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Scrutinizing Herman Cain’s 9-9-9 Plan

By: Brad Jackson (Diary)  |  October 13th, 2011 at 10:00 AM  | 

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On today’s edition of Coffee and Markets, Brad Jackson and Francis Cianfrocca are joined by Daniel Mitchell, to discuss Herman Cain’s 9-9-9 plan, the pitfalls of instituting a national sales tax, and the reality that 9-9-9 will probably end up more like 12-12-12.

We’re brought to you as always by BigGovernment and Stephen Clouse and Associates. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

Herman Cain’s 9-9-9 Plan Is Great in Theory, but…
Look Before You Leap on Cain’s 9-9-9 Tax Plan
Cain’s ’9-9-9′ tax reform plan under fire from both left and right
Herman Cain’s 9-9-9 economic plan gets lukewarm reviews from conservatives — and a Cain consultant
Daniel J. Mitchell at CATO Institute

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  • http://www.itsaboutliberty.com IronDioPriest

    Laffer – the “Godfather” of supply-side economics – says that 9-9-9 would be a “vast improvement” over the current tax code, and that it would provide “the least avenues to avoid paying taxes, yet also maintains the strongest incentives for work effort, production, and investment.”

    That’s a heckuva rockin’ endorsement if you’re Herman Cain. Imagine being able to play the “Laffer Card” against the naysayers of your proposal.

    • http://www.itsaboutliberty.com IronDioPriest

      typo

      • Jim Tomasik

        …..

        • tngal

          Here’s your link

          http://www.humanevents.com/article.php?id=46828

    • sayoung80913

      A whole slew of economists liked and backed Obama’s plan.so one person who says “it’s an improvement”-key word there since anything would be an improvement at this point. So what? For every one economist who says it could work,I’ll raise you five more who say it won’t. I realize Laffer worked for Reagan, but that does not make him above making errors in judgement, just like a lot of economists who backed Obama at first made errors in judgement regarding his economic foibles and glittery,unicorn laden vision of hopey changey. I have no faith at all that should congress get their hands on an new stream of revenue that they would find a way to expand on it. MAYBE they wouldn’t, but I’m not willing to take that bet since the odds are so high against it. We don’t need a new stream of revenue, we need to cut spending and get rid of useless programs,entitlements, and workers who are sucking us dry. It’s like already being in debt and getting a new credit card with a lower interest rate. Sure you can change over the balances from other high rate cards to the new one, but how long until something comes up and you need to call for a credit increase….-for an emergency you see-… or worse, you break out the old, high interest cards and now carry balances on both? NO WAY-it’s easy, take away the candy from the store and the kid learns to like eating fruit from the apple tree in the backyard. If you have no money or credit for new clothes or new furniture, you re- paint, or re- sew the old stuff but somehow, you still have a shirt to wear and a seat to sit on.

      • http://www.itsaboutliberty.com IronDioPriest

        He is the author of modern thinking on supply-side economics. He invented the Laffer Curve. He was the philosophy behind the Reagan economic recovery.

        THAT Art Laffer.

        • sayoung80913

          Who is THAT Warren Buffett? Who is THAT Steve Forbes? One guy,whoopideedo. We can play this game all day, lets look at the AGW argument to see how it plays out. One scientist supports it and another calls it crap. AL GORE supports it-why…..he is beyond reproach right,but Lord Monkcton says it’s crap-egads what to do? luckily for me, I don’t need for people to endorse a candidate for me to make up my mind. Herman’s plan in my opinion is crap at best and dangerously naive at worst. My opinion, my vote.

    • dio55

      looks like a Laffer Ryan one two Knockout punch for 999 haters. eatablishment so worried now Bill 0′riley openly shilling for Romney saying “cain cannot beat obama” HA.. Mickey Mouse could beat obama in 2012 . So Cain makes both liberal’s and RINO’S head explode as howard dean would say “YEEEAAAAA”

      • sayoung80913

        re read his comment-he said he loves it because it is a good starting point for debate-at least be honest

        • Scope

          during the Reagan admin. based on the fact that there is a certain point when taxing brings in less revenues for the government, but when you go above that point the government loses revenues? Do I have that right? So yes, Laffer would go along with the 999 plan if the rates stayed the same. The major argument has been that those rates have no guarantee of staying the same. What future Dem. pres. or Congress will guarantee it stays at 999?

