Superstar WaPo blogger Jen Rubin is not a fan of Herman Cain’s tax plan and its VATastic aspect:
What is interesting is that, far from being an anti-Washington tax scheme, Cain’s 9-9-9 plan resuscitates one of the worst, old ideas floating around European capitals and Washington. Moreover, it repeats one of the central flaws of past VAT schemes; it doesn’t replace the income tax code, it adds another new tax and revenue stream.
A few thoughts here: a) I come down on the side that Europe has embraced value-added taxes to fund its love of big government, not that VAT revenues necessarily drove the expansion of government; b) I think a VAT would be a great replacement for the current income tax system. My preference is a VAT along the lines of the Hall Rabushka flat consumption tax. It would end the bias against investment and in favor of consumption. Very pro-growth; c) I don’t buy the idea that the VAT would be a hidden tax, especially with a H-R variety where firms get to deduct wages as a cost—but then those wages are taxed at the household level.
But clearly, whatever the economics of the Cain plan, it is running into some political trouble, particularly the sales tax piece. Here are some stunning, jaw-dropping comments from the Wall Street Journal’s Steve Moore on Larry Kudlow’s radio show on Saturday (which I was also on):
I love the idea [of a 9 percent national sales tax]. As you know, Art Laffer and I helped design the plan. But I’ve come to the conclusion that the American people and the voters do not want a national sales tax. He’s going to have to replace that national sales tax with a 9 percent payroll tax. And if you do that it’s a total winner. … I’m surprised how hostile people are to the sales tax. When we designed this plan, I thought people would go along with the 9 percent sales tax. But the point is they won’t. And why not just do a payroll tax. It’s the devil we know …
Then Kudlow asks Moore if he is going to tell Cain to pull the sales tax:
Yeah, yeah I am. … But I want to be very, very clear on this. I am not bearish on this plan. If you could put in place the 9-9-9 plan, oh my God, it would be like steroids in the economy. … You would have a million jobs a month if we put this in place. … I love the concept of it … But the American people will not go for a national sales tax. They’re just afraid of it. …
The whole concept of a nat’l sales tax does seem to be hated… interesting angle. Thanks for sharing.
Unfortunately in our current system, the people who get the most benefits from Federal taxes, contribute very little or nothing in Federal taxes. What I do like about a national sales tax, is that now we would have a broader base, even illegal immigrants who game the system would have to contribute.
Maybe the Cain campaign should put together a Youtube video helping people understand the tax.
Citizen Cain isn’t the first “candidate” to be manufactured by a corporation nor the first to be their spokesperson, however camoflaged. That “honor” goes to RRR, Rotten Ronnie Reagan who was rebuilt as an animatronic robot in the subbasement of General Electric’s laboratories and then sent out to deliver “THE SPEECH” with which he traveled the country for years, much as has Citizen Cain. Like Cain, Reagan was often described as “sunny”,”upbeat”"optimistic”in his message and his delivery. Look what happened. In 1980 Reagan began the economic genocide against the middle class that has been going on ever since. The Koch brothers, major funders of the Cato Institute and the Heritage Foundaton, two right wing propaganda mills, and co-creators of the Tea Party along with Slimebag Murdoch and his creature, the Frankenstein News Network, dd for Citizen Cain what GE did for Reagan. GE got its money back a thousand times over as Reagan ballooned the “defense” budget, trebling the naional debt by favoring the nation’s largest defense contractor. The Koch brothers naturaly expect a great return on their investment a well. Koch Industries would love the opportunity to pollute the air and water and would find it easy to do when Cain cripples the EPA. The sad fact is that the entire Republican field has made only one contribution: it offers a partial solution to the national energy crisis as, whenever any on of them speaks, the volume of flamable methane belched forth is greater than that produced by all the flatulent cattle in Texas.
“You would have a million jobs a month if we put this in place.”
Moore is not one to be telling anyone anything. The Clinton administration averaged under 2 million new jobs a year over an 8 year period which is the highest average since records were kept. Mr Moore apparently believes Cain’s 9-9-9 plan would create 12 million a year although its not clear why especially when taxpayers are paring down debt loads. It’s OK to be optimistic, but at some point one should actually examine the BS they’re slinging to see if it makes any sense.
