Ok, forget the candidates for a minute. Lets just have a straight up economic discussion of the plan.
The 9-9-9 Plan has some high points and some low points.
Some good points are the elimination of the death tax and payroll tax... If Republicans don't compromise away the good points of the plan.
On the downside, the IRS goes no where, income tax remains, America gets one step closer to a European-style Value-Added Tax, and the Feds can now tax us while we are coming and going.
And lastly, isn't America having a hard enough time exporting its goods overseas without additional taxes being put on them?
The 9-9-9 Plan has some high points and some low points.
Some good points are the elimination of the death tax and payroll tax... If Republicans don't compromise away the good points of the plan.
On the downside, the IRS goes no where, income tax remains, America gets one step closer to a European-style Value-Added Tax, and the Feds can now tax us while we are coming and going.
And lastly, isn't America having a hard enough time exporting its goods overseas without additional taxes being put on them?
Herman Cain's "999 Plan": The Good, the Bad, and the Ugly
And another analyst says that the plan is unrealistic and will have the same effect as a "27 percent uncapped payroll tax."The Bad
Cain doesn't get rid of the income tax. Instead, he reforms it. And then he adds a new levy -- a national retail sales tax -- on top of it. Why? Why doesn't he just get rid of the income tax at the start? The answer, most likely, is that if he proposed to eliminate the income tax in one fell swoop, while trying to raise the same amount of revenue as we do today, he would have to set the rate for the sales tax so high -- well above 9% -- that voters would balk. My guess is a national sales tax would have to be set at something closer to 25%, to raise the same amount we currently raise with the existing income and payroll taxes.***
No wonder Mr. Cain has fallen back to a two-step strategy: 9% is a teaser rate!
The Ugly
The second problem with Cain's plan is more serious than the first. It puts in place the infrastructure for a VAT, a Value Added Tax. That's bad. No, that's very bad.
Cash-register sales taxes have a habit of evolving into VATs. That's what happened in Europe. And that's undoubtedly what will happen here, if we adopt Cain's plan.
And if Cain's 9% personal flat tax failed to remain flat (as happened with Ronald Reagan's promising but ultimately failed 1986 tax reform), we would end up with the worst of both worlds: a confiscatory income tax and a job-crushing VAT.
Paradoxically, then, if you want higher taxes and permanently bigger government, one way to get there would be to support Herman Cain's 999 plan!
Cain's 9-9-9 Arithmetic Raises Revenue Generation Questions
“Herman Cain’s bid for the Republican presidential nomination is fueled in part by his proposed U.S. tax code overhaul that tax policy veterans say doesn’t add up.”
“Tax policy experts say Cain’s plan is unrealistic because it presumes that no deductions and exemptions will be permitted, no matter how popular.”
“Either Herman Cain is the tax messiah or is proposing a system that has no correspondence to real-world tax systems,”
“In practice, it will have the same economic effect as a 27 percent uncapped payroll tax.”