          • http://www.itsaboutliberty.com IronDioPriest

            That congress will keep tax rates the same?

  • dio55

    http://www.humanevents.com/article.php?id=46828
    From ART LAFFER you know the guy who engineered the REAGAN ECONOMIC RECOVERY. not including this is not an oversight it is dishonesty

    • Jim Tomasik

      …

      • dio55

        If they ain’t seen it they did not WANT to see it. like i said before Dishonest

  • http://nerds4cain.com Brookhaven

    http://www.humanevents.com/article.php?id=46828


    “Herman Cain?s 9-9-9 plan would be a vast improvement over the current tax system and a boon to the U.S. economy,” Laffer told HUMAN EVENTS in a statement.

    Added Laffer: “Mr. Cain?s plan is simple, transparent, neutral with respect to capital and labor, and savings and consumption, and also greatly decreases the hidden costs of tax compliance. There is no doubt that economic growth would surge upon implementation of 9-9-9.”

    • wonkish1

      Interesting little piece of history there.

      • http://nerds4cain.com Brookhaven

        Again, proof that even a broken clock is right twice a day.

  • http://impudent.edublogs.org/ kyle8

    15 percent sales tax, 15 percent income tax, 15 percent value added tax, 15 business tax, 15 percent death tax, and then the 15 percent surcharge on the “rich”.

    I know with metaphysical certainty that over time this would happen.
    And if you don’t believe me you are just not cynical enough.

  • Death_of_the_Donkey

    First, it is extremely regressive and will play right into O’s class warfare campaign. Second, remember that almost every state already has a sales tax, so Obama is going to get to go around the country telling the people of say Ohio that Cain is going to raise your sales tax to at least 14.5% (add in the local average and it is 15.78%). That is a politically losing argument even before Congress gets their hands on actually drafting a bill.

    • tjms

      as independent truckers we have looked at the addtl 9% sales tax. Traveling and have to buy so many goods on the road, it will probably be the final nail for us.

      • http://nerds4cain.com Brookhaven

        Approximatly 22% of the price of all current products is the result of federal taxes–taxes that go away under the Cain plan. You have to account for that in your calculations of how much you would pay under the 9-9-9 plan.

        Let’s take a gallon of milk for example:

        Current retail price: $3.00 (it varies, but lets use $3.00 for a base)
        Current sales tax rate: 0% (assume state with no sales tax on food).

        999 retail price:$2.55 (reduce by 22%, then add back in 9% income tax)
        999 sales tax:$0.23
        999 total cost: $2.78
        saved under 999: $0.22

        A gallon of milk would be 22 cents cheaper under 999–good for truckers.

        Let’s look at something that has a local sales tax. A tool that cost $250. Let’s also assume you’re in a high sales tax state with a rate of 10%.

        Current retail price: $250
        Current local sales tax: $25
        Current total cost: $275

        999 retail price:$ 212.55
        999 local sales tax:$ 21.26 (yes, your local sales tax will go down, because it is based on the now lower retail price).
        999 fed taxes: $19.13
        999 totacl cost: $252.93

        You would save $22.07 on this tool over the current system. Again, good news for truckers.

        Even in states with high sales taxes, people end up paying less under the 9-9-9 plan.

