Skip to comments.9 responses to 9 false attacks on the 9-9-9 plan
Posted on 10/17/2011 11:08:56 AM PDT by RockyMtnMan
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 doesnt 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? Thats why Im happy to see so much criticism of the 9-9-9 plan Ive 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 countrys economic problems, we are getting somewhere. This is not to say, of course, Im 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 employers 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 consumers 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 dont want the rates raised, dont 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. Whats 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 Im 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. Whats 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 its not necessary. The consumption tax replaces ones already embedded in prices. Its 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 doesnt 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 wont be paying more than before. Theyll 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 companys income. Second, we treat capital and labor the same, both with the corporate tax and with the income tax. That is fair and neutral. Whats more, the current system taxes both capital investment by business and capital gains by individuals. Thats a double tax, and the 9-9-9 plan eliminates it.
Claim 6: The numbers dont add up. The 9-9-9 tax wouldnt 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: Thats 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 youd have to dodge two taxes, not just one, to save the 18 percent. And by eliminating loopholes weve made that virtually impossible to do anyway. I dont 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 doesnt 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 wont 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?
This should be a lively thread. Cain himself addressing many of the same claims I’ve heard many times on FR.
And another bump
I love Cain, the headline on Drudge made me happy then I saw Zero was taking his tax funded black buses on another campaign tour, and that soured my mood!
But but but The establishment RINO’s told me he can’t win and this is nothing but a VAT!
I wish somebody would explain “bump” to me...but I guess it means to add interest to the thread....So...BUMP...BUMP..BUMP..MR. CAIN...CAIN...
We need to get rid of the rusty, crusty career politicians in Washington in order to restore the country back to it’s Constitutional Republic status! The president can only lead. We need fresh faces to follow! Scrape the Commies out of Congress, and happy days will be here again!
Read more: 9 responses to 9 false attacks on 9-9-9 http://www.wnd.com/index.php?fa=PAGE.view&pageId=356825#ixzz1b1UDSiTl
I use “bump” as a means to file away a thread for future reference.
Which appears to be identical to the source I posted. I got the link from the official Herman Cain page on Facebook. I’m assuming only official members of the campaign can post to the FB page and doubly so as Herman Cain.
I do think it is cool that Cain has a war room for damage control purposes, and HE is it! He is his own war room. Given my tag line, I having been wishing for more of that kind of gumption for my guy and for quite some time to no avail. Good for Cain.
Typically it’s used to move the story to the top of the latest/most active news list for greater visibility. Some people use it to “mark” the thread for later reading and others will use a “ping”.
I’m in the camp of “it won’t get out of Congress.”
Anyone who has looked at the Congress in the last 20 years knows why it won’t get out of Congress.
Simplifying the tax code strips Congress of their power.
Look at what happened after the Reagan tax reform of ‘86. We crushed the layer cake of brackets, got rid of dozens of cherished deductions and tax shelters in the code.
In the next 20 years, Congress sold their ability to put those back in to the highest bidders.
Selling tax code changes is 80% of the business of Congress and is the real source of their power.
Before the creation of the IRC, Congress wasn’t in session anywhere nearly as much per year as they are now.
The only way this plan gets through the Congress is a POTUS has to declare martial law, use the Marines to imprison all of Congress, pass it by fiat and get the country operating on it for two full tax years before releasing Congress from prison. Once people become accustomed to the reduction in paperwork and have sorted out the changes, they’d prefer that to the amount of money and time spent dealing with the current tax code, even if they’re paying some more.
I’ve resolved to never bash opponents only offer my opinion of their ideas. What stands out in this response from Cain is his statement:
“Politicians propose things that can pass. Problem-solvers propose things that can work.”
To me that’s a testament to his way of thinking and exactly what I want to hear.
I wouldn’t have any trouble voting for Perry but would much rather vote for Cain.
Sorry, I don’t have time to read links this AM. I have a bunch of Concerned Women of America coming to my house for a meeting shortly. God bless.
