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Where Cain's 9% Came From
Vanity | 10/15/2011 | Self

Posted on 10/15/2011 10:09:54 AM PDT by rob777

There has been a lot of talk regarding where Cain got his 9% number for the income tax, sales tax and corporate tax. Apparently a full analysis was done by economist and former assistant to the director of the Office of Tax Analysis for the U.S. Treasury Gary Robbins. Robbins thinks that the plan would work economically, but would not sell politically:

“You’re trying to go to a system that taxes income once and only once and quits double-taxing savings,” Gary Robbins told POLITICO on Wednesday. “That’s something that can really juice the economy, it’s probably worth 15 percent in growth. … The problem with the big-bang changes like that, the flat tax or the fair tax, is that they are so alien to the current system that it would be a great big shock.”

Though Robbins says the plan would work fiscally and economically, he believes people would never accept such drastic changes.
http://caucuses.desmoinesregister.com/2011/10/12/herman-cains-9-9-9-analyst-its-a-theory-not-a-solution/

The actual number that would allow the plan to be revenue neutral is 9.1% (See table 10c on page 8: http://www.politico.com/static/PPM191_111012_999scoringtables.html


TOPICS: Politics/Elections; Your Opinion/Questions
KEYWORDS: cain
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So, the trick is to be able to sell the proposal to the public and prevent it from morphing into higher rates.
1 posted on 10/15/2011 10:09:58 AM PDT by rob777
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To: rob777

I’m just glad that for the first time in a LONG time, we have a leading candidate talking about scrapping the current tax system, and people are taking it seriously.

The debate is long overdue.


2 posted on 10/15/2011 10:18:10 AM PDT by Atlas Sneezed (Author of BullionBible.com - Makes You a Precious Metal Expert, Guaranteed.)
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To: rob777

I’m not sure if I’m totally in favor of this exact configuration but any consumption based tax has one BIG selling point which is not stressed enough by the sellers. That point being it gives the taxpayer some level of control of their taxes paid.

The taxpayer can buy a cheaper version of a product, defer the purchase or not purchase a product at all.

That has to scare the big spenders big time. People can vote for the government with their pocket books. The boycott will become a potent weapon.


3 posted on 10/15/2011 10:20:36 AM PDT by ImJustAnotherOkie (zerogottago)
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To: rob777
I believe Cain is proposing a two-thirds vote for any future increase in rates.

And, while the current nightmarish tax code means it is easy to slip in a hidden increase without anyone really noticing, under Cain's plan, if you do get two-thirds of congress to increase the sales tax (let's say) from 9% to 12%, it becomes VERY obvious to the constituents exactly who needs to be voted out of office.

I think 9-9-9 would have great longterm stability and businesses would really be able to project growth plans for years into the future.

4 posted on 10/15/2011 10:22:58 AM PDT by ClearCase_guy (I won't vote for Romney. I won't vote for Perry.)
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To: rob777

I believe that Cain himself said that The Lord asks for %10 so the Government should ask for less. Sounds good to me!


5 posted on 10/15/2011 10:23:21 AM PDT by frogjerk (Today is already the tomorrow which the bad economist yesterday urged us to ignore. - HAZLITT)
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To: rob777

i agree about both the potential of 999 and the danger.

The danger is that it turns into 30 - 50 - 20 like europe

nevertheless, i commend Mr Cain for putting this forward


6 posted on 10/15/2011 10:23:26 AM PDT by Reverend Wright (you voted for him to prove you're not racist, now vote against him to prove you're not stupid...)
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To: rob777

It’s the first legit step to an eventual flat tax. I like.


7 posted on 10/15/2011 10:24:53 AM PDT by cranked
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To: rob777
quits double-taxing savings

Actually, when first implemented, it WOULD be a form of double taxation, because (assume for example that you have saved dutifully for retirement and paid your (exhorbitant) income and capital gains taxes for 30+ years) you will be taxed again as you spend savings that you have already paid significant taxes on.

