Art Laffer and Paul Ryan both made news today by praising Herman Cain’s 9-9-9 economic plan. Since Cain has risen in the polls, his plan has been under quite a bit of scrutiny, from both sides. My biggest concern has been that third 9 – the national sales tax. Others feel the same way, the question being, how will they prevent future congresses and presidents from incrementally increasing that 9% sales tax? If that puzzle can be solved, it probably is a great plan. At least Laffer and Ryan think so.
Arthur Laffer sent a statement to Human Events:
The famed economist told HUMAN EVENTS that the proposal was pro-growth and would create the proper conditions for America’s economy to expand and thrive again.
“Herman Cain’s 9-9-9 plan would be a vast improvement over the current tax system and a boon to the U.S. economy,” Laffer told HUMAN EVENTS in a statement. “The goal of supply-side tax reform is always a broadening of the tax base and lowering of marginal tax rates.”
Added Laffer: “Mr. Cain’s plan is simple, transparent, neutral with respect to capital and labor, and savings and consumption, and also greatly decreases the hidden costs of tax compliance. There is no doubt that economic growth would surge upon implementation of 9-9-9.”
Laffer also said that “such a system provides the least avenues to avoid paying taxes, yet also maintains the strongest incentives for work effort, production, and investment.”
The Daily Caller spoke to Paul Ryan:
House Budget Committee chairman Paul Ryan says he “loves” presidential candidate Herman Cain’s signature “9-9-9″ tax plan.
Ryan told The Daily Caller in an exclusive interview that Cain’s plan is a good starting point for debate, and shows the GOP presidential campaign season has entered into a more advanced stage where ideas — not just personalities — have come to the forefront.
“We need more bold ideas like this because it is specific and credible,” Ryan said. “I’m more of a flat-tax kind of a guy.”
The budget chairman went on to say that ideas like Cain’s plan could help shape the debate over tax reform moving into 2013.
“It’s great to see such bold ideas,” Ryan told TheDC.
Those are huge endorsements for Cain’s plan, but I didn’t see any explanation of how to keep future politicians from turning it into 20-20-20, or 9-40-27, or any other combination. I still like Herman Cain, and would vote for him in a heartbeat, but that question does need to be addressed.
Update: See the comments below, on both sides of the issue. Notable is that there’s nothing to stop the current president and congress from raising tax rates and eliminating deductions. Hence, the president’s constant campaign for his “jobs bill” that would punish success.
Tags: 999, Arthur Laffer, endorsed, herman cain, Paul Ryan, plan
[...] of the other legacy Progressive ideas with which we seem strangely comfortable.Update: linked at The Lonely Conservative.Category: TaxesComments [...]
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Strawman back at you, what’s to keep the 15/15 from becoming 60/60? What’s to keep the current top tax rates from going back to 91%? The fact is that congress can screw up any plan. At least with the sales tax, everybody will feel it and notice when its raised.
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There would be no capitol payroll tax, capitol gains tax or death tax seems like a net positive to me.
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I agree Doon – it gets rid of capital gains tax, dividend tax, payroll tax (15.3% of our paychecks!), and the death tax. The payroll tax is regressive, and the income tax is progressive — and BOTH are a complete disaster). Why WOULDN’T we create a flat tax?
democRats: want to tax everyone more (except themselves), make the tax code more complex and harder to understand. They will never have a high enough marginal tax rate. Horrible for the economy.
Establishment Repubs like Romney: want to keep the status quo and be democRat/socialist lite. A slow, drawn out sinking into second, third, or fourth class economy. Wonderful thing for out children to inherit.
Anarcho-capitalists like Ron Paul wants to do away the income tax completely – because that is realistic. Will never, ever happen in this lifetime.
Herman Cain presents an plausible idea that can actually pass when we keep the House and gain the Senate… and he gets hit from every side imaginable. Yes, it adds a national sales tax, but it eliminates four other taxes. People will be able to see exactly what they are being taxed every single day. It is simple (unlike Romney’s 100+ page plan) and it is revenue neutral. People will not accept a 30-30-30 plan because the tax rate affects EVERYONE. People will push for an 8-8-8 plan, then a 7-7-7 plan… and so on. The plan is not perfect, BUT IT IS A PLAN, and it can be understood within about 15 minutes if one takes the time to to read: http://www.hermancain.com/999plan
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“how will they prevent future congresses and presidents from incrementally increasing that 9% sales tax?”
You can’t. Neither can you prevent future congresses from incrementally increasing marginal income tax rates. At least with the sales tax you incentivize savings over consumption – a prerequisite for capital investment and productivity growth.
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It incentivizes savings too. Another excellent point.
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Also, Santorum says that Cain’s plan won’t pass and can’t pass, but his plan is to just make the tax rate for corporations 0%. That is beyond unrealistic. The left would have a fit. Independents would have a fit. And to be perfectly honest that is just not fair. Why should I have to pay 20% in income taxes while corporations pay nothing? Everyone and every for profit entity paying the same rate of 9% makes perfect sense to me. Cain is the only one who has shown the guts and the initiative to go after the countries two greatest job killing organizations in Washington D.C. which is the EPA (he said he would close it if he could) and the IRS (this would simplify taxes and force them to downsize. 999, all the way to Washington D.C. Mr. Cain.
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Sorry, but an income tax rate of 9% and a sales tax rate of 9% do not give you an effective tax rate of 18%, as one does not have to spend everything they earn. This will encourage people to save their money instead of spending it before they get it. If they put that money towards a mortgage, a used car, or a savings/retirement account then they will still have only paid 9% in taxes.
Social Security and MediCARE are not welfare, nor would they be under Cain’s plan – just as unemployment insurance and current tax exemptions are not welfare. MedicAID isn’t even considered welfare, so in no way shape or form would the entitlements be confused with welfare. However, it will help Cain push his plan to personalize Social Security (what he calls the “Chilean Model”). I would prefer complete privatization of Social Security and health savings accounts that would replace MediCARE, however I would also like to pay no taxes: not going to happen in this lifetime, so the 999 plan and personalized accounts for Social Security and MediCARE are the next best thing. This way, it is more difficult for Nancy Pelois to spend everything I have contributed to Social Security and MediCARE before I retire (although she already has four times over).
If the government wanted to offset the 9% sales tax that Senior Citizens and Disabled Veterans will pay, they can increase the payouts in SS and Veterans pay – very simple, yet does not involve the IRS or tax exemptions. This way no one would get a waiver on taxes – a flat tax for everyone.
15/15 sounds good to me, however that would require us to lower the payroll tax from 15.3% to 15.0%, completely do away with the income tax and repeal the 16th amendment, and also lower corporate tax rates to 15% – not going to happen. As imperfect as 999 is; it is the best plan there is, and coincidentally it is being introduced by the best candidate we have.
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How about disabled vets who don’t pay taxes now and never have what would make me want to vote for anyone who wants to tax me.
I kindof like Cain but if he’s gonna start taxing me he’ll never get my vote. And i’m sure every other 100% disabled vet will tell him to get back into the pizza business. Would like to hear a yell back from theCain Camp!!!!
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