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I heard Cain on Hannity's show yesterday. He was explaining his plan in supposedly simple terms so even the dumbest of us can understand it. Sean was giving him all the time he needed (because he complained that the debate format didn't give him enough time to explain it the other night - hence the apples and oranges comparisons).

I listened to it honestly with an open mind - and it was complicated. No sales tax on used vehicles, "used" houses, etc. I don't think this is going to work. It is not a simple plan at all - and there are still loopholes. Deductions for charity, but nothing else? This isn't going to fly & the end result will not look anything like he is putting it out as now.

That's OK - no one's plan is going to look the same after the years it will take to rehash it & get something that will actually pass through Congress. NO ONE'S plan will.

Cain has made this plan the centerpiece of his run - I just don't think there is much meat in the rest of his positions. He has made some gaffes - but he is likeable and talks well. He is a nice guy - but I don't think he is ready for prime-time yet.

For example, look at the concept of “no sales tax on used homes”.

In simplest terms, a “used home” would be a home that was not bought from the guy who built it.

But home prices are not based on new vs used. Homes, almost uniquely in the market, are treated as eternal assets. If my house burned down, and they rebuilt it from scratch, it would be unlikely to sell for much more than my neighbor’s house, especially if my neighbor also replaced all his appliances.

So, what is to keep a builder from greating a subsidiary that does nothing but buy the homes from the builder? The builder builds them, then the subsidiary buys them, at some fraction of their real cost. The subsidiary pays the sales tax. Then the subsidiary sells the homes as used homes on the secondary market, for double the price.

OK, that’s more like tax cheating. Let’s look at what would happen in a market of $500,000 homes. On a new home, the tax would be $45,000. On the used home, tax would be zero. So, the used home sales price would increase by $45,000, or more likely the new home would sell for $45,000 less. Why? because the market won’t maintain an inbalance. People only slightly prefer new homes over used ones, and won’t support a 9% premium.

And since the price people pay for homes is what they can afford, the new/used prices will adjust to reflect the extra cost.

I wonder if adding additions to a home makes it new? Because if not, a builder might find it better to buy out some shanty town, and simply “upgrade” the houses and sell them as used refurbished mansions.

I’m sure home builders will have to do something, because this tax will pretty much destroy them relative to the used market, especially in a time when there is already tremendous pressure because of the large foreclosure market.

I missed the interview but I have to wait until more analyis is done. Mr. Cain is a mathematician, so this is elementary to him. I’ve never done well at math, so I, too, find the details somewhat complicated unless they are explained at the crayon level. I have used the calculators on my income...and depending how much “New” I buy, I can impact my tax burden. My job is to then figure out just how much ‘new’ stuff I actually do buy...my car is used, my house is used, many of my clothes/furniture is used. I haven’t figured tht out yet.

I also wish the media would give more time to some of his other points. His ‘outgrow China’ has appeal. He’s still my candidate...looking forward to watching him speak in Detroit today. After decades of government throwing money at cities and seeing them continue to deteriorate, I’d like to se what he has in mind.

There are some “complications”, but one of the objectives behind the plan is to make imports subject to taxation, and lessen the taxation of US produced goods.

Any US produced good or service has in its price all levels of US taxation. Imports have none.

Similarly, items made in the US exported abroad carry in its price all levels of US taxation PLUS consumption taxes or the destination country.

So the US produced goods have harder time competing in the US and abroad.

Phase One of Cain’s plan helps significantly, Phase Two completely levels the playing field.