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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?

Previously, I'd have been opposed on general principle.

But as it stands, the status quo is so bad - the tax code so impossibly Byzantine, and that's a very deliberate choice of words - that I think at this point such a consolidation is a necessity.

I don't agree on the flat rate, however. There needs to be a graduated tax rate - three or five brackets. I also have severe misgivings about the potential for transfer of wealth via non-cash compensation and barter. Any such law would have to go hand in hand with major overhaul of corporate governance.

Most importantly, this must be seen not as a "to the horizon" solution and instead simply a transitory reset. Regulation and obfustication are inevitable. Sooner or later the pristine new code will be cluttered by necessary, then obsolete, regulation, and we will be back where we started.

That doesn't mean it's an entirely bad idea, Tuhl.

Aestu of Bleeding Hollow...

Nihilism is a copout.

I was intrigued when I heard about it, but I was curious as to how we'd first make up the difference from flat-rate and corporate tax decreases and then generate additional revenue under his plan. I could see this maybe working in the long-term by way of attracting more businesses here but I don't think we have the luxury of time at the moment.

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Perhaps the difference is going to come with the national sales tax? Going with the first link on a google search, it looks like in a single year the American population spends 1.2T in unnecessary expenditures, so 9% of that would be about 100B in extra tax revenue. If we knew how much we bought in necessary expenditures then we might get a better idea of how much we could pull from this revenue stream... and that's not considering the increase we might see since more Americans will have more money to spend (from lower income tax rates).

9% taxes would be a big boon to the economy as a whole - and we have 4 years of it guaranteed assuming it's implementation with Cain's presidency. Only downside I can gather is the one stated by most critics - the implementation of a new tax.

I'd apply it to 'necessary' expenses. Exemptions for dependents would probably be the only exemption I'd consider off the top of my head.

The possibility of it becoming a 9-9->9 plan is hindered by two things pretty well:

- What Cain said about having a 2/3 vote for it. As well as presidential vetos.

- The former being increasingly hard when everybody is paying something. You don't have anybody indifferent about it at that point, or even having a vested interest in taxes going up.

Unfortunately, the 9-9-9 plan only addresses one problem among many. So there needs to be a little more than tax reform. Like Aestu said, other things need to happen in tandem with this. Unlike Aestu, I think those things are different for the most part.

But, much to Cain's credit, he's actually offered up a defined plan that actually does something - unlike... I think any of the other candidates. (Doesn't Romney have a massive plan that does next to jack shit?)

I'm not so sure. Though the concept bears examining, the plan itself is likely a red herring as the necessary political consensus on even one side is an impossibility. McCain, two months ago the realist who attacked the impudence of Tea Party freshmen, is too experienced to not realize this. The academic argument aside, the scheme itself can hardly be but a red herring.

Tax cuts will not directly trigger economic growth; stagnation is not a tax problem. The contrast between Japan and the EU, and the corruption and oppression in China no less costly than American taxes but willing to sacrifice their citizens' wellbeing for dollars, make that clear.

What tax reform will do is increase the money supply and decrease the operational onus of business.

Restoring prosperity and order will require a very fundamental restructuring of American economy and society...and that will not, it will not, occur, until we have a change in our form of government. It's touch and go.

Aestu of Bleeding Hollow...

Nihilism is a copout.

rofl.

Enjoy the treasury.

If destruction exists, we must destroy everything.
Shuruppak Yuratuhl
Slaad Shrpk Breizh

No estate tax, no capital gains tax

Dvergar /
Quisling

It's mind-boggling that someone could be considered a potential president with such a stupid tax plan. Besides the fact that it seems to be just some numbers plucked out of the air with no revenue projections, it would make the US tax system highly regressive (ie. poor people would pay a higher percentage of their income as taxes than rich people). I can see the argument for a flat tax given certain views of what is fair, but is anyone willing to defend a regressive tax code?

Laelia Komi Anomalocaris

if there were several tax brackets and each bracket had a x/x/x tax rate, it might be feasible, depending on the numbers.

Have you read this board lately?

RETIRED.
[armory loc="US,Bleeding Hollow"]Mayonaise[/armory]
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That would reduce the regressive aspects somewhat, but there's still no tax on capital gains or dividends.


Not really, no.

Laelia Komi Anomalocaris

Cain is a former head of a large pizza chain. This reeks of marketing strategies it's no different than 5 dollar footlongs at subway or 5 dollar p'zones at pizza hut. 5 dollars doesn't sound like much but when you actually look at the ingredient cost of a subway sub the markup is absurd. He took a number that sounds low (9) and added a "cool" marketing twist. I can't say it's unexpected considering his background. These types of strategies appeal to the least common denominator, which is why they are effective. America as a whole needs a complete restructuring. If people think that because a politician says there will be no loopholes that means everyone will suddenly be paying their fair share they are sorely mistaken. There is ALWAYS a loophole, if you think a multi-million dollar lawyer/accounting squad can't find some way to cheat this system you are naive.

Sincere and curious question.

Do you think it will happen? If so, how and when?

Aestu of Bleeding Hollow...

Nihilism is a copout.