8 posted on 10/15/2011 10:26:02 AM PDT by Optimist
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To: Reverend Wright

Yikes, I read your post and saw Mr Cain as McCain initially- scary


9 posted on 10/15/2011 10:26:06 AM PDT by petercooper (2012 - Purge more RINO's.)
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To: rob777
http://www.freerepublic.com/focus/f-news/2792843/posts

Story: I think Nine-Nine-Nine is a wonderful plan. "I think a lot of the candidates have very good plans for tax reform, but I love the Nine-Nine-Nine Plan. I think it's a great first step [this key].”

-- Economist Arthur Laffer, top tax adviser to President Ronald Reagan, on “ Special Report" with Bret Baier.”

House GOP Budget Boss Paul Ryan told the Daily Caller he “loves” Cain’s plan.

In Republican circles those are two very big boosters, especially for a guy who is said by critics to lack the intellectual heft to be president. Laffer and Ryan both have their own ideas about taxes, but agree Cain’s proposal for replacing the current federal tax structure with a 9 percent tax on corporate profits, a 9 percent national sales tax and a flat 9 percent income tax would be a big improvement over the current convoluted system.

One of the biggest knocks on Cain has been his instance on not identifying his economic advisers other then Rich Lowrie, a Cleveland-based investment adviser. The revelation that Cain consulted with Laffer on the plan and the praise from Ryan, the heartthrob of fiscal nerds everywhere, will go a long way in adding some credibility.[quotes]

But you will never educate those who do not wish to be educated and especially those who still do not even know who the VP is as recently shown segment on the popular NJ Housewives reality episode (Teresa Giudice).

More on link Laffer[Curve]/Ryan[above] and charts of the Harding-Coolidge cuts of the mid-1920s; the Kennedy cuts of the mid-1960s; and the Reagan cuts of the early 1980s.

Cain-Ryan Ticket?

10 posted on 10/15/2011 10:27:58 AM PDT by fight_truth_decay
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To: ClearCase_guy

Only allow tax increase votes during a presidential election cycle. That would tame any desire to raise the tax rates.


11 posted on 10/15/2011 10:30:37 AM PDT by fudimo
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To: ClearCase_guy

That’s what scares the politicians, how obvious an increase in taxes would be.


12 posted on 10/15/2011 10:30:47 AM PDT by skr (May God confound the enemy)
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To: rob777

A big shock is just what the system needs.
I’m thinking nuclear.


13 posted on 10/15/2011 10:32:19 AM PDT by gfbtbb (The answer to your question will not be found here.)
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To: gfbtbb
"A big shock is just what the system needs."


It certainly does.
14 posted on 10/15/2011 10:39:04 AM PDT by rob777
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To: ImJustAnotherOkie
taxpayer can buy a cheaper version of a product, defer the purchase or not purchase a product at all.

Or, buy used, or barter.

15 posted on 10/15/2011 10:40:00 AM PDT by afraidfortherepublic
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To: rob777

Actually it came from the German word for “No”. When asked by the German magazine “Der Speigel” if he could ever live through another 4 years of Obama, Cain banged his fist on the table and replied: “ Nine nine nine!”


16 posted on 10/15/2011 10:40:09 AM PDT by GrandJediMasterYoda (Mark Halperin - Learned the hard way what happens when you speak the truth on PMSNBC.)
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To: cranked

Correction. It is the first phase of a two phase plan. Phase 2 is the FairTax.

Another misconception is that the tax would be added at the cash register at the time of purchase. It is applied to the retail cost of the item at time of manufacture. When the other taxes on manufacturers are reduced and eventually eliminated, this tax will result in keeping the profit margins very close if not greater once all the federal fees, taxes and regulations that have been swept away.


17 posted on 10/15/2011 10:41:17 AM PDT by mazda77
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To: rob777

How is asking that I pay 9% sales tax on top of money I already have been taxed on and have in savings not a double tax?

