College Conservatives Maranatha Chapter is a Registered Student Organization dedicated to providing information on candidates, office holders, ballot measures, and current event issues to the students, faculty and community surrounding Maranatha Baptist University.

Thursday, October 13, 2011

So. It's Totally a Horse Race.

Mr. Cain’s Taxation Policy
Written by Jason Garrison

Editor’s Note: The following article is editorial in nature and content. This editorial represents the author’s research, opinion, and understanding of Hermain Cain and his proposed 9-9-9 plan. This editorial does not necessarily represent the opinion of the College Conservatives Maranatha Chapter.

If you’ve been watching the news lately, you’ve seen the name Herman Cain.
If you’ve paid attention, you’ve heard about his 9-9-9 tax policy.


 
The Good: Cain is a dark horse candidate making his way to the top of the Republican straw polls—trailing only behind Mitt Romney http://bit.ly/hB1z4U). Cain is a 67-year-old, African-American heralding from the great state of Georgia. He’s known as an extraordinary businessman and leader. His accomplishments are amazing— his business track-record ranges from working his way up to becoming the CEO of Godfather’s Pizza to saving the same company from imminent bankruptcy. He’s had experience in banking as an advisor to the Federal Reserve System and has served as chairman of the Kansas City reserve bank. Currently, Cain is involved in a community organization while traveling across the nation as the key note speaker for a myriad of leadership conventions.

The Bad: In one sentence: The 9-9-9 Plan. This policy is hot off the press and, in my opinion, a red flag to potential supporters. Almost everyone in America agrees on one thing: the current tax system—a graduated income tax where you pay a higher percentage the more you make —is flawed and in need of serious reform. Cain’s policy calls for a 9% tax across the board: 9% corporate tax, 9% income tax, and 9% consumption tax. The policy is more complex than that, but let’s focus on the basic idea. While many are attracted to Cain’s tax policy on the surface, a closer look shows some serious problems. A main issue is additional state tax. Not only are Founders rolling over at a proposal giving the federal government higher tax control but also implementing 9% consumption tax means adding 9% to whatever a state has determined their tax rate to be. Example: Illinois’s sales tax is 10%. 10% + 9% = 19% tax on everything purchased in Illinois. Most states constitutions also include a percentage of income tax withheld. So in addition to a 9% + consumption tax—many states will also withhold 13-17% of a household’s income.

Yes, Herman Cain is politically conservative, charismatically engaging, and a great leader—but the only way he is getting my vote is if he kicks the 9-9-9 plan to the curb.

37 comments:

Anonymous said...

Jason, I realize that you don't want to pay more for anything that you buy than you have to, but you have to look at the other side of this.
1. We HAVE to balance our budget, we need real change
2. An additional 9% sales tax really isn't that much. 19% on a dollar adds 19 cents.
3. this 9-9-9 plan would cut an estimated $430 Billion dollar deadweight to our economy by eliminating spending on tax compliance and collection - this is no small chunk of change.
4. You failed to mention how the 999 plan would benefit us.
- eliminates payroll taxes (Government won't take away part of your paycheck)
- ends the death tax (up to 55% of an estate)
- Zero taxes on capitol gains and repatriated profits
- Eliminates double taxation of dividends
- Ultimately ENDS the IRS as we know it
- no taxes on capital gains

I believe if you look into this plan, there is far more good than bad. I am willing to pay a little more in sales tax to help get our country out of debt.

Matt said...

Here is the thing that a lot of people like. Herman Cain has actually presented a plan, and one that isn't the regular government size plan of 400+ pages (as a minimum requirement.) People appreciate Cain for being willing to be bold and and present a revolutionary plan. Sure, it's probably not perfect. But it's bold and revolutionary, and people appreciate that.

Wisconsin Brutus said...

I like Herman Cain's plan. The 999 has some merit and should not be "kicked to the curb". Sure it may need tweaking, but it looks like a job creator to me.

Ending capital gains for selling a house or some stocks and lowering the tax rates on business will stimulate the job market and at the same time pay off the debt.

Instead of castigating Herman Cain, we should be thanking him for a bold constructive plan.

James said...