    • sayoung80913

      I think the rate is zero there. How will Cain explain to the seniors down there that he is going to be raising their taxes which is not a conservative plank and a reason a lot of these seniors moved from NY or NJ to FLA anyway-to get away from the taxes. How long until the DNC and Wasserman-shultz runs an ad saying Cain wants to raise your taxes old people, They made a commercial showing Ryan dumping a wheelchair bound granny off of a cliff-what makes people think they will do anything less for Cain’s short sighted plan? Anyone heard of the “catfood commission?” the vitriol would be at a volcanic,toxic level if this was to be thoroughly vetted in the MSM. But,never fear, oh it will be,just you wait, but right now the republican elite needs Cain so they can use him to get rid of all of the other conservative candidates. He’ll be their golden boy until the last one drops out and then good ole Mitten’s and NRO,The Weekly Standard,Rove,Morris, and the usual cast will decide that his plan is just too risky, he’s a little “too” inexperienced after all and they will turn guns ablazing at him, destroy him too and leave their “acceptable” boy Mitt. Cain is running something, but it isn’t a presidential campaign with that skeleton staff,very few fundraisers,raising minute amounts of money and conducting a book tour. Looks to me like Cain is shilling for Romney in the hopes of getting a VP slot or cabinet post. Little else makes sense.

      • avagreen

        But,never fear, oh it will be,just you wait, but right now the republican elite needs Cain so they can use him to get rid of all of the other conservative candidates. He?ll be their golden boy until the last one drops out and then good ole Mitten?s and NRO,The Weekly Standard,Rove,Morris, and the usual cast will decide that his plan is just too risky…..
        An excellent analogy!
        Man! You’ve hit it on the nose!
        And, you’ve got that routine down pat!

        I can just hear Rove droning on about it on Fox.

        Yeah, Cain is aiming for a VP spot and plying his trade, that shrewd businessman who is only interested in what’s best for the rest of us.
        Sheesh!

        The sooner people see through this fraud, the quicker we can get on with electing a real candidate, not some charlatan like him.

        And, remember………..I used to support the guy!!

    • clintonformccain

      At least we will have sent a message by nominating someone with zero political experience, just like we show’d ‘em with Sharon Angle and Christine O’Donnell. That’s a lesson they won’t be forgetting soon….

  • Matthew Morris

    I bet Art Laffer doesn’t bother to try to come up with all the possible ramifications, implications, and effects of implementing 9-9-9. He probably just knows that based on, you know, the PRINCIPLES of things, it would be a fair and more efficient system.

    And for some REASON… too many conservatives are nay-saying 9-9-9 and trying to come up with a bunch of the ramifications, implications, and effects- only problem is you are only focusing on the negative!

    Many of you are overlooking the grand opportunity before you. The almost inexplicable support building for Cain could very well translate into the political will to get 9-9-9 done, and to get it done in such a way as to alleviate concerns like 9-9-9 becoming 15-15-15.

    As for the multitudinous re-alignment and transition factors that must be realized- well those are too many to even contemplate. But if you feel pain in the process, remember- that is the price of Fair and Equitable that you are paying (for our children, mind you- not to say that we won’t all realize the benefits of fairness in the short term)

    Fairness would eat its way not only into our economy, but into our CULTURE. Think about it. Skin in the game is transformative.

    Now will it be possible after 2012 elections to make any of this law? Who knows…. but don’t get SCARED when its time to consider and discuss something BIG.

  • tngal

    and he’s no goldwater, but his plan is do-able.

    And instead of all the criticisms being leveled against 999, what would you tweak to make it better?

    Would you add another nine somewhere, or sub one for a 12? C’mon the current tax code isn’t working. This is a plan. So what would you do to improve on it?

    • streiff

      What is there to “tweak” about a national sales tax?

      • acat

        Something to require sunsetting the income tax within 10 years, with a 3/4 majority needed to override it.

        Mew

        • tngal

          Ideas. Poison pill that puppy, err kitty. Hey if you don’t like 9 percent on the national level, go with 2 percent and make up the difference among the other two legs of the plan. Or add another leg. Where do import products fit into the tax mix? Is that a tweaker? The point is to look at it objectively and see how you would change it. Mr. Cain seems like the kind of guy that would actually take suggestions.

          He just announced he’s stopping the bus tour and heading for the early states, plus he’s hiring staff. He’s a listener.

          • acat

            The only problem I have with Cain is a concern over whether he can translate his business executive background to the government-executive role.

            Some people make the jump pretty well, some people crash and burn.

            The model, by the way, is Florida’s new Governor.

            Mew

  • tngal

    This would be great because on occassion a Potus listens to advice from his vpotus. Maybe the vp could work with him on the 999 plan that many here seem to dislike.