Mr Cain needs an exemption for current savings.


18 posted on 10/15/2011 10:42:38 AM PDT by mylife (The Roar Of The Masses Could Be Farts)
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To: Beelzebubba

While I am strongly against a national sales tax before repealing the 16th amendment, I agree the current systems sucks. Failing repeal of the 16th, I would like to see a flat tax that EVERYBODY pays. As you stated, this debate is long overdue.


19 posted on 10/15/2011 10:43:18 AM PDT by jospehm20
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To: Optimist

Exactly.


20 posted on 10/15/2011 10:43:35 AM PDT by mylife (The Roar Of The Masses Could Be Farts)
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To: afraidfortherepublic

And that is going to kill sales of new goods.
I have problems with Mr Cains plan.


21 posted on 10/15/2011 10:45:14 AM PDT by mylife (The Roar Of The Masses Could Be Farts)
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To: Reverend Wright
The danger is that it turns into 30 - 50 - 20 like europe

Currently, raising taxes is usually an exercise in class warfare by targeting the rich and our collective envy lets us rationalize such theft is a public good, especially if we get some of the redistributed booty.

But, greed and envy aren't very good checks and balances against ever increasing taxing and spending. We simply elect more politicians who'll spread it around and here we are.

But, with everyone paying into the tax system, you have the ultimate check and balance of equal participation, thus greater scrutiny of what the taxes are and how the tax revenue is being spent.

With equal participation, any politician who raises taxes, raises YOUR taxes. Sound good to you?

The demonrats LOVE to raise taxes, but that only works if they raise someone else's taxes.

Are you going to vote for someone who raises YOUR taxes?

I hate discrimination and I applaud and support equal treatment for all, so I think the idea is brilliant.

22 posted on 10/15/2011 10:45:29 AM PDT by GBA (The Constitution and conservatism must win in 2012!)
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To: rob777

Under Mr Cains plan, your $9.99 pizza will cost $10.89 PLUS state sales tax.


23 posted on 10/15/2011 10:47:13 AM PDT by mylife (The Roar Of The Masses Could Be Farts)
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To: GBA

The first danger is that it opens a new revenue conduit to the Gov.
A national sales tax.


24 posted on 10/15/2011 10:49:15 AM PDT by mylife (The Roar Of The Masses Could Be Farts)
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To: mylife

We’re already double and triple taxed under the current federal tax system:

I pay fed taxes out of my paycheck. Taxed once. I put the rest in a savings account, but later have to pay the “unearned” income tax on my interest. Taxed twice. When I take some of my savings to buy gas, a pack of smokes, or a bottle of booze, then I’m taxed a third time.


25 posted on 10/15/2011 10:50:19 AM PDT by kevao
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To: rob777

Correct, I think the debate will soon shift from “is 999 a good idea” to “how could this actually be done”? And here Mr. Cain’s brilliance comes through, because he’s going to have top brains across the country working to answer that problem and vying for airtime to explain how it might be done - all for free!

To those like Robbins who like the idea but worry about the practicality, “let now your heart be troubled”....

America has risen to the challenge of big, bold ideas before, remember?

“I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the Moon and returning him safely to the Earth.”

We did that, and we can do this too.


26 posted on 10/15/2011 10:52:02 AM PDT by bigbob
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To: Reverend Wright

There is nothing to stop the current tax rates from being raised 20-40-50%

This fear that some day someone may raise 9-9-9 is totally misplaced. The same fear applies even more so to the current tax code.

Congress can simply raise the existing tax rates any time they want. Changing over to a more broad based tax in exchange for eliminating all the current corrupt gimmicks, loopholes and double taxation in the current code is something any Conservative should be for.

It also has the added advantage of making raising taxes much hard then it currently is. Now taxes can passed off as “a tax on business” or “making the rich pay their fair share”. Under 9-9-9 everyone pays so everyone knows they personally will pay more if taxes rates go up.