This (http://economix.blogs.nytimes.com/2011/10/11/inside-the-cain-tax-plan/)
is a (http://abcnews.go.com/blogs/politics/2011/10/9-9-9-plan-would-almost-double-taxes-on-middle-class/)
very bad idea (http://www.washingtonpost.com/blogs/fact-checker/post/herman-cains-misleading-pitch-for-the-999-plan/2011/10/12/gIQAHszPgL_blog.html?wpisrc=nl_pmpolitics)

Wisconsin Brutus said...

Wow. I really surprized that the New York Times, The Washington Post, and ABC News do not like Cain's 999 plan. Go figure, liberal leaning news outlets against Cain?

I'm a middle class taxpayer that supports a bold innovative way to help this terrible economy and I am willing to look at parts of Cain's plan. Status Quo is NOT acceptable. "no pale pastels for me". It is time for action.

Jason Garrison said...

@anonymous-
1: We do need to balance the budget, but that comes from wise spending in Washington, not a tax plan that puts more money into the government's hands.
2: .19 cents on the dollar is a lot. One out of every five dollars just in the income tax portion...
3: This is valid, however, it takes care of the IRS in the short run, but a 19% consumption tax is a huge incentive to evade on big ticket items, and ultimately will drive buisinesses across the border to escape it. Whatever organization tries to regulate fair taxpaying will have its hands full.
4: There is some good, obviously, but that's where I'd have to disagree that the bad outweighs the good in this case.

@Matt- I'd have to agree, he is the only candidate with a hard plan, and he's got some other things going for him, but we have to think critically and evaluate his policies/plans so we can make an informed vote in the primaries.

James said...

@anonymous
1. Totally agreed, something need to change. Income need to go up and spending need to go down.
2. 9% increase is a lot, and, from what I understand, this will be on everything. In essence its like a 9% paycut.
3. IRS, as we know it, will be gone, but there will an agency replacing it to ensure tax compliance, sure it will be a whole lot easier and more cost effective, but it's not going to eliminate $430 billion completely. There we still be people not paying and not paying enough, and that will all need to be checked.
4. Honestly this doesn't really help the every man, but it does help he wealthy quite a bit. Even with all these 'positives' my taxed would go up quite a bit.

@Wisconsin Brutus
It's very easy to attack an article because you don't like where is posted, but I would like discussion about the issue. If you can see something incorrect or that you disagree with in the articles, lets talk about it, but to simply discredit it because you think it 'liberal' it a bad idea. An idea isn't good because it's 'conservative' or bad because it 'liberal'. Let discuss the issue and implications not the website it was posted on.

@Jason
1. We need to increase revenue, and this can be done by stop reward corrupt corporation. I'm not against corporations as an entity, I'm not against people being wealth, I'm not against capitalism in anyway, but some people game the system and it's unacceptable ( eg. http://www.reuters.com/article/2011/10/04/usa-tax-holiday-idUSN1E7921A620111004)
2. Totally agree. 9% is a lot, especially when you add it on top of everything else.
3. Again, I agree,
4. I don't think these a all good ideas, especially ending the taxation of capital gains, but that a personal stance.

Zachary Guthrie said...

I think Herman Cain's plan is realistic. Although the plan calls for a federal streamline adding on to the state taxes. I like the idea that it may get rid of the other taxes across the board. If he is calling for reform, I say this idea is a good start. Granted, a 9% is a little much and taxes typically do not go away once their implemented. But this plan is drastic enough to work especially in a drastic tax situation. As far as Illinois goes, they have been doomed from the start really.

Chris said...

If the "Founders" to which you are referring are our Founding Fathers, I can assure you they are not "rolling" at the prospect of a consumption tax. The founders of this country were almost universally in favor of consumption taxes because, as Alexander Hamilton said, they "contain in their own nature a security against excess."

Confiscatory taxes (income taxes) had no part in financing the federal government until 1913. The introduction of these compulsory taxes would certainly have been struck down by early American leaders, nearly all of which believed that taxing consumption gave the citizen the upper hand.

I would be careful attributing beliefs to the founding fathers, which they clearly did not hold.

This does not mean that the 9-9-9 plan is perfect, or even good. Certainly it will need more research and testing. With that being said, the rehash of our current tax code being offered by other candidates simply won't work. They are not real solutions. Instead, they continue to push an inevitable total-overhaul of our tax system into the future.

