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October 13, 2011

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Cecil Turner

How long after Cain's nomination do you think before lower-quintile voters and retired folks are marching with placards? Politically unsalable, can't be implemented.

MarkO

Ah, more of TM holding his breath.

Danube of Thought

Bad plan; will never fly.

I think Cain is at his high-water mark.

Ignatz

Art Laffer thinks it's a vast improvement over what we have so I'm not ready to dismiss it just yet.
Can't see any reason why its regressiveness couldn't be addressed in the same way state sales taxes are.

Jim Ryan

It. Doesn't. Matter. And voters know that.

POTUS doesn't legislate. 999 is short for "I'm ready to reform the federal government, including the tax system." It just makes Cain the reform candidate. It doesn't matter whether his plan is good enough to be the one finally agree-upon.

"999. Reform candidate." Anyone else a reform candidate? Crickets.

Sue

My problem is what will keep another congress, another president from keeping raising 9-9-9 to 10-10-10, 11-11-11, etc. And what will prevent them from keeping the federal sales tax and re-implementing the payroll tax? My short answer is nothing. They do what they want with very little consequence.

Ignatz

What I'm looking forward to is liberals screaming bloody murder about a 9% sales tax one minute, which is both visible [making it harder to raise] and fairly easily mitigated for lower incomes and then describing for us the wonders and advantages of a VAT which of course is hidden and therefore easily raised and because it is embedded at all levels rather harder to gauge the impact of on specific prices.

Ignatz

--And what will prevent them from keeping the federal sales tax and re-implementing the payroll tax? My short answer is nothing. They do what they want with very little consequence.--

This argument flies right over my head I'm afraid.
They can't do what they want now, like raise income tax rates or FICA taxes?
They can and do and the only thing that prevents them is voter outrage not lack of a different form of taxation.

Sue

Ignatz,

Exactly. And when income taxes were originally implemented, they wanted to limit the tax to and outrageous 10%. The argument against an upper limit was the country wouldn't stand for it. They would vote the fools out that raised the income tax above 10%. And probably chase them home with pitch forks. How high did that tax get before it was brought back down to where we see it today? I don't want them getting another tax unless we have a constitutional amendment that says we can't have both, federal sales tax and income tax.

centralcal

Happy Birthday Margaret Thatcher and U.S. Navy!

NK

I'm not a fan of 9-9-9; it opens the pandora's box of an effective 18% VAT, and can be demagogued by the Muppet -In-Chief (MIC) the Bam. That said, I do like Cain's ability to make clear choices and explain those choices to voters so they know where he stands. He's also a "Happy warrior" who supports conversative values with no malice, but doesn't shy away from taking on leftist stupidity like the OWS slackers. I'd be very comfortable with him as a VP candidate for Romney.

Old Lurker

Hey! I love regressive. Let's run the entire show with lotteries.

NK

PS-- imagine a Cain-Biden debate. If Slow Joe can't call the Repub a bigot or a rich boy from the big manor house, he can't form a sentence, so Joe will say moronic things in sentence fragments.

Old Lurker

Iggy, not only can they and do they raise taxes all the time, but for about three years now they have de-linked their spending from any semblance of taxes by not even passing make believe budgets. That being the case they might as well have a 5-5-5 plan...

Melinda Romanoff

OL-

Go up one digit on that plan and I think you'll have your #.

cathyf

I like my plan, which I call Rule-of-6. The plan starts with a simple premise: no matter what we do with tax rates, tax plans, tax schemes, tax revenues are about 18% of GDP. Which means that all of these tax wars will have the same outcome: bruising, demoralizing, tear-apart-the-fabric-of-society class warfare and at the end there is no actual revenue to show for it.

So my plan starts with a truce in the tax wars -- we have a tax system, of course it could be better, but it's good enough. Instead, decide how much we want to spend each year, and then focus all of our national energy, ruthlessly, single-mindedly, on creating six times that amount in annual gdp.

Eliminate the EPA and repeal ALL of the laws which it enforces. The DOE -- both of them gone. (Break off the NRC -- it is already self-supporting in enforcing nuclear safety.) All of the agencies and their laws and regulations. Basically everything but the Defense Department -- and they are cut back to managing the different branches of the military and coordinating overall defense strategy. FDA, Dept of Ag, look, if you poison or injure people, you get sued, so nobody is going to stop you in advance.

I'd hire Dave Ramsey as our National Reality Check. He'd be on TV every day shouting, "We don't need it!!! We can't afford it!!!"

We got along just fine for a century and a half without having regulations to regulate selling rabbits, and we are just going to have to learn to manage without them in the future because we can't afford them. Because we are broke.

mikey

Jim,

i agree . It changes the debate in the right direction. I dont know if I am for it but when I read and hear the attacks from Joe Scarborough to the Jennifer Rubin it makes me wonder how these pundits can be so stuck in the weeds when the average voter gets it.

