Cain's Tax Mutiny. New national sales tax on top of the income tax is a political killer

Wall Street Journal ^ | Oct 7, 2011 | WSJ Editorial

[Clairity]

The real political defect of the Cain plan is that it imposes a new national sales tax while maintaining the income tax. Mr. Cain's rates are seductively low, but the current income tax was introduced in 1913 with a top rate of 7% amid promises that it would never exceed 10%. By 1918 the top rate was 77%.

Part of Mr. Cain's appeal is his willingness to challenge political convention, and he certainly has with his tax proposal. Voters like that he isn't a lifetime politician but a successful business owner who has met a payroll and created jobs. But his endorsement of a sales tax on top of the income tax is a political gamble that would eventually finance an even larger entitlement state. Better to reform the devil we know—the income tax—than to introduce another devil and end up with ever-rising rates of both.

[xzins]

DT...I just knew you weren’t a tax increaser. :>)

[Huck]

Is there a national sales tax right now? No, there is not. Cain is bringing a whole new avenue of taxation into the discussion. The good news is that I see that his plan is now getting a lot of attention, and it's getting the bad reviews it deserves.

If he really thinks it's so hot, he should run for governor and prove its merits there. But of course, he couldn't get out of a GA primary.

Cain reminds me of Huckabee, who also pitched the national sales tax boondoggle. Huckabee's big mistake was actually serving as governor and having a record. If he were just a talker, with no political record, he could do at least as well as Cain is doing now.

They have a lot in common though. Cain will parley his newfound fame into something lucrative. Palin's another one who did the same thing. Conservative shucking and jiving has become big business.

[fightinJAG]

Yes. But you can’t let process lead.

I agree with everything you say about the process and its pitfalls and tendency toward certain unfavorable results.

But process can’t lead the decision-making, IMHO. First, decide on the plan. Then determine whether the process can, somehow, some way, support (bring about) the plan.

If so, then go with it.

If not, THEN make a new plan or try to modify the process to support the plan.

All I’m suggesting is this author is saying the plan can’t work because the process won’t support, therefore the plan is bad. And that’s not good reasoning.

[cookcounty]

"Cain has specifically stated it would not apply to used items or housing."

[Response]: Cain's own website says no such thing. A 9% sales tax with no exceptions mentioned

You're right that his website needs to step it up on detail. But Cain has said more than once that it would not include housing or used items. None of the state income taxes include housing or used items-----for extremely obvious reasons.

[SoJoCo]

You're right that his website needs to step it up on detail. But Cain has said more than once that it would not include housing or used items. None of the state income taxes include housing or used items-----for extremely obvious reasons.

So Cain contradicts himself. Which version are we to believe?

[xzins]

If not, THEN make a new plan or try to modify the process to support the plan.

I'm a long-time fair tax supporter, so this is where I'm at. Any notion of a gradual transition to the fair tax is a little naive in my opinion. That notion needs to go back to the drawing board.

[ThomasMore]

When all is said and done, 999 whould have to be passed by congress, and it won’t. But a Hermen Cain POTUS would not frighten me...it would certainly be a 180 from Obama and a step in the right direction...and SOMETHING would be done about the deficit and spending and taxes.

[cookcounty]

"You're right that his website needs to step it up on detail. But Cain has said more than once that it would not include housing or used items. None of the state income sales taxes include housing or used items-----for extremely obvious reasons."

RESPONSE: "So Cain contradicts himself. Which version are we to believe?"

What contradiction?. His website says nothing about sales taxes on housing or used items, and in his speeches and interviews he has stated these would not be taxed. It defies common sense. How can you police garage sales? Next thing you'll be saying he wants to tax singing the national anthem because his website didn't say he wouldn't.

[JCG]

When all is said and done, 999 whould have to be passed by congress, and it won't. But a Hermen Cain POTUS would not frighten me...it would certainly be a 180 from Obama and a step in the right direction...and SOMETHING would be done about the deficit and spending and taxes.

Right on. Hearty applause!

----

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[SoJoCo]

His website says nothing about sales taxes on housing or used items, and in his speeches and interviews he has stated these would not be taxed.

If he's constantly making this stuff up as he goes along it's hard to gauge exactly what the impact of his plan is. For example, he claims that his 9-9-9 plan is revenue neutral. But if he's constantly adding things to the list of tax exempt items then it's hard to see how that is possible. What set of figures is he going from at any given moment?

It defies common sense. How can you police garage sales?

OK then how about this? I go to my local Ford dealer. If I buy a new car from him it's taxed an additional 9%. What if I buy a used car from him? Taxed or not? What about an existing house? A pair of pants from the Goodwill Store? Are those taxed?

Next thing you'll be saying he wants to tax singing the national anthem because his website didn't say he wouldn't.

Cain's site doesn't say that service charges are exempt. If I contract someone to sing the National Anthem then that is a service, and I would expect it to be taxed at 9% just like a furnace repair or a haircut or a doctor's visit.