The guys with perfect hair offer a patch, a bandaid, a quick fix; none of which will get us back on sound finacial footing.

Dan said...

Jason, you need to go back to your economics class to see the benefits of this plan. Conservatives across the country are loving this plan - why are you different?

1. This tax plan is not putting more money in the hands of the government. The plan aims to raise the same amount of revenue that our current code does (eventually more through economic growth). While liberals don't like this plan, even those articles I have read admit 999 will cause growth.

2. .19 is money yes. But everyone will have more money to spend to start because 9% income tax is tiny. People will have much more money to spend to begin with. You criticize this, but it is truly the best part of his plan. Check out some WSJ articles on the topic. They investigate well.

3. Driving Business over the border is a moot point. 9% sales tax is national. The only difference between states is the difference that already exists in state sales tax today. It would not increase evasion because the disparity already exists.

4. I have to reiterate the benefits of the program as anonymous said:
-YOU HAVE MORE MONEY IN YOUR POCKET because personal income tax will be incredibly low - 9%.
-Investment and businesses are both taxed less through 9% flat corporate and no capital gains/dividends taxation.
-Death tax is gone

You are forgetting that the sales tax does not apply to necessities like food and clothing just like it always has not. Used things also are not subject to the sales tax. The plan will result in people having more money to buy what they need. They will pay sales tax on what they don't need.

After Cain introduced this plan and it received attention, he hs been catapulted into the lead in the primary. His understandable, simple plan has been well received by Republicans. Cain was not a contender for the nomination, but because of his audacity with 999, he has a shot. We should support him.

Matt said...
This comment has been removed by the author.
Matt said...

I agree with Chris that more testing is needed. I think that this is an issue which we should be willing to look at, but not rush into. If the system were to be changed, I would recommend a gradual implementation of the new system and phasing out of the old. Jumping from 0% National Sales Tax to 9% in one year would be disastrous. But implementing it over time could in the end give us a good product. I think the key is to be open to the idea, but extremely cautious.

James said...

@Dan
1.)Everything I've read says the opposite. See my other comment to see the a few of the articles I've ready. Could you also post the links to the articles you've read, I'd love to read them. Also, I'm having a hard time finding conservative articles about this, and the few I've read say it's a bad idea, unfortunately I forgot to save the link, so I can't link to them.
2.)Why would we have more money? Everything I've read says my effective (not just income) tax rate will increase. (See other comment)
3.)I don't know enough to make an educated comment
4.)Once again, not sure where your getting this. I've done the math with my income and my effective (not just income) taxes will raise several thousand dollars.

JoelJoseph said...

@Dan and WisconsinBrutus
Dan, I think your little pot shot at Jason about his economic wherewithal was a tad bit unnecessary. I don't know if you know this but when someone of an opposing view challenges the status quo the burden of proof is on him to prove the status quo (in this case the gradual income tax) is flawed and in need of repair.
With that said, Herman Cain is offering a solution that is quite contrary to the existing tax system and the burden of proof is on him to show how it will work. Sure you can say he still needs time to explain how all of it will work and better the country but it is not wrong for people to criticize the mans campaign and proposal when all he has said is what 9-9-9 stands for. Herman Cain should not receive our compassion or sympathy, he is running for the most important position in this world and has zero experience in government. He, more than any other candidate in the Republican party needs to prove that he belongs. The questioning of his plans are completely warranted and necessary. The castigation of those that question are not acts of nobility but rather weak attempts at defending an already flawed plan and candidate.

Wisconsin Brutus said...

@Joel

I agree with most of what you said. Cain does need to flesh out his plan and explain why it is better than the status quo. He has not done that very well and needs to. One must make the case before acceptance.

However, that being said, I simply want to applaud Cain's attempt at thinking outside the box. The American tax policy is flawed and needs serious revision.

Also Joel, I do not think that Cain's outsider status is necessariy a terrible thing. You make it sound like the kiss of death. Is it?

check out http://en.wikipedia.org/wiki/List_of_Presidents_of_the_United_States_by_previous_executive_experience

Lincoln and Obama had no executive experience and 8 presidents have only had expereince commanding a unit in the military which is very similar to being a CEO of a complany like Herman Cain.

