A fair and reasoned analysis of Cain's 999 plan

[icedancer2theend]

Cains vision is;

Limit all personal income taxes (including SS / Medicare) to 9%

Reduce Corporate Taxes to 9%

Introduce an national sales tax of 9%

Phase II would be to eliminate the personal income tax and the Corporate Income Tax and replace them both with the "Fair Tax"

Cain's brochure claims that the plan is revenue neutral, which would mean that it would generate a similar amount to the current Federal Revenues of about $2.162 Trillion. At first glance it seems difficult to fathom. It fortunately it isn't difficult to test this contention. We'll simply assume zero deductions and multiply the aggregate totals of each sector by 9%.

Our best, or perhaps most optimistic, estimate of aggregate U.S. personal income comes from University of New Mexico's Bureau of Business and Economic Research. According to UNM's BBE - total personal income in 2011 will be $12.590 Trillion.

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[icedancer2theend]

Cains vision is;

Limit all personal income taxes (including SS / Medicare) to 9%

Reduce Corporate Taxes to 9%

Introduce an national sales tax of 9%

Phase II would be to eliminate the personal income tax and the Corporate Income Tax and replace them both with the "Fair Tax"

Cain's brochure claims that the plan is revenue neutral, which would mean that it would generate a similar amount to the current Federal Revenues of about $2.162 Trillion. At first glance it seems difficult to fathom. It fortunately it isn't difficult to test this contention. We'll simply assume zero deductions and multiply the aggregate totals of each sector by 9%.

Our best, or perhaps most optimistic, estimate of aggregate U.S. personal income comes from University of New Mexico's Bureau of Business and Economic Research. According to UNM's BBE - total personal income in 2011 will be $12.590 Trillion.

more

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[Damocles]

Realistically, you cannot bind the future legislators to the limitations in the plan. How quickly, assuming no vetoes or overridden vetoes or even after he leaves office... before we're right back to where we started? One year? Two?

 

[icedancer2theend]

Realistically, you cannot bind the future legislators to the limitations in the plan. How quickly before we're right back to where we started? One year? Two?

The idea behind the plan is that by making every citizen pay, every citizen has a stake in taxes getting raised- it removes class warfare and therefore special interest.

 

[Damocles]

The idea behind the plan is that by making every citizen pay, every citizen has a stake in taxes getting raised- it removes class warfare and therefore special interest.

Again, how long before you hear, "The richest of the rich aren't paying their 'fair share'?!!!" Blah, blah...

I don't see it lasting, it is a political non-starter.

That doesn't mean I don't like it, it just means I see it as simply adding a national sales tax to what would become the exact same tax code we already have...

There'd be some bleeding heart out there who thinks that interest paid on houses should be deductible for "this group"... and then the who thing will just start over and we'll wind up with just another tax added on to what we already have.

 

[icedancer2theend]

Again, how long before you hear, "The richest of the rich aren't paying their 'fair share'?!!!" Blah, blah...

I don't see it lasting, it is a political non-starter.

That doesn't mean I don't like it, it just means I see it as simply adding a national sales tax to what would become the exact same tax code we already have...

There'd be some bleeding heart out there who thinks that interest paid on houses should be deductible for "this group"... and then the who thing will just start over and we'll wind up with just another tax added on to what we already have.

It certainly could not work without specific legislation to protect against what you make a case for. It could be as simple as creating a super majority necessary to change it. That it would have to be drafted as a pure bill (no pork) and voted on in proper order. I do think forcing all citizens to contribute equally, makes everyone a stake holder, and that, in and of itself, is a built in protection as it were. An example in recent history in my state? An increase in sales tax- basically by fiat of the governor, was put on the ballot this past November and struck down by a mostly liberal progressive voting block. Why/ because everyone from the wealthy to welfare recipient had a stake.