    (so very glad he announced this in TN. )

    http://thehill.com/video/campaign/187323-cain-names-demint-ryan-as-possible-running-mates

    • izoneguy

      N/T

      • tngal

        granted Ryan has already said he didn’t want to run for anything, but herman is vocalizing who he wants surrounding him. I like the people he picked. In the article he points out he is not deeply familiar with the ways of Washington. So that’s why he would like someone who is. He likes newt somewhere around him because newt is is one smart cookie. Unlike our current pres who surrounded himself with crazy czars.

      • rightwingmom52

        Paul Ryan on 9-9-9 –
        here.

    • sayoung80913

      since Paul Ryan already said his 9-9-9- plan was unworkable. And being as how Ryan is the chairman of the budget committee-how does Cain get the plan through him?

      • tngal

        (wait for it…..)

        Work with him!

        That’s right, I’m talking tweaking the 999, as mentioned several posts above. Cain appreciates Ryan for what Ryan brings to the table. And Demint, and Gingrich. He’s tryng to simplify the code, and everyone knows we need that but he’s not completely closed off to new ideas.

        He may not turn out to be the best candidate, but he hasn’t stumbled enough to be disqualified yet. Greenspan or no Greenspan.

        I know the economy and jobs are big and everyone’s focused on them and thus attacking the plan, but social issues are what draws the lines between conservative, republican, (moderate d’s and m’s ) and that other side way over there.

        That’s part of the reason so many are just not ready to leap into the Perry and Mittins and Paul camps. For some the line in the sand is healthcare/romney or immigration/perry, or military/paul etc, etc. Once someone has found their own personal line in the sand they are willing to allow a little wiggle room on another issue. And if this 999 plan isn’t perfect it can be wiggled.

        But Paul won’t back off his military stance, and so loses a bunch, Romney still defends his healthcare, and perry is happy with his vote on his state’s stand on tuition for kids of illegals. So they lose a bunch.

        If Cain flounders, look for his supporters to back Perry or Newt if he’s still in it. But right now, Cain is not floundeirng.

      • rightwingmom52

        to izoneguy in this thread.

        • sayoung80913

          and he said the same thing he said the last time he was asked. “I love it because it’s a good starting point for debate” the only thing he left off was what he said last time asked when he said “Herman was a friend of his but his plan was unworkable- a good starting point to debate, but in it’s form unworkable” That is not an endorsement people. I can say the same about Mitt’s or Huntsman’s plans. And in my own eyes Cain disqualified himself when he participated in racially smearing another conservative. I have no interest in working with someone like that. Little if any facts, questionable sources, and yet made sure to make the rounds on t.v. putting the idea out there. I also don’t like putting the idea out there that he served his country in Vietnam when he was actually a civilian worker who happened to work WITH and not IN the navy. That makes a difffrence to me as a military brat,wife and mom. Civilian workers have not been through boot camp, do not wear the uniform and rank, and do not see combat-in short they are not soldiers and the government does not consider them as such. we have hundreds of them-government union workers BTW, who we can not fire over flowing our base. There is an entire fleet of men who “work beside” Lockheed Martin here, a group who I have personally come upon walking my German Sheperd through the woods. They were playing cards! A civilian worker is not the same as serving your country- a job yes, a soldier no and I don’t appreciate being led to believe otherwise. Cain is gaining a reputation for slightly bending the truth which i also do not appreciate and saying Greenspan was the best chairman for the fed was pure idiocy from a business man-c’mon. Next I’ll expect the Cain fans to claim Barbour endorsed him-except he didn’t

      • Scope

        which is probably why his plan went no where fast. I don’t believe Ryan even had any great R support for his plan. Ryan is a wonk. That was evident in his proposal. I could understand Ryan giving kudos to Cain for coming up with something, as he has been trying to do the same. It doesn’t always mean it is the best thing. Ask Ryan how far his plan went in Congress, even with R’s.