JoelJoseph said...

His outsider status is not a kiss of death but that status will make it hard for him to prove that he's the right man for the job. Whether you like it or not, politics in Washington is a who you know type of game and Herman Cain is starting on the bottom of the ladder and it's going to be a long climb for him.
As far as the comparison to Obama and Lincoln go, I am pretty sure you don't like Obama due to the fact that you are supporting Herman Cain. So, question, did President Obama's lack of experience help the country? From what I can tell from your political leanings, I would have to say your answer is no. On comparing him to Lincoln, this is a different time and era. I don't think you can make the case by using Lincoln.
Finally, I would have to say that commanding a military unit is not like being a CEO of an organization. Yes, there are similarities but this is truly a case of comparing apples to oranges.

Dan said...

@ Joel Joseph
I do believe there is a general consensus that the status quo of the tax system is flawed. This is show by the 9-9-9 plan catapulting Cain to a lead in the polls.
I feel that Cain's plan does point out problem and addresses them. If you haven't heard any of that, I encourage further reading.
@James
You should consider that many news outlets generally belittle all republican candidates. NY times and Washington Post are not very conservative in their leanings.
http://video.foxnews.com/v/1217405910001/reagan-economist-a-fan-of-999-plan/?playlist_id=87485
http://online.wsj.com/article/SB10001424052970204774604576629433751126652.html?mod=rss_com_mostcommentart
http://online.wsj.com/video/does-herman-cains-999-plan-add-up/05272D91-ADB8-4066-8830-037E23C82A30.html?KEYWORDS=herman+cain

JoelJoseph said...

Dan, there are definitely some problems in the current tax system but that does not mean we can't fix the problems without throwing out the system completely. I am even a proponent of a flat tax. The reason I am so critical of 9-9-9 is that I don't believe that it will pass through Congress. What's the point of talking a big game if you can't deliver?
However, Mitt Romney, has a 59 point plan that he believes will lead to economic growth. His plans are both realistic and passable.

Link: http://www.politico.com/news/stories/0911/62760.html

Anonymous said...

@Joel

I must be misunderstanding your "starting at the bottom and working your way up comment." You are saying that a person has to play the game the establishment way in order to be deserving for office are you? Romney has but Cain has not so Cain should take a seat in the back of the bus? I don't think you mean that.

If Cain's ideas and principles are best for America - and I said if - He need not kiss anyone's ring.

CCMC said...

@Anonymous

CCMC would like to apologize for your comment not immediately uploading.
Blogger occassionally and randomly chooses to "spam" posts.
We found your comment in the "spam" box. It has been unmarked as "spam" and should now show up in the comment feed.
Sorry for any inconvenience.
Regards,
-CCMC

James said...

@Dan

It doesn't matter where an article comes from, it's about the article. You can't discredit an entire argument based of whether it was left or right leaning, you have to look at it and logically analyze it. Honestly, if we used your logic who can't cite FoxNews of WSJ because of there overtly right leaning and ties to Rubert Murdoch, News Corp and the Koch Brothers, as well as record of misleading and lying (FoxNews at least). But even FoxNews can have a good article, so I read and watched the links you provided and was prepared to fact check.

The first video had no substance at all. The guy came on said the taxes would be lower didn't prove it, he didn't use really world number (or any numbers) and did say how it would affect the american family. He said that corporate tax was bad, but once again no proof or explanation. He did mention that poor people might get some money back but no details. Nothing to argue or analyze, because there was nothing there.

The second link was a article, but once again no data. It sang the praises of Cain and said that tax would be lower, but didn't use any numbers. No substance again.

The last link, had some data, but not anything that I would call encouraging. He said that taxes would go down, especially for the top quintile (once again no data to support that, but it was at least a little more info) and that those under poverty line would get some sort of tax credit(yay, for something positive) bit no word on how much or any details.

