Posted on 11/11/2011 6:26:20 PM PST by goldstategop
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?
Cain also annouced a 909 plan...you have heard about it
I like the 9-9-9 plan. It’s actually an 8.75-8.75-8.75 plan but that doesn’t sound as catchy.
presidential candidate Herman Cain clarified his much talked-about “9-9-9” tax plan Friday, saying those who fall at or beneath the poverty level would have a different plan: “9-0-9.”
Cain took heat over his proposal, which replaces the current tax code with a 9% corporate tax, a 9% income tax and a new 9% national sales tax. Opponents have argued the middle part of the plan would increase taxes on the poor, who currently pay little to no taxes.
But Cain fired back Friday, saying in a Detroit speech that those paying no taxes now would continue to pay zero taxes under his plan.
“If you are at or below the poverty level, your plan isn’t 9-9-9 it is 9-0-9,” Cain said. “Say amen y’all. 9-0-9.”
TAX TEA NOW! The Tea Party candidate wants to tax tea—and everything else! And the Tea Party is buying it! It’s hilarious!
I can’t figure out for the life of me why people wouldn’t want to pay an 18% tax. Today the government confiscates 50% of people’s income at the top rate. People should pay LESS in taxes not more.
The opponents of this plan want to keep the high tax status quo. Our corrupt establishment thinks our taxes are too low!
That’s exactly what’s wrong with the thinking in Washington these days.
I prefer Newt’s plan..create jobs. The plan includes:
1.Stop the 2013 tax increases to promote stability in the economy. Job creation improved after Congress extended tax relief for two years in December. We should make the rates permanent.
2.Make the United States the most desirable location for new business investment through a bold series of tax cuts, including: Eliminating the capital gains tax to make American entrepreneurs more competitive against those in other countries; Dramatically reducing the corporate income tax (among highest in the world) to 12.5%; Allowing for 100% expensing of new equipment to spur innovation and American manufacturing; Ending the death tax permanently.
3.Move toward an optional flat tax of 15% that would allow Americans the freedom to choose to file their taxes on a postcard, saving hundreds of billions in unnecessary costs each year. This optional flat tax system will preserve deductions on charitable giving and home ownership, and create a new personal deduction of $12,000 for every American. This deduction is well above the current poverty level, ensuring that this new system does not unfairly target the poor.
4.Strengthen the dollar by returning to the Reagan-era monetary policies that stopped runaway inflation and reforming the Federal Reserve to promote transparency.
5.Remove obstacles to job creation imposed by destructive and ineffective regulations, programs and bureaucracies. Steps include: Repealing the Sarbanes-Oxley Act, which did nothing to prevent the financial crisis and is holding companies back from making new investments in the U.S; Repealing the Community Reinvestment Act, the abuse of which helped cause the financial crisis; Repealing the Dodd-Frank Law which is killing small independent banks, crippling loans to small businesses and crippling home sales; Breaking up Fannie Mae and Freddie Mac, moving their smaller successors off government guarantees and into the free market; Replacing the Environmental Protection Agency with an Environmental Solutions Agency that works collaboratively with local government and industry to achieve better results; and Modernizing the Food and Drug Administration to get lifesaving medicines and technologies to patients faster.
6.Implement an American energy policy that removes obstacles to responsible energy development and creates jobs in the United States.
7.Balance the budget by growing the economy, controlling spending, implementing money saving reforms, and replacing destructive policies and regulatory agencies with new approaches.
8.Repeal and replace Obamacare with a pro-jobs, pro-responsibility health plan that puts doctors and patients in charge of health decisions instead of bureaucrats.
9.Fundamental reform of entitlement programs with the advice and help of the American people.
We need pro-growth policies. I’m one of those conservatives who loathes austerity policies. I don’t think they’re politically viable - people can only tolerate being put on a diet for so long. Its human nature and honey is more palatable than bitter vinegar. There is nothing with America we can’t fix as long as we have the right policies.
If you have quoted Newt’s plan accurately which I believe you have, I have the following comments:
1. The IRS is still the IRS we know and “love” today
2. The IRS is still the IRS we know and “love” today
3. The IRS is still the IRS we know and “love” today
4. The IRS is still the IRS we know and “love” today
5. The IRS is still the IRS we know and “love” today
6. The IRS is still the IRS we know and “love” today
7. The IRS is still the IRS we know and “love” today
8. The IRS is still the IRS we know and “love” today
9. The IRS is still the IRS we know and “love” today
This country will never be great again until we have replaced the IRS with something less intrusive and oppressive. Just changing the tax rates isn’t going to cut it.
Secret knowledge to the math challenged... (Shuuush)..
9/9/9 is 27%.... true its a little less than whats paid now..
Most americans have no idea of what they actually pay in taxes..
That is.... the ones that pay taxes..
Course everybody pays taxes... business pay zero taxes..
It is passed on as the cost of doing business.. in “the price”..
TAXES are a major part of the price of ANYTHING you buy..
Federal, State and local taxes.. fees, penaltys, licenses, permits, citations, and other GRAFT..
People forget what Fascism “IS”...
hosepipe, I was doing the math on the 999 and do NOT like it at all. The national sales tax will vary depending on how much you shop, how far you commute (gas) and also have an impact on those living in countys or cities that have high sales taxes already
Yeah that is terrible. A 9-0-9 plan if you make less then $15,000. Rather then the 35-0-0 plan they pay now
Except you “do the math” by ignoring all the current taxes you will not pay under 9-9-9.
Cain is the only one who understands the real problem. How do you change a system that appaeras to divides the nation into 47% takers and 53% payers. You got to get everyone to realize they have skin in the game. That government does not “give them” anything. It merely takes from them indirectly to give them the illusion they are getting stuff.
Cain’s plan is the only one who makes the hidden taxes transparent.
“If you don’t want the rates raised, don’t elect politicians who will raise them.”
Oh, okay; problem solved! We'll just make sure the nation never elects anyone who would raise taxes again. Why didn't anyone else ever come up with that idea? Genius! Now we don't ever have to worry that the National Sales Tax will ever become repressive!
That is SERIOUSLY listed as the “solution” to Conservative concerns about giving the Liberal a brand new National Sales Tax. He's not joking.
Good argument by Mr. Cain.
I don’t think empowerment zones or 9-0-9 are good ideas,they are steps towards the complexity and favoritism we have now.
No, he cannot. Did not work for Reagan, will not work for Newt.
As long as you maintain a tax code where some pay and many take, you will not change the fundamental political dynamic. Our system encourages Government spending because the tax code hides the cost of that spending in the illusion that someone else pays for it.
Newt plan does not ever reconize the problem. The problem is he system itself is broken. We don't need to fix the system, we need to reboot it.
People have to stop electing politicians who promise them “free” this and “free” that. No such thing. We all pay for it even when we don’t see it.
Sorry real Conservatives would rather see serious tax reform then blindly cling to the current corrupt failed system based on nothing but blindly ignorant hysteric fear
909 sucks! Do not like his plan and will continue to support Newt.
9/9/9 is a ruse a shell game for the rubes..
It would turn into a VAT quickly..
It might take some time for it become 33/33/33, maybe not!!!..
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