I am in total agreement with Moore on this plan, and the fact that Laffer backs it 100% is a HUGE selling point for me (and should be for anyone familiar with economics). I think what Cain needs to do is create real examples for the American public, in order to get past the fear of the VAT. He’s started doing this a little bit, but I think he really needs to hammer his points repeatedly by real-life examples: a single parent making 45k a year …. a college student with a part time job …. a family of four with one working parent – AND that same family with BOTH parents working. Examples like that will make it easier for the public to say, “OK, I ‘get’ his plan, because MY situation is the ‘family of four with both parents working’ angle.” That will make it easier for people to decide whether it’s something they can get behind or not. Cain should also describe in detail what his plan does for a wealthy person – because people will want to know exactly what happens under that scenario as well. If the public thinks this tax code is essentially just like the one we have now – in that it’s tilted against the poor, and for people who can hire lawyers to reduce their tax bill – then it will NEVER happen … and the liberals will stab it to death.
One thing that I think is clear, though …. even if Cain becomes President, he’s going to need the GOP in control of BOTH houses of Congress to even have a prayer of getting this through; if Republicans don’t win the Senate, then this is a moot discussion. Voters aren’t paying enough attention to that point, I think; conservatives MUST take control of the Senate if we’re going to correct a lot of the damage Obama’s done – otherwise, Harry Reid will just spend all his time being a roadblock to any meaningful reform of ANYTHING, just to spite Republicans for the Dems losing the White House.
it’s the sales tax aspect that levels the playing field for all, and it’s a small give-back
in comparison to the substaintial drop in personal income tax down to a mere 9%
also .. since there’s no other federal taxes imposed anywhere save for the 999,
that means no “hidden” taxes such as a VAT .. the baker buys the flour from an american
supplier and is not charged ANY tax on same to pass on to the retailer in the price of
the loaf of bread he bakes with that flour .. he sells the bread to an american retailer and is not charged ANY tax to collect for doing so, and the retailer can thus pass on a lower sale price
to the consumer … multiply that by every item in every store … and weve got ourselves
a kick-start to the economy
beeper45 – can you please tell us in which country that operates a national consumption tax such as a VAT or GST (Goods and Services Tax – as it’s know througout much of the rest of the world beyond/outside Europe, e.g. Canada, India, China, Australia, Brazil…) is the VAT hidden? By hidden do you mean the consumer’s don’t know they are paying it? In every single country I have been to where I have paid the VAT / GST, I merely need to look at my receipt to see the amount of VAT/GST I have been charged. Perhaps you are confusing a VAT with a sales tax which is an archaic and still popular way to tax folks throughout the US at the state and local level. But, please do share with us where + how a VAT is hidden. Its interesting too that for all the people who think a VAT is a bad idea, very few of them are in any of the 150 or so countries that have embraced a VAT / GST.
your example is fantastic. A foreign bakery imports US flour to export his bread back to a US retailer?
A VAT would work to ensure that imports into the US are taxed at the same VAT rate as similar products sold domestically, thus creating a level playing field. This would go a long way towards ensuring that imported goods from say Canada, or China, or India or anywhere are thus taxed appropriately.
Similarly, goods made in the US (are there still some of these) which are exported from the US would not have any VAT added to them, or technically they would, but the VAT rate would be 0%.
to put it another way ..
from raw materials to finished product, and every stage of the way
where a purchase is involved in the process .. there is NO TAX charged
to any domestic supplier.. in each stage of processing a reduction in costs
are thus realized, and since such tax costs are eliminated, a price reduction
can thus be realized in several steps of the process to a point where the
accumuluative effect in the finished or assembled product can be quite substantial
ie, drasticly cheaper costs in consumer goods .. that means you’ll be able to get
$20 worth of groceries at the store for $20, instead of the $50 it presently requires
I prefer the corporation-built candidates to those manufactured by diehard but inept socialists. Their purpose-built robots never do learn the right moves.
This current one has to have a teleprompter and is fueled by watching sports programs. These are not feature, definitely they’re bugs. I hope they can reconstruct the next one so that a malign FLOTUS doesn’t get to keep the rewind key.
However they flatten the tax, I’m glad Laffer is on board.
Could not agree more. A national sales tax should be hated, similarly the state sales taxes should be repealed. What this country needs is a federal VAT to be combined (harmonized) with the state sales taxes so that businesses only need to worry about filing one single / harmonized tax return. Make the rate of the harmonized sales tax (let’s call this the HST) high enough so that corporate tax and personal income taxes can be abolished. Imagine that, having more money in your pocket, no tax off of any paycheques, or any income of any kind and we only pay tax on what we consume.