The Truth Shall Set You Free…It might piss you off first, but it will set you free.

Posts Tagged ‘999’

Herman Cain Should Stick to Selling Pizza for 9-9-9

Posted by politicalmonkey2010 on October 12, 2011

999 it’s catchy, it’s easy to remember and it just begs for the next line that says “but WAIT there’s more, for 999  you also get …”   I realize the political field is a dynamic place, always changing, reinventing itself,  but with each passing day it becomes more and more like a carnival complete with freak shows, and hustles.  This week it is Herman Cain’s time to shine on the board walk.  Step on up ladies and gentlemen and let’s see what Zoltar  Herman Cain has to offer with his magical 999 elixir, sure to cure the economy and tired listless people. Uh, huh.

Looking at Cain’s plan is like a trip to the fun house complete with the mirrors that distort the true image.   But first let’s look at who designed the plan.  Numerous times Mr. Cain has been asked about his economic advisors, so far only one name has been mentioned.  He assures us that he has had his economic advisors he won’t compromise their confidentiality, except for one:  Rich Lowrie, who by the way is NOT an economist. He is however,  a wealth manager for a division of Wells Fargo and according to his LinkedIn page holds an accountancy degree from Case Western Reserve University.  Lowrie also spent three years on the advisory board of the conservative third-party group Americans For Prosperity.  Are you starting to feel uncomfortable  yet?

So let’s look at the nuts and bolts of this simple plan:   9 percent flat tax on household income, a 9 percent corporate tax, and a 9 percent national sales tax. There are no deductions except for charity.  Seems straight forward doesn’t it?

What about the Value Added Tax (VAT)?  Eventually under Cain’s 999 plan income tax would be eliminated and replaced with sales tax – called ironically Fair Tax by Cain fans, to the rest of the world it is call VAT.  This did not come up in the debate last night for good reason.   Let’s take a brief look at VAT in Europe.  When imposed in 1967, Denmark’s VAT was 10 percent; it is now 25 percent, in addition to a top income tax rate of over 50 percent.   In 1968, Germany levied a 10 percent VAT.  Germans are more fortunate; their VAT has risen “only” to 19 percent, and their highest income tax rate is “only” 45 percent.  The notion that a country can impose a small  single-digit sales tax is not supported by other countries’ experience.  In many countries the VAT is the largest source of revenue.

Cain likes to claim his plan is revenue neutral.  That’s not exactly true.  An analysis by Bloomberg last week found that Cain’s plan would actually have brought in $200 billion less in 2010 than the current tax system — $2 trillion instead of $2.2 trillion.  In short, it would take a 25% VAT tax to maintain current revenue levels.  That’s a 16% margin of error.  Are you getting uncomfortable yet?  Tax policy experts go on to say it is  unrealistic in part because it operates on the assumption that voters and lawmakers would be willing to fully phase out even enormously popular deductions and exemptions.   Under Cain’s plan everything would be subject to the 9%  sales tax – food, housing,  clothing – no exceptions.   We are already suffering from reduced consumption, additional taxes would curtail consumption even further, not to mention the anger from the public.  It also opens up a whole new market for under the table transactions, pay me in cash and you get in essence a 9% discount.  If memory serves this country started its revolution over excessive taxes.

One of the many cries of the Tea Party is state’s rights.  We hearing that with health care reform aren’t we?  Cain’s plan also impacts states’ sales tax collections.  States depend on sales tax revenues. Adding a 9 percent sales tax on top of a state sales tax would reduce states’ freedom to use sales taxes because it would reduce revenue.

How would Cain’s 999 effect the vast majority of Americans?

CAPD: Cain’s Tax Plan Would Increase Taxes Paid by Lower-Income Americans

However, Michael Linden, the Center for American Progress’ Director of Tax and Budget Policy, told Think Progress that because the bottom quintile of earners currently only pay about 2 percent of their income in federal taxes, under Cain’s plan they would be paying considerably more. Specifically, he said with the 9 percent tax on every dollar they make, as well as every dollar spent, the poorest Americans would pay a whopping 18 percent of their income in taxes.

Comparatively, Linden said middle-class earners would see their taxes rise from 14 percent to about 18 percent, while the richest one percent of Americans would see their tax rate fall from about 28 percent to 11 percent under the 9-9-9 plan.

“It would be the biggest tax shift from the wealthy to the middle-class in the history of taxation, ever, anywhere, and it would bankrupt the country,” Michael Ettlinger, the vice president for economic policy at the Center for American Progress, told The Wall Street Journal.

While Cain has touted his plan as the solution to the nation’s economic struggles, Linden’s analysis found that, based on 2007 tax data, it would actually result in the largest budget deficits since World War II. If applied that year, the 9-9-9 plan would have yielded just under $1.3 trillion in total federal tax revenue — 9.2 percent of the GDP — compared to 18.5 percent of GDP in tax revenue that was actually collected that year.

Cain’s plan to tax food is so surprising that even the Tea Party group FreedomWorks assumed certain vital goods, such as food and medicine, would be exempt from the 9 percent national sales tax.

“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,” FreedomWorks’ Web site states in an Oct 6. blog post titled “Herman Cain’s “999 Plan”: The Good, the Bad and the Ugly.


What we have in Herman Cain is a carnival barker appealing to the Tea Party with simplicity.   Even conservative economist are calling Cain’s plan a non starter.  This is one of the most fundamental problems with the Tea Party mentality is the inability to engage in critical thinking, and Mr. Cain has fully taken advantage of the sheeple.  Welcome to the carnival, step right this way folks and see the unbelievable…


























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