Herman Cain 9-9-9 Plan
The National Review today ran a blistering critique of Mr Cain's 9-9-9 plan.
This tripartite scheme makes for a succinct slogan but has little else to recommend it. In particular Cain’s inability to choose between a sales tax
and a VAT is puzzling. The two are very similar in their economic effects.
The chief advantage of the sales tax over a VAT is that the latter is
considered easier for governments to raise, because it is hidden. The
chief advantage of the VAT over the sales tax is that it is easier to
enforce without stimulating black markets. (Another is that it reduces the
risk of taxing business-to-business purchases.) Opting for both as a
transitional step means courting the danger of a VAT with none of its
rewards: In the first stage, the government would get a new money machine,
and in the second it would supposedly destroy that machine and opt for
something hard to enforce. The two-stage scheme is self-defeating in another respect as well. The 30 percent national sales tax, whatever its other merits, would be significantly softer on the poor than the 9-9-9 transitional step, since
the larger sales tax includes a “prebate” check to all Americans to exempt the basic necessities of life from being taxed, while 9-9-9 includes no
similar provision. Leaving aside whether a major tax increase on people at the bottom of the income scale is a good idea, what is the point of first
raising their taxes and then cutting them?
In the last debate, only Rick Santorum noted that Mr Cain's plan involves the danger of even temporarily handing the government "a new money
machine", a point one would expect to resonate with conservative voters. I expect we'll hear a lot more of this line of argument in upcoming debates.
More generally, the fact that Mr Cain apparently believes it is politically feasible to wipe out the entire status-quo federal tax system in order to move to the 9-9-9 scheme, and then wipe out the entire 9-9-9 scheme in order move to a 30% national sales tax seems to me to draw attention to Mr Cain's policy inexperience and dazzling political naivete.
That the 9-9-9 plan would cut taxes on the rich while raising them on the poor led Bruce Bartlett to call the proposal "a distributional monstrosity", a phrase you could imagine Barack Obama using to good effect in a general election. Why would you propose to raise taxes on the poor, making yourself vulnerable to charges of monstrous callousness, when, as the NR editors note, your ultimate plan would only cut them later? Well, you wouldn't, if you knew what you were doing. It requires only superficial examination to see that Mr Cain's 9-9-9/Fair Tax scheme is more an ill-considered, hand-waving improvisation than a serious plan from a serious policymaker. He's winging it, which I supposed makes it all the more impressive that he's been able to wing it all the way to preeminence in a few polls. But now he's made himself a target, and an easy one at that, so I doubt Mr Cain will wing it all the way to the nomination.
Mr Cain touts the simplicity of the 9-9-9 plan, but it is anything but simple. Even after reading about it on Mr Cain's campaign site, I'm still not sure I understand it. I thought I knew that the plan proposed 9% income, sales, and corporate tax rates. But the corporate tax is not a simple reduction in the corporate tax rate, as I had thought, but a value-added-tax on "Gross income less all purchases from other U.S. located businesses, all capital investment, and net exports." Anyway, the 9-9-9 plan is not what Mr Cain ultimately has in mind for American tax policy. It is but the first step of a two-step process to replace most federal taxes with a 30% national sales tax, a version of the so-called"Fair Tax". Why not go directly to the Fair Tax, then? Why the transitional step? Mr Cain's statement doesn't really say, though it does seem to imply that the Fair Tax is at present too unpopular to implement."Amidst a backdrop of the economic renewal created by the 9-9-9 Plan," Mr Cain says "I will begin the process of educating the American people on the benefits of continuing the next step to the Fair Tax."
Herman Cain - http://www.economist.com/blogs/democracyinamerica/2011/10/herman-cain
In 2008, Herman Cain endorsed Mitt Romney for President. Herman Cain is the former CEO of Godfather's Pizza and the host of a Georgia radio show.
He's never been elected to public office, but ran for president in 2000, and again
for U.S. Senate in Georgia in 2004.
Cain also once donated money to former Sen. Bob Kerrey (D-NE).
We also know that Herman Cain is a former chairman of the Federal Reserve Bank of
Kansas City, who backed the Wall Street bailout in 2008 (which he called the"recovery plan"), advocated nationalizing the banks, slammed opponents of these programs
(the majority of Americans) as "free market purists," and was against an audit of the
I do not have a problem with appointing an openly gay person.
Herman Cain on Gay Issues
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