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Posted on 10/17/2011 3:25:58 PM PDT by La Enchiladita
Herman Cain deserves credit for proposing a tax-reform plan that is specific, promotes economic growth, and has captured the imagination of conservatives nationwide. His 9-9-9 plan builds on the insight that one of the chief defects of the current tax code is its bias toward consumption over savings. But his plan’s peculiarities of design, substantive weaknesses, and political naïveté render it unworthy of conservative support.
Cain’s ultimate objective is a 30 percent national sales tax, but his interim plan is to replace the current income, payroll, and corporate tax codes with three new taxes. A 9 percent income tax would apply to a very different tax base: Capital income would go untaxed, but the exemptions that keep the basic cost of living from being taxed would disappear. A 9 percent value-added tax would be levied on corporations. And consumers would pay a 9 percent retail sales tax as well.
This tripartite scheme makes for a succinct slogan but has little else to recommend it. In particular Cain’s inability to choose between a sales tax and a VAT is puzzling. The two are very similar in their economic effects. The chief advantage of the sales tax over a VAT is that the latter is considered easier for governments to raise, because it is hidden. The chief advantage of the VAT over the sales tax is that it is easier to enforce without stimulating black markets.
(Excerpt) Read more at nationalreview.com ...
There is no “VAT” tax in the Cain 9-9-9 plan.
A “VAT” - a “value added” tax, as it is in Europe, is a complex tax POLICY (not even a single universal tax rate) that taxes, at different rates the “added” value of specific goods and services AT EVERY STAGE OF PRODUCTION AND DISTRIBUTION of something until it reaches the cash register.
That gives a VAT another distinct difference from either a flat corporate tax - Cain’s 9% corporate income tax, or a flat sales tax, as in Cain’s 9% flat national sales tax - the VAT is a hidden tax; by the time something gets to the cash register the VAT taxes are already embedded in the price
I am not calling Cain’s 9-9-9 plan “perfect”. Is any tax plan, in existence or proposed, a perfect plan? No.
Yet, how is it that the NRO Editors prefer the very unConservative prospect that continues the Socialist-Crony-Capitalist alliance of their political agendas embedded in the most complex personal and corporate income tax code in the world, and the continuation of their use of the tax code as their corrupt, social engineering, wealth redistribution play-thing, versus the economic certainty of a set of fixed and flat tax rates all around, as in Cain’s 9-9-9 plan?
There are two reasons that the long term, phase two, goal of the Cain tax policy - a 30% national sales tax, does not bother me as it does the NRO editors.
Cain is right to view the conjoined process of a repeal of the 16th amendment along with enactment of a broader national sales tax. Unless the 16th amendment is repealed, how can Congress be trusted with the continued POWER to re-impose a personal income tax, and a 30% sales tax to replace it? They can’t.
But Cain is right to not want to wait for that before junking most of the current tax code for a set of flat taxes immediately. Economically it is right to do - to not wait.
And, as imperfect as 9-9-9 is, I believe it will benefit the economy and THAT benefit, more than the particulars could help sell the “Fair Tax” later on.
It seems the NRO, like the RINos is Congress is not really interested in changing the way Washington operates, or in changing one of the main vehicles for the corrupt shenanigans of Congress - the complex tax code with all its exemptions, exceptions and deductions.
IRS lover!
"Ah.. cute.. the RINO editors want to defend poor Mittens from that nasty, actually going-to-cut Gubmint conservative financial hawk, Herman Cain.
Why don't you all go and be editors at Politico where you can fit in with all your fellow progressives."
All the long knives are coming out for Cain, now.
I think the editors’ plan is Mitt Romney.
>>>>>>Cain’s ultimate objective is a 30 percent national sales tax
Hadn’t heard that one before. Prelude to a VAT.
What part hadn’t you heard before?
“...objective is a 30 percent national sales tax,”
30% seems a bit low. I have heard the total hidden taxes and fees amount about 45%. That would mean an item that cost a dollar buy now would cost $.70 plus $.30 national sale tax. The trick would making sure that no “group” is exempt from collecting or paying the tax.
The editorial wasn’t even well written.
And I didn’t like that the actual author didn’t put his name on it.
What you said, every word!
You’ve been on nearly every 999 thread bashing the plan for the last many days at least, and you just now have learned that Cain plans it as a transition to the Fair Tax?
Personally, I think this 999 plan may be better overall than the Fair Tax since both plans require reporting to the federal government, why bother with the back and forth of money the Fair Tax envisions (and how to determine who should receive their poverty level rebate)? Just leave this flat rate in place.
One of the best things about both 999 and FT are that it taxes tourists and visitors to the USA on their spending. They use our infrastructure and enjoy our electricity and national resources - let them help pay for it directly.
Exactly.
Their editorial made my eyes glaze over after about 50 words; I had to force myself to read it. And I am into these issues and well-versed on them.
NR’s dismissive droning is just the ticket to get their ideas even into the discussion. NOT.
They know as well as anyone that no plan — NO plan — such as this just gets taken to the Washington by the President and it appears the next day without a bunch of things having been hashed out.
To not be excited that for the first time ever the conservative dream of major tax reform is getting true traction — well, don’t let the door hit you on the buttocks, NR.
When Steve Forbes ran on a Flat Tax program, it was considered a political impossibility because that was then and this was now. But the same basic principles were at work in that proposal as in 999.
Isn’t National Review where Bill Kristol squats? If so, I think that they will back anything that Romney puts out.
I’m wondering why NR ignored the principles of 999: broadening the tax bax and lowering rates.
The impact of implementation of policies consistent with those two principles alone on the economy is indisputable. It creates an economic boom over time and increases government revenues.
That is all.
But, no, NR, let’s start droning on about “return to capital” and some such Ivory Tower dinner talk which could never accomplish what Cain has done — which is to get the base and the punditry engaged in a true debate about massive tax reform.
It’s not an additional 30%. The Fair Tax envisions a flat 30% tax on all new goods purchased at retail. That single tax would replace all other national taxes (you would still pay state taxes). The Fair Tax also envisions paying every citizen about $150 every 2 weeks, which is the amount of tax they would pay at the poverty level. That is the FTs way of making sure the poor do not get hit with 30% tax they cannot afford and currently do not pay.
I am not sure if the FT is passable in its current form. That 30% is scary high and people have no sense of perspective on it. Seniors will never go for it because they paid income taxes all their lives and now you ask them to pay 30% on sales?
The senior could go for 999 because they are not going to be taxed on any of their investment gains or capital gains. So they trade their 15$-30% tax rate on their IRAs, 401ks, SS income and other retirement money for a flat 9% sales tax. They would not, imho, trade it for 30% sales tax.
Well said!
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