Yes, I have been wondering a little about Hillary. But, she would have to be begged first, and begged just as vociferously as she was publically dissed and dumped by her pals, who favored Obama. She likely will let them all stew in their own juices, however, and she will retire relagating them all to kissing her feet for their errors and responding to anything and everything she asks in the future. This will include all things Chelsea, her pet projects, her political endorsements, etc. BHillary will be the permanent sages of the Left into oblivion. All that “smart power”.
In 2010 Congress got a strong message from we the people, I suspect in 2012 it will be stronger..those in Congress who survive 2012 will probably be running for the Cain Train to hop aboard...and not be left behind. Think sea change.
“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 dont want the rates raised, dont 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...any plan could be criticized for what it would look like if someone messed it up. The plan as Im proposing it is a huge improvement over the status quo.”
This is the most substantive of the criticisms levied against 9-9-9 and he pretends it’s not important by saying essentially that “well, any plan could be twisted by bad politicians.” Not if the income tax were entirely repealed first instead of following this incremental step towards doing that. I don’t understand why Cain thinks 9-9-9 is a step we need to take if he really supports the Fair Tax and limited government. Just saying “we’ll make everything 9,” doesn’t stop the next wave of Rats from saying, “Well, let’s just make it 10, shall we?”
And even without that omission, these responses don’t address the most cutting criticism of Cain: he is not in the least a reflexive, principled conservative. He supported the TARP bailout in the strongest language possible, to the point that he wrote articles extolling the virtues of a bailout. He endorsed ROMNEY in 2008. The man is simply not cut out to be a leader for the right.
I’ll add my bump too.
Palin and Perry endorsed TARP also. Which of the candidates currently running opposed it?
Face it folks. Cain's 999 tax plan is more a political ploy then anything else. Its a gimmick to hoodwink conservatives into supporting his plan and voting for Cain in the primaries.
I like certain aspects of Cain's plan. Personally I support a flat federal income tax and the abolishment of corporate taxes and capgains taxes, or at the very least a significant decrease in both. But even that is not doable in todays political climate.
A return to the Reagan tax rates of 1988 would be a step in the right direction. Better yet, Congress needs to address the biggest issue today. Cut spending!
I think what he is saying is there is nothing stopping politicians from implementing a national sales tax right now. He addresses the rate change issue much the same way but also adds the salient point that those who don’t pay much or any now would not be inclined to see the rate rise.
The 9-9-9 plan makes much of end of payroll taxes offsetting the sales tax, but retirees have already paid payroll taxes and now they pay income tax on their pensions and withdrawals from 401ks. So retirees appear to pay 18% with no offset via the end of payroll taxes. Why is this a fair deal for retirees or workers who have already paid payroll taxes for years? (This is not a statement, I’m looking for an answer.)
Rush just said that Ron Paul has the right idea with his plan to cut $1+ Trillion in government spending.
I agree with Rush, Cain’s National Sales Tax & Spend Scheme is a terrible idea. What is needed is a cut in government spending, not a New Tax like Cain’s National Sales Tax to give the politicians more of our money to waste.
... He endorsed ROMNEY in 2008....
what were his other options?
“It virtually eliminates the massive compliance costs of the current tax code, and it restrains the size of government.”
I’m pretty sure he’s on board with cuts in spending. He obviously subscribes to a “starve the beast” approach so I’m sure he’ll present his views on cuts if he hasn’t already.
The one two punch of supply side economics is to lower taxes and reduce spending at the same time. Expanding the base and reducing spending both have the same effect of lowering the cost of government.
Yes he supports cuts. Its easier for some to suggest he doesn’t.
I think he is releasing his plans, slowly, bit by bit. This does a couple of things. It allows for discussion on each piece as its released and it helps to prevent information overload. I really do think that he wants people to understand his plans.
I’m hoping that he wins in 2012 and shames Congress into passing it. I know it will go against everything Congress stands for since it will strip their power away. Let’s face it, Congress derives power from concocting these tax loopholes.