Were the article I cited left leaning? Possibly, but they had substance. They said family pay X with A,B,C and with Cains plan would pay Y because of D,E,F. If you have a problem with the data lets talk about it, if you disagree with something one of the authors said, let talk about. But to say the website it was on is left leaning so it must be wrong is very dangerous thinking. If you can point me to some article that uses number and has detail as to why this is a good plan, I would be more that happy to talk about it, I'm not going to blast it because I might disagree with the website it's on. I'm going to educate myself about both side of the issue, make sure what what was said was accurate and make informed decision on what I believe.

JoelJoseph said...

@ anonymous
Well first off that "back of the bus" line was cute but in case you think I'm hating on Cain cause he's black be at ease. I'm Indian (from the country) and I have nothing but respect for the man but I don't believe that he should be president.
As far as the "kissing rings" comment. I think you don't need to be apart of the establishment but I do believe you need to have pull with them at least. The idea that a lone renegade can come into the Capitol and fix problems without the help of major members of both parties helping him is a little fantastical. This isn't "Mr. Smith Goes to Washington." This is real life.

Minnesotan said...

The 9-9-9 plan is right on from a economic perspective. Lowering the cost of goods produced globally increases demand without raising the monetary supply successfully growing the aggregate with no negative side effects like inflation. Its revenue neutral so it wont hurt the government as far as ability to pay back debt once the spending is reeled in. The will never be a complete removal of the IRS as long as the government spends money and therefore requires some amount of income... hence the name. Weather or not this plan can be ruined in the future by politicians is a ridiculous argument. The plan as presented works. We need to get politicians in DC that understand economics, maybe even take a macro or even intro course, then they wont be trying to corrupt the plan. All I do know is this plan has American Capitalism & Greatness written all over it. Herman Cain is my man for 2012, not because hes against the establishment, not because he isn't in love with himself, but because he knows how to make money, and what the government needs to do(or not do) to let American businesses thrive. In the end of the day, jobs and money make or allow everyone to be better off and pursue happiness. -And it just takes one FULL election cycle to change Washington. Don't give up before the battle even takes place. Think about it, Romney's been campaigning 6 years or so now... and he still can't get more than 30%, that's not who we need to put forward.

Dan Luty said...

Disturbing thing about this is that Cain is actually being fielded as serious Republican Presidenti­al candidates­.

A few years ago he would have been laughed off the stage for his ideals by his own Republican party. Ron Paul makes more sense than this guy.

Shows how desperate GOP has become to regain complete power

Christopher Bowkamp said...

Go Michelle Bachman!

CCMC said...

Please remember to keep the discussion about Herman Cain and the 999 plan only.

Jason Garrison said...

There's been some great discussion over the topic here, but I'd like to just reiterate my objective in writing this post. I believe there are some great aspects of Herman Cain, and his buisiness success is very impressive to me. There are some concerns with this aspect of his platform, however, and it's important to analyze every area possible when determining the republican candidate for the upcoming election. It's not necessary to agree with the post at all, but please take the time to think critically about the plan in order to make an informed vote in the primary.

James said...

Another article using real numbers describing why this is a bad plan, ultra wealth get little to no(not figurative but actually 0%) taxes while people like you and I see a large tax raise.

http://thinkprogress.org/economy/2011/10/17/345663/buffett-nothing-under-999/

Yes, I know this is not a Conservative website, but it uses real numbers. If you think the author is wrong please explain why, and not just blast the website.

jessica.walworth said...
This comment has been removed by the author.
jessica.walworth said...

Just to throw another article into the mix...

A tax expert at the University of Southern California hashed out how the 9-9-9 plan would actually effect tax payers...

Read more: http://curiouscapitalist.blogs.time.com/2011/10/17/the-cain-9-9-9-plan-how-much-would-the-99-pay/#ixzz1b61S6rs9

Matt said...

Fair article with descent arguments. But it made the comment that the 9-9-9 plan is the most "unfair" tax plan that has come along.
I think that is a question that we as Americans have to ask ourselves. What is the definition of the word "fair." Obviously depending on whether your taxes would go up or down under the 9-9-9 plan, you mind find the plan to be very fair or extremely unfair. I think in American culture, we have thrown thrown the word "fair" around so much that nobody quite knows what it means anymore. So,everybody out there: What is your definition of a "fair" tax code?

Mike said...

Don't get me wrong, I think Herman Cain is a great guy. If nominated, I would vote for him over Obama in a heartbeat. That said, I don't like this plan.

