of existing taxes.
This week Cain's team came to Washington to explain the plan to conservative economic analysts at Americans for Tax Reform, Club for Growth and other institutions. Those experts are starting from scratch; they haven't really seen anything like Cain's plan before. And for all the problems they have with it -- they're also flummoxed by Cain's inclusion of "empowerment zones" for inner cities -- they still admire Cain for trying to find a new solution to today's problems.
"It's not an entirely coherent set of proposals," says a fourth expert. "I do worry about the end game. But I hate to rain on it because there's no perfect tax system in the world, and this is another person stirring the tax reform debate, and that's a good debate to have."
Byron York, The Examiner's chief political correspondent, can be contacted at byork@washingtonexaminer.com.
Please leave the wisecracks to other threads :)
I like it in concept, but would need to see some safeguards against the 9/9/9 becoming 23/12/43 or something.
Don’t see anybody else offering a plan. Mostly they just point out (correctly) how bad Obama is.
Personally, I’d rather go “all the way” to the Fair Tax, though.
Reagan showed us how “a rising tide raises all boats”. This is Cain’s version of that.
I don’t know all the details yet, and if this will mean I will be paying a little more or a little less – but what I can say for sure, those not paying income tax today (and I don’t mean the rich) will finally have to pay their fair share. And that is a good thing.
Like the economists said in the article, I also have a problem with layering a vat or national sails tax on top of the existing income and business taxes. You know darn good and well that the politicians will just raise taxes from their.
I support scrapping all income, business, capital gains taxes along with that all sacred deductions for everything including the home mortgage interest deduction and etc, etc.
Replace with a Fair Consumption Tax.
999 is a gateway to the Fair Tax.
their=there
seeing as Cain is a mathematician, he probably ran the figures.. and if it doesn’t bring in enough money, then raise it a bit (ug).. anyway, I like the idea. I think the people who get gubmint checks should pay a bit when they are buying their plasma tvs and playstations.
I don’t really buy much other than food or clothes, so I like the idea of paying less income tax. Most big things I buy are used...
A business tax is just a hidden sales tax. In other words, there would be a 9% personal tax and an 18% sales tax. If it were locked in the constitution with no other deductions, then it's probably better than what we have now.
I thought Cain said in the last debate that what we have now would be thrown out the window and 9-9-9 would replace it.
[they’re also flummoxed by Cain’s inclusion of “empowerment zones” for inner cities ]
Anyone have the details on this?
[they’re also flummoxed by Cain’s inclusion of “empowerment zones” for inner cities ]
Anyone have the details on this?
The SAME political pressure Congress from raising the Income tax right now applies even much more so to 9-9-9
Right now it is east to demagogue tax hikes as "making the rich pay their fair share". That become impossible with 9-9-9 since EVERYONE know ANY tax hike will mean THEY pay more.
Those "Economists" who talk about VAT in relation to 9-9-9 are knowingly lying to you
The SAME political pressure Congress from raising the Income tax right now applies even much more so to 9-9-9
Right now it is easy to demagogue tax hikes as "making the rich pay their fair share". That become impossible with 9-9-9 since EVERYONE know ANY tax hike will mean THEY pay more.
As long as they eliminate all those deductions, loopholes, exemptions and credits, including the popular mortgage interest deduction, the 9 percent personal and business taxes are fine with me.
I also don’t personally have a problem with the 9 percent sales tax. However, if it’s a stepping stone to the FairTax, it might, like the FairTax itself, be imposed on all goods and services. I’m not sure how much people would like paying a 9 percent tax to their lawn people, roofers, plumbers, etc. Also, when combined with state and local sales taxes, the 9 percent levy might cause some economic activity to go underground.
I guess you missed the “empowerment” zones for inner-cities?
That translates to no taxes on the plantation voters.
>>Those who say VAT are lying to you. 9-9-9 has NO VAT tax. 9-9-9 taxes at the final point of sale, VAT taxes tax at every level of production. <<
Right now it doesn’t.
It opens a new door of tax for the dems to exploit.
That being said, because all of this needs to be discussed, HC has been my pick all along.
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