27 posted on 10/15/2011 10:57:26 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: rob777
The reason Obama won in 2008 is because he co opted the Conservative platform of lowering taxes. He was lying, but that's what he did. Cain or any Republican cannot win by promoting new taxes even if in the long run it lowers taxes. The person who wins is they guy that says I am going to save you money and get you more. Obama is going to say it by tell us he is going to take it from the rich and give it to the poor. The Conservative has to say I am going to take it from the Government and let you keep it and I'm going to help you make more.
28 posted on 10/15/2011 10:57:38 AM PDT by txroadkill (Antlers up! The Claw must be feared!)
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To: mylife

“And that is going to kill sales of new goods.”

Not true. Those who can afford new, will still buy new. People like me, who can’t currently afford to buy new will save enough income tax to buy more things new (yay)

Those who can’t afford to buy new, shouldn’t really be buying new anyway.

Food and medicine is another discussion, but reducing the 22% embedded tax will offset the sales tax on those things anyway.


29 posted on 10/15/2011 10:58:47 AM PDT by justsaynomore (Cain 2012 - http://teamcain.hermancain.com)
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To: rob777

If this pasased no one except the very rich would ever be able to afford a home again.

Sub contrators work on a very small margin, 5% or less and since his plan doesn’t allow business to deduct wages, which is 80% of the cost, the cost of housing would at least double!

Stick youe 999 plan where the sun doesn’t shine!


30 posted on 10/15/2011 10:58:57 AM PDT by dalereed (uity wise!)
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To: mylife

Only problem with that Perrybot attack line, as has been pointed out to you hundreds of times on other threads when you repeat the same fraudulent attack line, is that same fear applies much more to the current tax system

There is nothing to stop the current tax rates from being raised 20-40-50%

This fear that some day someone may raise 9-9-9 is totally misplaced. The same fear applies even more so to the current tax code.

Congress can simply raise the existing tax rates any time they want. Changing over to a more broad based tax in exchange for eliminating all the current corrupt gimmicks, loopholes and double taxation in the current code is something any Conservative should be for.

It also has the added advantage of making raising taxes much hard then it currently is. Now taxes can passed off as “a tax on business” or “making the rich pay their fair share”. Under 9-9-9 everyone pays so everyone knows they personally will pay more if taxes rates go up.


31 posted on 10/15/2011 10:59:14 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: mylife
How is asking that I pay 9% sales tax on top of money I already have been taxed on and have in savings not a double tax?

Because you already pay a hidden sales tax of 27% to 30% on all items you purchase via the Corporate tax that will be reduced to 9% (not to mention the costs involved in managing the tax system that won't be part of the overall expenses of COGS).

32 posted on 10/15/2011 11:00:02 AM PDT by mnehring
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To: mylife
No it will not. Since your $9.99 pizza will now cost $7.77 since the business is no longer paying all the hidden business taxes and fees to make the pizza and pasting those costs on to you.

But you know that since it has been explained to your little Perrybot mind several hundreds of times before.

33 posted on 10/15/2011 11:01:14 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: mylife
I have problems with Mr Cains plan.

No you don't. You have a problem that Mr Cain is kicking Rick Perry's butt. That is your real problem

34 posted on 10/15/2011 11:02:13 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: mazda77
"Another misconception is that the tax would be added at the cash register at the time of purchase. It is applied to the retail cost of the item at time of manufacture."


That, I did not know. The question is how a manufacturer is to determine the retail cost of an item. Manufacturers deal in wholesale costs.
35 posted on 10/15/2011 11:02:57 AM PDT by rob777
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To: MNJohnnie

My argument is that a national sales tax gives the Gov one more way to tax us.
It gives them a new tool.
It also unfairly taxes current savings which have already been taxed.

What has any of that to do with Rick Perry?


36 posted on 10/15/2011 11:03:14 AM PDT by mylife (The Roar Of The Masses Could Be Farts)
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To: mylife
And that is going to kill sales of new goods.