  • dsmurf

    999 sure can become 12-12-12. just like our tax rates can become 90-90-90 with another Carter or Roosevelt or another in the White House but then that would come down to independents who thought that the Democrats were geniuses when it came to economic matters.
    The fact of the matter is that 9-9-9 would broaden the tax bases, expand the economy and bring income from the underground economy as it made way back to retailers etc. As our infantry officer commentator made the shotgun blast remark that hope is not a strategy is correct. But neither is Congress should be restricted to the current tax code or the sixteenth amendment. Making shotgun blasts about hoping not to get the 9 9 9 plan. May the debates continue.
    Bachmann is not correct in thinking that 9 9 9 is another revenue stream in that the old tax code and its multiple streams of income. It replaces those multiple streams with just 3 streams. So instead of 35% corporate + 9 % sales tax plus deductions from workers pay. It would be full pay, I reckon pay 9% sales tax and pay 9% on income at tax time. Just please lets debate the merits and not throw it so we can keep this redonkulas tax code which I hope no one will raise to 95 95 95 95 95 95 . . . etc you know on the Soviet or communist model.

  • Scope

    during Reagan’s term, at least temporarily? If I’m not mistaken Reagan increased taxes to get out of the Carter slump, but then reversed them back?

    It is funny that the conservatives love to bring up the fact that Reagan increased taxes, and hold that against Reagan. Now laffer comes out saying good things about the Cain plan, and all the conservatives rally around the Cain plan, and oh my, Laffer likes Cain’s plan. Why is Laffer promoting a plan that includes a national sales tax? That perplexes me.

    • rbdwiggins

      Laffer is an economist. When viewed solely from that perspective, the plan is genius…

      It’s simple because the tax rates are the same across the board. It reduces the cost of compliance. It nearly eliminates any chance of cheating. The rates are low enough that they’re not too punitive. The corporate tax rates are more than cut in half. It broadens the tax base because everyone will pay income taxes, including those not currently paying federal income taxes. And no one who participates in commerce can escape the sales tax.

      From this conservatives viewpoint: No one in their right mind would propose giving the federal government a brand new revenue stream.

      Liberals, progressives and the political class were busy just trying to figure out a scheme to tax the “rich”, CO2 and the Internet. Now we’re discussing a national sales tax.

      It’s the political class’s wildest dream: They get to tax the entire US economy.

      Since no congress can bind a future congress, 9-9-9 is just the starting point. Change the rules under reconciliation and change the rates with a simple majority vote.

      It’s economic suicide.

      • Scope

        Romney went to Fla and convinced the seniors that Perry wants to make you eat dog food, because he wants to take your SS away from you. Typical liberal scaremongering. The national sales tax will hit the seniors hard, and cuts more deeply into their income. It is on everything from necessities to luxury items.

        You know the Democrats are going to push that end of it big time. In fact, they already are.

    • http://travismonitor.blogspot.com Freedoms Truth

      Scope, you are confused about the history of the Reagan tax cuts.

      In 1981, the Kemp-Roth tax cut bill was passed. The core of the bill was cutting the top rate to 50% and cutting ALL tax rates significantly. To get support of deficit hawks, they delayed full implementation until jan 1983. Congress also “Christmas tree”‘d the bill with a load of additional tax cuts, loopholes, etc. that increased the revenue reduction in the bill.

      Folks like “tax collector for the welfare state” Bob Dole and others got nervous in 1982 that they cut too much, and so in 1982 they undid some of the tax cuts, but they KEPT THE RATE REDUCTIONS. That ‘tax increase’ took back a lot of looholes etc. but did not change the rates.

      So your history is backwards – they cut taxes first (staged) and then took some of it back.

      laffer’s curve was vindicated. The lower rates raised more revenue than ever.

      “It is funny that the conservatives love to bring up the fact that Reagan increased taxes, and hold that against Reagan.”
      But they get it wrong – OVERALL, Reagan cut tax rates significantly.

      “Why is Laffer promoting a plan that includes a national sales tax?”
      Laffer wants lower rates and a broader base. That is the best tax system from an economic point of view. Cain has it.

  • bzip

    Interesting reading;
    http://blog.sfgate.com/nov05election/2011/10/13/did-herman-cain-get-9-9-9-tax-plan-from-simcity-video-game/?tsp=1

  • izoneguy