Im in the camp of it wont get out of Congress.
I’ve heard this argument before and as a spouse to a retiree, it interests me a lot, too. I’m voting for him though, because I think this is the best deal for my kids and grandchild.
Also posted here:
If it can’t be passed, it really doesn’t matter if it works, does it??
I believe he mentioned on Sunday that SS is not taxable as it was already taxed. Neither is dividend income like the growth on a 401K. I believe that answers your concern.
Cain has not proposed any cuts in government spending. Cain’s only proposal is a Liberal Tax and Spend Scheme.
Not if the income tax were entirely repealed first instead of following this incremental step towards doing that.
Considering his tax plan eventually has no income tax, I think He’d be on your side.
Meanwhile, he’s proposing drastic improvements, even if they are reversible (though he explains why that becomes unlikely politically).
Under the plan 401k portfolios would rise in value significantly with a corporate tax rate of 9% and the elimination of the capital gains tax. The cost of goods and services would also fall with the elimination of the payroll tax.
As for fair, the SS administration says it will be insolvent before I retire, making my rate of return on contributions $0.
A booming economy will do more to save SS than the current tax code would ever do. Retirees should be more concerned about that instead of buying new goods and services. It also sounds as if “empowerment zones” would potentially buffer the impact on retirees.
Cain is nothing more than a Stalking Horse Candidate for Romney to split up the Conservative Vote so that Romney can win the nomination with less than 30% of the vote. Cain endorsed Romney in 2008 and he will endorse Romney again in 2012.
Didn’t see the dupe when I posted, maybe my FR search skills are lacking. :-)
He supported the TARP bailout in the strongest language possible, to the point that he wrote articles extolling the virtues of a bailout.
Government shouldn’t pick winners & losers
Q: Mr. Cain, you initially supported the TARP program?
CAIN: I studied the financial meltdown and concluded on my own that we needed to do something drastic, yes. When the concept of TARP was first presented to the public, I was willing to go along with it. But then when the administration started to implement it on a discretionary basis, picking winners and losers and also directing funds to General Motors and others that had nothing to do with the financial system, that’s where I totally disagreed. The government should not be selecting winners and losers, and I don’t believe in this concept of too big to fail. If they fail, the free market will figure out who’s going to pick up the pieces.
Source: 2011 GOP primary debate in Manchester NH , Jun 13, 2011
The 9-9-9 plan makes much of end of payroll taxes offsetting the sales tax, but retirees have already paid payroll taxes and now they pay income tax on their pensions and withdrawals from 401ks. So retirees appear to pay 18% with no offset via the end of payroll taxes. Why is this a fair deal for retirees or workers who have already paid payroll taxes for years? (This is not a statement, Im looking for an answer.)
2. Your contributions to your 401k avoided a 28%+ (?) marginal income tax rate. They will eventually be taxed at 9%. Sweet deal for your generation!
3. We need a humming economy to be able to afford to keep your checks coming from the earnings of current workers who have little hope of receiving the same benefits without drastic change.
4. The sales tax will merely reveal the embedded tax in goods, not necessarily increasing the total cost.
5. If those whose earnings become your monthly check are celebrating this plan, you might want to keep the golden geese happy by supporting it too.
6. It might cost you something to save our nation from socialism. Wouldn’t that be worth it?
All part of the ol' switcheroo. Can you imagine how little preparation the GOP would have after buying all its advertising for a run against Obama if the Slave Party pulled it at the convention?
This is why I have advised conservatives not to run against "Obama," but to direct their attacks against "Democrat policies," linking them directly to socialism. It helps especially in the run to take back the Senate, and this time, we cannot suffer a center-left majority that is only nominally Republican. This is where the GOP really hurt us in Nevada and New Jersey in 2010. Having those two Senate seats is a big deal when the turnover is only one third of the Senate every election.
Cains National Sales Tax & Spend Scheme is a terrible idea. What is needed is a cut in government spending.
Cain’s outline of his spending cuts are on his website, and have been for some time.