Arthur Laffer, the fatherof supply side economics explained his Laffer Curve on the back of napkin over dinner. So much for simplistic.

Jane

Cathy for President!!

Sandy Daze

Jim Ryan @ 1233:

"It. Doesn't. Matter. And voters know that. . . ."999. Reform candidate." Anyone else a reform candidate? Crickets."

Exactly.

OMG~ABO,
Sandy

mikey

In December 1974, Economist Arthur Laffer was in a restaurant with President Fords Chief of Staff Dick Cheney. Laffer was frustrated in explaining to Dick Cheney the benefits of his tax theories. He then began to write on a cocktail napkin a diagram that depicted federal revenue at different levels of taxation. He showed that at zero and one hundred percent tax rates, the federal govt took in zero revenues. As you lower rates towards zero federal revenues increase. Somewhere on the descending side of the curve approaching zero was where you would the optimum level of federal revenue. This graph because famously known as the Laffer Curve, which became an important component of the intellectual foundation behind the Reagan Revolution.

Last year, Laffer predicted that 2011 would be worse than 2010 because businesses anticipating an increase in taxes would move their profits into 2010. That seems pretty accurate to me.

Laffer is a big endorsement for 9 9 9.

Clarice

I vote for Cathy and then we'd also have wonder boy, wonder girl and a crazy cat plus a professor in the wh plus no jumping jacks and no groddy armpit views.

maryrose

cathyf:
I love how you think! I'd vote for you for president in a heartbeat.You have so much common sense.

maryrose

Yes, what is with the jumping jacks? Is Michelle not content with the fairest in the land? Now she has to be the fittest also? Drop the tacos and cheesburgers and then maybe we will believe it.

Captain Hate

maryrose, are you in that new Kucinich/Kaptur district and will you have a chance to vote for Joe the Plumber in the primary?

centralcal

Laffer is a big endorsement for 9 9 9.

So, mikey, do you think Laffer is one of Cain's anonymous advisors that he can't name right now?

I agree with the rest, cathyf makes sense to me.

Sue

Cathy,

It amazes how your mind works. I'm impressed and amazed and totally envious. Just so you know.

Jim Ryan

groddy armpit views

Akh! You've put me off my pie.

mikey

centraical,

Laffer endorsed Cain's 999 after the debate took place when he was asked that question. Also Paul Ryan has good things to say about it today.

Charlie (Colorado)

it might behoove NBC News and Dave Weigel to look at total taxes paid by the middle class, including the payroll tax.

Not if it helps the GOP.

Ignatz

--I like my plan, which I call Rule-of-6. The plan starts with a simple premise: no matter what we do with tax rates, tax plans, tax schemes, tax revenues are about 18% of GDP. Which means that all of these tax wars will have the same outcome: bruising, demoralizing, tear-apart-the-fabric-of-society class warfare and at the end there is no actual revenue to show for it.--

I think that is fundamentally wrong.
The form of taxation effects growth.
After several decades of bad tax policy tax revenues equal 18% of one sum.
After several decades of sound tax policy the government has 18% of a very much larger sum.
There is not only a great deal of revenue to show for it but there is a vast amount of new wealth to show for it too.
As an economic libertarian I'm all for slashing government to a small fraction of its current size but the two are equally important and cutting government out root and branch is if anything a much harder slog than any tax reform ever attempted.

Charlie (Colorado)

Instead, decide how much we want to spend each year, and then focus all of our national energy, ruthlessly, single-mindedly, on creating six times that amount in annual gdp.

I kinda like that. Focus on the right thing: GDP.

After several decades of bad tax policy tax revenues equal 18% of one sum.
After several decades of sound tax policy the government has 18% of a very much larger sum.
There is not only a great deal of revenue to show for it but there is a vast amount of new wealth to show for it too.

That's not really a very sensible objection, Ignatz. Oh, I guess if you figure the government would then take steps to damp both spending and GDP growth it might work out the way you imagine, but realistically the government is always trying to get and spend more money. This scheme at least would mitigate that by ensuring the economy grows fast enough to keep up.

fdcol63

Yeah, for me, the specifics of Cain's 9-9-9 plan aren't that important because I think those kinds of specifics would probably be negotiated and changed during legislative battles, to something like 5-5-5 or (Heaven help us!) 6-6-6. (In this case, should we also be worried that his name is CAIN, as in he that slew Abel?)

But what is more significant to me is that it signals Cain's intention to greatly simplify the existing tax code.

But this means putting a lot of tax lawyers, CPAs, and IRS bureaucrats out of work, as well as making it more simple to understand exactly how much is being taken from you from the govt, which is why so many establishment politicians of both parties object to it.