Maybe. Maybe not. You can't buy everything used. And bartering only goes so far. The government may swoop in to tax garage sales, etc.

37 posted on 10/15/2011 11:04:25 AM PDT by afraidfortherepublic
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To: mylife
And the check and balance is We, the People who actually pay that tax.
38 posted on 10/15/2011 11:04:27 AM PDT by GBA (The Constitution and conservatism must win in 2012!)
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To: justsaynomore

What of food and medicine? Has Mr Cain given any details? Or are we to HOPE that it all works out well?

I want answers, not just a bunch of crowing.


39 posted on 10/15/2011 11:05:42 AM PDT by mylife (The Roar Of The Masses Could Be Farts)
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To: rob777

>The problem with the big-bang changes like that, the flat tax or the fair tax, is that they are so alien to the current system that it would be a great big shock.”

.. the only shock would be the loss of jobs for 16,000+ IRS criminals


40 posted on 10/15/2011 11:06:23 AM PDT by SF_Redux (Sarah stands for accountablility and personal responsiblity, democrats can't live with that)
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To: rob777

Even if the plan worked politically, it would not work fiscally. If it is revenue neutral then it would still leave a deficit of well over a trillion dollars. I’ve heard no specifics on how Cain would eliminate that. Of course, none of the other candidates have done any better.


41 posted on 10/15/2011 11:06:48 AM PDT by SoJoCo
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To: mylife
Under Mr Cains plan, your $9.99 pizza will cost $10.89 PLUS state sales tax.

So what's your point?

You have $5.00 more in your wallet when the delivery kid shows up.

42 posted on 10/15/2011 11:06:57 AM PDT by Cobra64 (Too many people are incapable of critical thinking. Common sense isn't common anymore.)
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To: GBA

Mr Cain is calling on the Super Committee to implement his plan.
How does cutting out the Congress and reducing decisions to a panel of 12 represent “checks and balances”?


43 posted on 10/15/2011 11:08:08 AM PDT by mylife (The Roar Of The Masses Could Be Farts)
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To: ImJustAnotherOkie

So, people can take a lesser-paying job, work fewer hours, etc., in order to control how much income tax they pay.


44 posted on 10/15/2011 11:09:10 AM PDT by 9YearLurker
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To: mylife

Or maybe the 9.99 pizza will be $7.00 because of all the hidden taxes already built in?


45 posted on 10/15/2011 11:09:10 AM PDT by Cold Heart
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To: Cobra64

My point is that its a double tax on current savings.


46 posted on 10/15/2011 11:09:24 AM PDT by mylife (The Roar Of The Masses Could Be Farts)
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To: mylife

Perry should drop out. Otherwise, he’s just playing spoiler to siphon away just enough duped conservatives to throw the nomination to Romney.

So, stop slinging mud at real ideas and get to work on convincing the phony from Texas to go back there.


47 posted on 10/15/2011 11:09:24 AM PDT by perfect_rovian_storm (Perry's idea of border control: Use both hands to welcome the illegals right in)
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To: ImJustAnotherOkie
The taxpayer can buy a cheaper version of a product, defer the purchase or not purchase a product at all.

Which cuts demand for the goods produced by business. What effect will that have on the economy?

48 posted on 10/15/2011 11:10:28 AM PDT by SoJoCo
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To: ClearCase_guy
I believe Cain is proposing a two-thirds vote for any future increase in rates.

Not good enough. This is where my 99 Plan comes in. Taxes can't go up unless 99% of the Congress votes in favor of it.

49 posted on 10/15/2011 11:10:57 AM PDT by Hoodat (Because they do not change, Therefore they do not fear God. -Psalm 55:19-)
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To: Cold Heart

Show me the math.


50 posted on 10/15/2011 11:11:43 AM PDT by mylife (The Roar Of The Masses Could Be Farts)
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