 

[Damocles]

It certainly could not work without specific legislation to protect against what you make a case for. It could be as simple as creating a super majority necessary to change it. That it would have to be drafted as a pure bill (no pork) and voted on in proper order. I do think forcing all citizens to contribute equally, makes everyone a stake holder, and that, in and of itself, is a built in protection as it were. An example in recent history in my state? An increase in sales tax- basically by fiat of the governor, was put on the ballot this past November and struck down by a mostly liberal progressive voting block. Why/ because everyone from the wealthy to welfare recipient had a stake.

Legislation wouldn't be enough to protect anything, the legislative body simply would rewrite legislation to their purpose. It could only be viable if it were a limitation in the constitution. Otherwise change toward the system we now have would be inevitable. We'd be hearing all about "those most able to pay" and how they paid the "same rate"... Seriously, it would be a godsend to the class warfare elite.

I don't see this 999 plan passing the legislature, and if it did I see it having the problems I list above.

 

[Jarod]

I dont hate it, I dont understand how the sales tax is turned into a progressive tax. The guy in the video I saw said the government would offer Pre-Bates? Can anyone explain that to me better?

I also belive it would be very difficult for the poor to pay that much in sales tax unless there were exemptions on things like Baby Food and eletricity.

 

[Jarod]

I love the idea of getting rid of income tax because it "punishes" the working class and keeps them from garnering wealth, ultimatly its almost impossable to garner enough wealth in a single generation to be wealthy, if you started with nothing. (there are some notable exceptions.)

It keeps those who are born with money rich, even if they dont work hard, and it keeps the middle class, middle class. I just have not heard a sutable alternative. The best Ive heard yet is a huge inheratance tax, that way wealth is not so strongly stagnated in family lines and instead those who work hard are the ones who get the wealth.

 

[Damocles]

I dont hate it, I dont understand how the sales tax is turned into a progressive tax. The guy in the video I saw said the government would offer Pre-Bates? Can anyone explain that to me better?

I also belive it would be very difficult for the poor to pay that much in sales tax unless there were exemptions on things like Baby Food and eletricity.

Pre-bates. Estimation of spending you will do, the taxes you would be charged, and a check to offset those.

 

[Jarod]

Pre-bates. Estimation of spending you will do, the taxes you would be charged, and a check to offset those.

So the government would estimate how much you are going to spend this comming year on essentials and send you a check for that at the start of the year? That is going to result in some real issues. Plenty of lobbying will take place trying to get more money for x, y, or z. Plenty of illresponsable people with kids will blow that Pre-Bate on something useless then not be able to afford baby food at the end of the year.

 

[Jarod]

Has any other nation tried the income tax deal? What was the result? Any other nations (other than oil rich nations) gotten rid of income tax? How?

 

[Damocles]

So the government would estimate how much you are going to spend this comming year on essentials and send you a check for that at the start of the year? That is going to result in some real issues. Plenty of lobbying will take place trying to get more money for x, y, or z. Plenty of illresponsable people with kids will blow that Pre-Bate on something useless then not be able to afford baby food at the end of the year.

Yup. As I said, I see this as political noise. This will never pass, especially not in this form. Liberals will spend time increasing the size of the groups who are means-tested into prebates, the level of taxation will never stay where it is at and will migrate to the same system we already have, and in the end we'll be left with an even more complex set of taxation rules that include a sales tax as well as the system we already have. When that begins the corporate-owned politicians will begin "offsetting" certain "Important" businesses sales taxes and begin altering deduction tables to allow for those 'industries' to get a 'better chance'...

I see this winding up even more complex than before.

 

[Jarod]

Yup. As I said, I see this as political noise. This will never pass, especially not in this form. Liberals will spend time increasing the size of the groups who are means-tested into prebates, the level of taxation will never stay where it is at and will migrate to the same system we already have, and in the end we'll be left with an even more complex set of taxation rules that include a sales tax as well as the system we already have. When that begins the corporate-owned politicians will begin "offsetting" certain "Important" businesses sales taxes and begin altering deduction tables to allow for those 'industries' to get a 'better chance'...

I see this winding up even more complex than before.

Its subject the same problems the current system is subject to, in fact I agree, it would add a new level.

So any other ideas for replacing the income tax?