Rationalist
Hail Voltaire
I'd like to have an honest discussion about Herman Cain's tax reform proposal. Many conservatives have become obsessed with the plan, refusing to acknowledge its flaws. Virtually all liberals are quick to criticize the plan without presenting an idea of their own, except that the rich should pay their "fair share," whatever the hell that means.
Personally, I like the plan. It does, however, need some adjustment.
Here's what I like about 9-9-9:
- It broadens the tax base. As it stands, nearly half of American workers pay no income tax. If we are to increase revenue, we cannot do so simply by soaking the rich; rather, we must increase the number of Americans paying into the system. Besides, the lower and middle classes already contribute 7.65% of their income for SS and Medicare, in addition to the 7.65% paid by their employer -- a 15.3% tax that will be eliminated when the 9-9-9 plan is enacted.
- Many liberals like to say that the US tax code should be modified to more closely resemble Europe's. But in most European countries, the poor and middle classes are taxed at a much higher rate than in the United States. For example, the bottom 50% in Denmark accounts for 42% of tax revenue. In my mind, "fair" means everyone contributes. If you make $1, you pay 9 cents in taxes. If you make $1 million, you pay $90,000 in taxes.
- It is fair and simple. Everyone pays the same rate. However, it is also progressive in that the wealthy will contribute a greater percentage of their income via the sales tax, considering that the wealthy purchase more goods.
- It would close loopholes on individuals and corporations. Everyone would pay 9% of their paycheck. Companies such as GE and GM, which are in bed with the Obama administration, wouldn't be able to avoid paying their fair share.
Here's what I don't like about 9-9-9:
- The sales tax would disproportionately impact the poor and middle class by increasing the cost of food, housing, and other basic necessities. My hope is that Cain will modify his plan to exclude these necessities.
- Capital gains would not be taxed. I'd actually prefer a 9-9-9-9 plan: 9% income, 9% sales, 9% business, and 9% capital gains. While 9-9-9-9 may be not as catchy as 9-9-9, it would ensure that the wealthy are paying the same rate as everyone else, and would make up for providing sales tax exemptions for food, housing, and other essential goods.
- Once we implement a national sales tax, there'd be nothing to stop a future Congress from raising 9-9-9 to 12-12-12 or 20-20-20. It would probably be 9-9-9 for only 9 months, 9 days, and 9 hours. Some provision would have to be made to prevent Congress from doing this.
Personally, I like the plan. It does, however, need some adjustment.
Here's what I like about 9-9-9:
- It broadens the tax base. As it stands, nearly half of American workers pay no income tax. If we are to increase revenue, we cannot do so simply by soaking the rich; rather, we must increase the number of Americans paying into the system. Besides, the lower and middle classes already contribute 7.65% of their income for SS and Medicare, in addition to the 7.65% paid by their employer -- a 15.3% tax that will be eliminated when the 9-9-9 plan is enacted.
- Many liberals like to say that the US tax code should be modified to more closely resemble Europe's. But in most European countries, the poor and middle classes are taxed at a much higher rate than in the United States. For example, the bottom 50% in Denmark accounts for 42% of tax revenue. In my mind, "fair" means everyone contributes. If you make $1, you pay 9 cents in taxes. If you make $1 million, you pay $90,000 in taxes.
- It is fair and simple. Everyone pays the same rate. However, it is also progressive in that the wealthy will contribute a greater percentage of their income via the sales tax, considering that the wealthy purchase more goods.
- It would close loopholes on individuals and corporations. Everyone would pay 9% of their paycheck. Companies such as GE and GM, which are in bed with the Obama administration, wouldn't be able to avoid paying their fair share.
Here's what I don't like about 9-9-9:
- The sales tax would disproportionately impact the poor and middle class by increasing the cost of food, housing, and other basic necessities. My hope is that Cain will modify his plan to exclude these necessities.
- Capital gains would not be taxed. I'd actually prefer a 9-9-9-9 plan: 9% income, 9% sales, 9% business, and 9% capital gains. While 9-9-9-9 may be not as catchy as 9-9-9, it would ensure that the wealthy are paying the same rate as everyone else, and would make up for providing sales tax exemptions for food, housing, and other essential goods.
- Once we implement a national sales tax, there'd be nothing to stop a future Congress from raising 9-9-9 to 12-12-12 or 20-20-20. It would probably be 9-9-9 for only 9 months, 9 days, and 9 hours. Some provision would have to be made to prevent Congress from doing this.