1. One of Cain's primary backing groups is the tea party - named after the Boston Tea Party, where Colonists dumped cases of tea into the ocean to protest what? A sales tax. Ironically, that is Cain's sole unique contribution to the presidential debate.

2. No tax, once implemented in American history that I know of, has ever gone away. If there was a sales tax, government would
have a hand in every single economic transaction within American borders. Too much power, and directly contrasting the fundamentals of capitalism, entrepreneurism, and the American dream.

3. Cain talks as if he will control the tax code. I got news for you, he won't. The rates will never stay at the 9's. Every tax in American history has gotten bigger and more complex. What makes this one any different?

Anonymous said...

@mike

A couple of points...

1. The tea tax of the 1700's was an excise tax placed on a particular product - tea, not a sales tax. Some in the tea party see a consumption tax as a better alternative to a graduated income tax.

2. The have been many many tax changes to taxes and tax laws in American history and many example of taxes being lowered or even abolished. Examples? Whiskey tax of the late 1700's, 50% tariff of the 1830's, Kennedy's tax rate cuts, Reagan's tax rate cuts, and many more.

I'm not a fan of 999 as written but to say that we should not bother with the tax code because it might turn out bad is putting our heads in the sand.

James said...

@Matt,

I think a fair tax plan means that every one should pay roughly the same percentage (I, personally. don't have a not problem with the poor paying less though even if that's not "fair"). I don't think there is much variation in the usage of the word fair here. Currently, the middle class pay a much higher percentage that the wealth (in some cases as much as 17% more) and with this tax plan it would increase the divide not close it (see cited articles). I think it quite accurate to call it extremely unfair, I don't think you can make an argument with any substance of it being fair, if you use any standard usage of the word fair.

I personally don't have a problem paying for higher tax rate if it includes thinks like helping the poor, paying for education, paying for health care (oh, no the controversy), and repairing and creating infrastructure in the US. I do have a problem paying higher taxes when that money goes to things like corporate bail outs (especially when that money goes into the profit margin and they still lay people off), tax refunds for jets, maintaining the 700 odd military based around the world, the un-winnable war on drugs (don't get me wrong I'm not for drugs, but good intentions don't justify this monstrosity), and the Iraqi war (whether we should have been there is a moot point, but I don't think we should be there now).

I don't think usage of the word 'fair' has any bearing on this argument, as I believe that it's a pretty standard word with a pretty standard use.

Anonymous said...

Cicero:

In response to Jason's well-written discussion of Cain's 999 plan.

1) No one understands the current IRS code - no one can - it's terrible
2) almost anything is better than what we have now
3) I don't like a sales tax but it's infinitely better than an income tax and if you raise the sales tax people would go nuts because they SEE it going up right in front of them. If you have an income tax hike you don't think about it till April and then you still can't understand the code.
4) 47% of people pay no income taxes. That's absurd for half the country not to pay anything - making most everyone pay a sales tax would be great
5) the current tax code tops off at 35% - 9% for sales tax plus 9% income tax is nothing compared to that
6) his 999 plan is easy to understand and enforce also, the corporate tax is 35% - one of the highest in the industrial world - cutting it to 9% would be amazing
7) our founders would roll in their graves if we refused to exchange our current abominable plan for this one (in other words, didn't adopt 999 and kept the progressive (socialist) one

Conclusion - Yes, a sales tax is a bad idea but a progressive income tax is 10 times worse)

tryanbaseball said...

This is what a real, truly conservative plan looks like, that doesn't involve raising taxes:

1 trillion dollars in one year and balanced in four without raising taxes

...of course most Americans aren't really serious about getting out of debt and having a balanced budget and deem such plans like this as too "radical".

I think it's exactly what our nation needs. Less government, more freedom, and to follow the constitution.

Virginia Dare said...

Herman Cain has said that the 9-9-9 plan is merely an intermediate step to the Fair Tax. So even Mr. Cain doesn't believe that his 9-9-9 plan is the best. THEREFORE -- should we not be critiquing/praising his Fair Tax plan rather than his 9-9-9 plan?

(Just Google 'Herman Cain 9-9-9 plan fair tax'or something similar.)