Herman Cain has been gaining a lot of ground in the race towards the GOP nomination, surpassing Perry and even tying Romney in some polls. During last nights debate he was taking a lot of slack from the table for his plan. Cain suggests that everyone is wrong for trying to reform the existing progressive tax plan and offers his own 9/9/9 plan which would do away with the existing tax code.
9% Corporate Tax (Down from ~35%) 9% Flat-rate Income Tax (Down from 10-35%) 9% National Sales Tax (Increase, from no National Sales Tax)
As I understand, this would remove a lot of the complexity from the tax code by simply saying, "9% is what you pay," eliminating special loopholes, credits, deductions, etc. It would also eliminate all federal payroll taxes. If you make 3K/mo, then you take home that much (less state taxes and the 9% tax)... meaning you get more of your money. This plan is his 'bold' approach to fixing out budget issues and with his surge in the polls it looks like people do approve... but I haven't found a true consensus on it's feasibility. From what I read, economists from all schools of thought are still debating this approach and trying to determine if it'll provide the revenues needed.
Like Santorum's 0% Corporate Tax, I feel like a 9% tax would be better for companies and the American people because that would make America more appealing for setting up shop. (I think we have the second-highest corporate tax rate in the world) I hope that would bring jobs back to our shores, free up money for companies to hire and invest, and spur more growth.
One criticism is the national sales tax. Currently, sales taxes are only run by most states so the cost of goods (to all consumers) would increase by 9%. Personally, I hate this idea unless certain 'essential' items are exempt. Food, for example, would increase by 9%... which is 'fair' in the literal sense that everyone pays the same... but it's going to be harder for lower-income Americans to cover the expense. Cain's response is, "The cost of goods would go up from taxes, but the individuals would be keeping more of their money because of the lower income tax rate." I think I would be on board with this if the tax applied to Soda, 'Junk Food', Candy, Beer/Wine/Liquer and other non-essential or 'luxury' foods. Also, clothing under a certain threshold would need to be exempt. (Sorry black people... your $150 Timberland boots won't be exempt but maybe a cheap pair of sneakers from a discount store would be?) Also, Cain made a point to say that used goods would be exempt from the tax, so you're safe, Aestu!
Another criticism of the sales tax was pointed out last night during the debate when Santorum asked the New Hampshire audience, "How many of you will support the 9/9/9 plan knowing you'll have a 9% sales tax"... and it looked like no one raised their hand. Santorum said, "Looks like you won't be getting any votes from New Hampshire, Cain." That was a pretty powerful point. New Hampshire doesn't have a general sales tax so this plan must look terrible to them... and realistically, everyone would have an extra 9% tax levied against their goods... not just New Hampshire. Despite people not raising their hands, Cain got a lot of applause from the audience when he talked about his plan and how it's the solution America needs.
The final criticism people have is the national sales tax might be used as a conduit for raising taxes on all Americans. 9/9/15? 9/9/35? Who knows. He said he would have it drawn up to require a 2/3 vote by the house and even that would be vetoable by him [the President]. When he said that at the debate last night, one of the other Presidential hopefuls could be heard saying, "You won't be President forever."
One thing I haven't been able to figure out if how much revenue would be generated with this plan. It's hard to say. Would it expand the base like Cain suggests since all companies and individuals would be paying 9% (so companies like GE or people like Mr. Buffet couldn't get their way out of their obligations) or would the base stay the same because it doesn't bring companies to the states, doesn't create more jobs and doesn't raise more revenue.
So, I'm curious to see your opinions (or that from your daily liberal readinds) on this plan. What do you like? What don't you like? How could it be better?
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