Someone should look into a crony capitalism connection between Herman Cain and the needle and thread industry. Explaining the sales tax portion of his 9-9-9 plan on CNN, Mr. Cain pointed out detractors of his plan were assuming people would be buying new things. That’s where their analysis is flawed, he said.
Crowley: You would make an exemption for food and clothing?
Cain: No. No exemptions. You don’t need those exemptions.
Crowley: A poor person is paying the same amount of tax on groceries as I would. Does that sound fair?
Cain: Yes, because of the other point I’m about to make. If they need a car or home or other hard goods that are used they pay no taxes. So they have an opportunity for them to leverage their income. The assumption made by the critics is that they’re going to spend all of the rest of their money on new goods. No, that’s not how my parents did it…To say that it is regressive is based on erroneous assumptions.
I confess I haven’t done any research on the 9-9-9 plan. Intuitively it doesn’t seem plausible. If Cain isn’t going to fade away like the clothes he’s expecting middle class Americans to wear, we need to go over 9-9-9 with a fine toothed comb, preferably a new one.
Maynard adds:
Hi, Pat, can I jump in here? I’ll start with the admission that I haven’t paid much attention yet to Cain’s 9-9-9 plan. But why should that stop me from opining?
I’ll quote from a segment of my earlier post, Theories of Taxes:
Here are some fundamental tax types:
- Consumption taxes, such as sales tax, which tax you for stuff you use
- Production taxes, such as income tax, which tax you for your productivity
- Property taxes, which tax you for stuff you own
- Transfer taxes and fees, which tax you for transactions in which non-consumable goods change hands
- Taxes on capital gains and investment income, which tax you on the growth of assets you hold
- As the final insult, there’s a death tax
Excessive taxes can suck the life out of an economy. Some types of taxes are more toxic than others. A strong economic argument can be made favoring the consumption tax over the alternatives. Taxing consumption rather than production encourages savings, which are an essential part of the foundation upon which a prosperous economy is built. Also, taxing consumption levels the playing field with respect to domestic production, since all goods are taxed at the same rate regardless of origin, instead of having domestic goods weighed down by built-in taxes. Unfortunately, it’s politically awkward for an elected official to advocate rational tax policy, because the political opposition strives to make good ideas sound ugly.
So in principle and in the context of a greater tax strategy, I favor a sales tax because I think it would do good things for the big picture. And Cain is correct in pointing out that, if used goods are exempted from sales tax, this opens a pathway for people of limited means to evade the tax. Our economy would be more efficient, and I think most people would be happier, if we got the full mileage out of the stuff we already have instead of rushing to chuck our current possessions and replace them with shiny new expensive bling. That tax policy might encourage our thrift and legitimize a lot of semi-underground economic activity seems to me desirable.
—–
Pat adds:
Don’t tax the rich because it is bad for the little people. Tax the middle class because it is good for their souls. Where do people get the idea Republicans are aristocratic? What jobs will the rich be creating if the middle class is not consuming?
—–
Maynard notes:
If we negotiate a few details, a consumption tax becomes substantially progressive. Exempt the basic staples (and I know Cain was saying otherwise, but we can talk about this) plus used stuff as Cain said, and the poor have a pathway to largely go tax-free. Alternatively, some have proposed a VAT that covers everything but gives every citizen a “prebate” which would cover the taxes for basic living expenses.
Under the plan Cain describes, a used car would go untaxed, a cheap new car has the lowest tax, and an expensive car pays the most. So the rich are going to pay for their lifestyle choices, but the new tax structure would reward people for saving rather than consuming. I know it’s commonly argued that we need people to start spending in order to get the economy moving, but I think that’s a canard. We can’t consume our way to prosperity; we must seek the balance of production and consumption. Right now we’re consuming at a rate that’s not supported by either our production or our capital (savings); that’s got to change. Rational tax policy is part of that change.
As part of the big picture, I have two other goals. First, the government must live within its means (and preferably get there by limiting expenses rather than enhancing revenues). Second, I want every citizen — or at least every voter — to feel the pinch of taxes. Rich or poor, I want everyone to understand that there’s a connection between what the government spends and what comes out of your pocket. Otherwise, it’s just an abstraction. Another billion dollars for fill-in-the-blank? When the president proposes spending on anything, I want the people to think, “That’s going to take twenty-three (or whatever) extra dollars I’m going to have to come up with.” This is what the tech boys and girls know as “feedback”. Then maybe the nation would start to take the national budget, and the spend-aholics who are in charge of it, seriously.
