Economics, Taxes and Spending

Cain’s 9-9-9 tax reform: Plan beats no plan … for now

The more GOP voters look at Herman Cain’s 9-9-9 tax plan, probably the less they are going to like it. Michele Bachmann’s critique was just the start:

I would have to say that the 999 plan isn’t a jobs plan, it is a tax plan. And I would say that from my experience being in Congress, but also as a federal tax lawyer, when you — the last thing you would do is give Congress another pipeline of a revenue stream. And this gives Congress a pipeline in a sales tax.

A sales tax can also lead to value-added tax. The United States Congress put into place the Spanish-American War tax in 1888. We only partially repealed that in 2006. So once you get a new revenue stream, you are never going to get rid of it.

And the folks at FreedomWorks are knocking it around pretty good, too, particularly the sales tax component:

Now, ask yourself: If you could be relieved of paying income and payroll taxes, would you be willing to pay a roughly 25% sales tax on everything you buy? …The key here is how much you pay in income taxes under the current system. If you’re one of the minority of people — the top 10% of the population — who pay 70% of the income tax revenues, you might see the change as a good deal. But if you’re lower down the income scale, and especially if you’re one of the 50% of Americans who don’t pay any income taxes, then you might not see it as such a good trade. And if you’re poor, you might really hate it.

But as Tim Geithner is fond of saying, plan beats no plan. Among Cain, Mitt Romney, and Rick Perry, Cain is the only one offering a bold reform to the tax code. Perry has no plan yet, and Romney’s is recycled from 2008 and he only hints at more in his recent proposal:

In the long run, Mitt Romney will pursue a conservative overhaul of the tax system that includes lower and flatter rates on a broader tax base. The approach taken by the Bowles-Simpson Commission is a good starting point for the discussion.

I would like to hear more about that addendum, please.

4 thoughts on “Cain’s 9-9-9 tax reform: Plan beats no plan … for now

  1. The criticisms are justified in many ways. It is a very regressive tax no matter what Mr. Cain says.

    I suggest Mueller’s “Family Flat Tax” proposal as far more fair if we must confine ourselves to a paradigm of income taxation.

  2. I like Herman Cain a lot, but I am not in favor of giving Congress any new revenue source like a sales tax unless the income tax is abolished. I am a supporter of the Fair Tax which I have heard Mr. Cain support in early tax discussions.

    Ou real problem is that too many people look to government as their primary source for solutions. Anyone who is waiting for the government to fix their problems will be waiting a long time. Just look at inner cities if you want clear examples. You need to depend on yourself. Don’t give the government that kind of power over your life.

  3. Cain’s 999 is his way of getting major tax reform on the table for all to discuss just how desperate this country is in need of tax reform. To take the ability of punishing groups with higher taxes away from congress. We are all fooled when we buy whatever that we’re just paying the local sales tax as the corporation tax has already been added to the cost of everything. We pay the taxes, not corporations. If all the taxes that corporations pay were eliminated then competition would force the price of goods downward, and then a national sales tax would be beneficial and equally applied as the FairTax would do. Also, think of the corporations who have moved their operations overseas to avoid the US tax rates. Hmm? They would then seriously consider moving back to the US and there increase the job market for the US of A.

    Cain is a smart dude and has already made tax reform a very important element in this election.

  4. I do agree with all the ideas you have introduced for your post. They’re very convincing and can definitely work. Still, the posts are too quick for beginners. May just you please extend them a bit from next time? Thanks for the post.

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