Frau Steuerangst

cathyf sounds like my husband ("eliminate DoE, etc.) and she is unquestionably cuter. Keep bringing your ideas.
Now, how do we convince everyone we are really *broke*? Californians don't believe it. Our elected Democrats keep coming up with one more spending scheme after another. That is when they are not busy running businesses out of the state.

Ignatz

--That's not really a very sensible objection, Ignatz. Oh, I guess if you figure the government would then take steps to damp both spending and GDP growth it might work out the way you imagine, but realistically the government is always trying to get and spend more money. This scheme at least would mitigate that by ensuring the economy grows fast enough to keep up.--

It's an unrealisitc plan because of this;

Instead, decide how much we want to spend each year

How come nobody thought of that before?
Getting the left to agree to a sum small enough that it would require a vast shrinking of the government is patently unrealistic.
If the Dems don't agree to a severely slashed government [which they won't] the only way to ensure rapid growth is through maximizing the efficiency of the tax code which puts us right back at some type of tax reform, which is precisely the opposite of cathy's proposal [which I'm assuming was made partly or perhaps wholly in jest anyway].
If they would just agree to spend some small fraction of what we do now then liberals and leftists would have ceased to exist in their present malignant form and there's all sorts of neat things we could do besides eliminate the EPA like, ride our unicorns down to Mr. Plumpy's house of chocolate in Candyland.

Cecil Turner

That's not really a very sensible objection, Ignatz.

Au contraire, it's spot on. The most important single element in GDP growth is tax policy. Besides, the type of taxation not only affects growth, it affects government spending. As we're seeing now, everyone always wants to spend everyone else's money. The end result of an overly progressive tax policy coupled with overly redistributive spending is the cycle we're in now: too much spending and too much taxation on wealth creation driving too little growth.

Old Lurker

Cathy's got my vote too.

Sara (Pal2Pal)

My objection to the 9-9-9 plan is the first 9. Yes, it might lower the initial tax burden, but buy a new car and add 9% and with today's car prices, you are paying a whopping amount of tax on the purchase. Even that doesn't bother me as much as the way a consumption tax is not a one time event on a one time purchase. In states with this type of tax, each year, your car registration is based on the present value of your vehicle, so you pay the tax over and over again on that purchase.

At my gas station they list that 51 cents of every gal bought is taxes. Remember the days of your youth when the total price of a gal. was 19 cents, I do. Now, gas could be free and it would still cost you at least 51 cents here in California today. And that does not include any local taxes added on.

I have heard Cain say that his plan wouldn't double our state tax to 18 cents on the dollar, because it is based on eliminating present taxes and replacing them. Are states buying into this? I seriously doubt our dem controlled legislature is onboard.

Will states with no state taxes be willing to start paying 9%? I can't afford my tax burden now and I'm one of those supposedly who doesn't pay any at all, since my income is below the poverty line, yet somehow I seem to owe big bucks each Apr 15th and I still have to pay an additional 8 1/2% on my purchases. And in this state, when they don't want to say they are raising our taxes, they just add or raise fees. It may save something on those still working, but for those on fixed retirement incomes, I see no benefit in the long term.

But then, I find it hard to pay too much attention since whatever our taxes end up being, I'll have to pay or go to jail, and for me, paying a consumption tax over and above an income tax adds more burden, not less, so I'll have to take that into consideration and not make any major purchases at all. How does that help job growth?

It reminds me of when we bought our first house and my husband was in VietNam. At that time, the VA would not allow me, even with a power of attorney, to sign the loan docs. By the time they were mailed and returned, the interest rate went up from 8% to 10% and I was told that with the rise in rates, we were then priced out of the house. Not only that, but every time the rate went up, all new paperwork had to be sent out again, with another month and half delay for return, if we got them back that fast and the interest would go up again. The Carter years and all that. The consumption tax will price many people out of purchases they otherwise are willing to buy.

I like Cain a whole lot and think he could make a decent president, but I could not support his 9-9-9, at least as I understand it now.

Threadkiller

I present my 2-1-5 plan.

Article II, Section 1, Clause 5.

http://www.house.gov/house/Constitution/Constitution.html

That would fix a lot.

Sara (Pal2Pal)

I love regressive. Let's run the entire show with lotteries.

Well at least with lotteries, you decide whether to foolishly spend your hard-earned money on a ticket. With taxes, you pay or else.

jimmyk

Well, with income taxes you get to decide whether to work or not. A lot of people seem to be opting for "not."

Iggy's got my vote. Cut first, ask questions later.

Sara (Pal2Pal)

Well, with income taxes you get to decide whether to work or not. A lot of people seem to be opting for "not."

Working is not required to still have a huge tax burden. My taxes weren't suspended when I retired.

petesuchos

Maguire: "My guess is that a proper analysis would still conclude that the 9-9-9 plan will represent a tax increase for the middle class."

And this guy is the tea party favorite and at the top of the GOP polls!!!

Wow, you people are dumb.

Ignatz

--My objection to the 9-9-9 plan is the first 9. Yes, it might lower the initial tax burden, but buy a new car and add 9% and with today's car prices, you are paying a whopping amount of tax on the purchase.--

Then you can buy a used one since 9-9-9 only applies to new merchandise.
Which raises an interesting question since it would presumably lower the value of new stuff and raise the value of used. How would that effect retail sales?


Sara (Pal2Pal)

How would that effect retail sales?

Destroy it pretty much. And destroy what is left of our manufacturing base.

The 9 is a VAT any way you slice it, and my experience with VATs is that they are never a one time event on a brand new purchase. You really think if you buy a used car, you won't have to pay tax on the purchase price? Car registration is the perfect example. In states with a straight sales tax, you pay the tax once and then a fixed fee to register the vehicle each year. In states with a consumption tax, you pay the high tax once on the purchase, and then each year, based on the value of the car, you are taxed again. Yes, the tax goes down as the car's value decreases, but it is still a repetitive tax on value.

My mind is too fuzzy today to remember which state did what, I've lived in 10 states since adulthood. But, we moved from a standard fee state to a state with a consumption tax and one of our cars, an older vehicle, had registration fees go from $45 for the year to the amount based on the original purchase price of the vehicle many year earlier. I don't remember the exact amount but it was hundreds, not tens, in increase.

If Cain can explain to me how that would not happen then I'm more than willing to listen but at this point, I see no advantage to me as a fixed income person.

Threadkiller

Pete, what is your guy's plan?

Jane

I'm with Art Laffer. He loves it. And I know he is much smarter than petesuchos.

Sara (Pal2Pal)

Just an aside, what is it those who appear on TV who squint to the point of looking like they got eaten by a Chinese laundry rather than be seen in glasses?

Laffer is one of those, another one was that female Congresswoman from Colorado, I forget her name, but she tried to run for prez and was always on TV back then.

I like Laffer, always have, but I find it offputting to look at him while he is talking with his eyes squinted shut and his face all screwed up in a pinched look as a result of the squinting.

Jane

Don't look.

I never watch TV. But I listen to it all day long.

maryrose

CH;
Yes I am in the Kucinich district and absolutely hate Marcy Kaptur after the Obamacare fandango and her giving up on the Stupak amendment. Today she was whining about the trade agreements and the anti-abortion law in the House. She is smarmy

Captain Hate

maryrose, Kaptur and Kucinich deserve each other. I saw the dwarf on tv coverage of a "town hall" that he was hosting about upcoming layoffs at Metro General. First, I'm surprised his young wife can look at him without vomiting. Second, hardly anybody showed up for it. Third, the layoffs are happening because so many uninsured people go to Metro and the county isn't reimbursing them enough; so Earth to Dennis blames the Cleveland Clinic for not taking enough charity cases, leaving aside that Metro was expressly set up to handle that. I hope he and Kaptur destroy each other.

cathyf

Oh, yeah, while I'm making wild plans, here's entitlement reform: Every social security check is fixed as a percentage of GDP. "Drill Baby Drill" -- your check goes up by the fraction GDP goes up. "Save the Snail Darter" -- your check goes down by the fraction the GDP goes down. Sure there will be a few rich people who will be willing to lose their checks for insects or polar bears or screwing oil companies or whatever, but when the going gets tough the tough will outvote the crazies.

THAT is what "having skin in the game" means.

Sara (Pal2Pal)

Don't look.

I hardly ever do. My TV is background noise.

I just wondered why so many I see on TV don't realize that their glasses would be more attractive than the squinting.

RB Miller

The DailyCaller.com reports that GOP Budget Chairman, Paul Ryan is endorsing Herman Cain's 999 Plan.

""House Budget Committee chairman Paul Ryan says he “loves” presidential candidate Herman Cain’s signature “9-9-9″ tax plan."

This endorsement as huge for Cain. This is the man responsible for forging the new Republican President's Economic Recovery Plan through Congress. This is Huge News and counters the objections that Herman Cain's 999 Plan cannot get passage in Congress.

econus.blogspot.com

It also doesn't hurt that Reagan's economist Art Laffer, Grandfather of Supply Side Ecoomics is endorsing Cain's 999 Plan.

Jane G

Doing some math.
$64K income.
Give $1000 to charity.
Your 9% income tax on $63K is $5670.
Not available for consumption:
Your income tax
Assume $2000 in savings.
Assume a $4000 property tax payment.
Assume an existing $1000 monthly mortgage payment.
Round to $25K not avaiable for consumption.
Sales tax on $39K is $3510.
Combined 9-9 taxes are $9810 or 14.3% of income, or virtually no change frm today's effective rates.

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