—–
Pat again
As I said, I haven’t researched the 999 plan so I can’t say how well the theoretical benefits of consumption taxation integrate into the rest of it. Cain is nimble with the numbers about a $50,000 a year household saving enough on income tax to pay the sales tax. Does that apply to other income brackets? Retirees who pay little or no income tax will just be hit with a whopping sales tax increase. This is a 9% national sales tax on top of individual state taxes and income taxes. Who’s to say once a national sales tax is implemented Congress will stick with low numbers? We’ll be right back where we are only with another revenue source for Washington.
It isn’t just an academic debate about consumption taxes right now. My issue is with the way Cain is trying to promote the plan. Cain’s popularity with Republican voters is surging. If Cain is the nominee he needs to make his arguments for his tax plan sound better than let them eat leftover cake. All lower income people will be hearing is that there is a new tax to pay, the rich get a tax cut and I’m supposed to shop at rummage sales. This is not a winning argument the way he is stating it even if 999 is a viable plan. Once the plan undergoes scrutiny I wouldn’t be surprised it doesn’t even add up. On the other side the Democrats are successfully playing the class envy card. Hello President Obama second term.
No candidate is going to be good enough for us… accept it. There is no perfect candidate.
Sarah Palin has helped create a movement… she is a leader of people who believe in the basic principles that were responsible for attracting people to her cause. She is not running for the Presidency… this does not change anything for her supporters… she has pivoted and is “driving to the basket” from a different angle. If you believe in those principles, then whether she is running or not for the Presidency is irrelevant at this time.
Washington and government all across the US requires the restoration of these principles… and Americans have to hear those principles again…. it will take many election cycles to achieve it… not just one run for the Presidency.
You have to sit down and watch what I consider one of, if not the best, speech that Sarah Palin has ever given…
Sarah Palin – Defending the Republic – http://tinyurl.com/6bdpfvz
Oh good grief. The “poor” are buying cellphones and flat screen TVs, and not used. The kids wearing $200 sneakers didn’t get them at a thrift store. What Cain’s parents did in their day is irrelevant in an age of rapid obsolescence and throw-away products.
You’re a bit out of touch. My family shops thrift whenever possible. We buy as much of what we need used, before we spring for new. Not poor. Middle class. It’s how we get by. Only a fool (or wealthier person) would pay $200 for sneakers. What Cain’s parents did is totally relevant for most of the working class people I know. Craigs list, ebay, Thift stores, garage sales, ALWAYS come first. Then retail if we have to. Taxed to death in New York State.
Agreed! I started shopping thrifts and garage sales when my children were very young and we were flat broke. Now I do it for fun and I often find the most amazing things at great prices! Did you know that Goodwill purchases Targets overstock by the pound and resells it? And the items are all new with tags! I no longer NEED to pinch pennies (well maybe a squeeze or two now and then in this economy) but I sure do have fun making those pennies squeal anyway! And if they didn’t tax these items…WOW what a sweet bonus! (I once bought my son a new/with tags $170 pr of SEVEN for all Mankind jeans at Goodwill for only $6.99!)
I am a fairtax supporter. Cain used to be, but he abandoned it with the 999 plan. The fairtax limits the fed govt’s revenue to a sales tax only.I can’t get behind a plan that adds a new source of revenue to the existing ones.
Fair tax is phase 2 of Cain’s plan. The income tax would go away. Of course, it’s all academic if it doesn’t get passed. 999 Also eliminates several revenue sources. Capital gains, gone. Inheritance tax, gone. Social Security tax (15%+),gone.
There’s no way America should go down the road of a National Sales Tax, without a constitutional repeal of the income tax. Which, of course, is never going to happen. Which is why he better scrap 9-9-9 fast if he wants to be a serious candidate. Otherwise, it’s going to be the albatross around his neck. As better minds than me have pointed out, there will be nothing stopping the libs from turning 9-9-9 into 30-20-20.
I truly love this argument “there will be nothing stopping the libs from turning 9-9-9 into 30-20-20“. There’s nothing stopping them now from raising taxes on use in our current system? Except WE THE PEOPLE. OMG imagine that. In fact I would argue it’s easer to do it in our current system with different tax brackets and different types of taxes. If it don’t affect me why should I care, and we didn’t care. Until enough of use wake up a little and started yelling enough is enough. Here’s the problem I feel 999 starts to address, and that’s enough of use have not woken up yet. It’s funny we fought our revolutionary war over no taxation with out representation. Maybe the next revolution should be no representation without taxation. When almost half the US population doesn’t even pay taxes, and lets not even get in to earned income credit. That half doesn’t have the buy in that the rest of use do. 999 makes them buy in, and when every one antes up a little than, and maybe than things will start to get better.
I had hoped that Cain’s 999 would be a jump off point for a real discussion on tax reform, inspiring those with ideas to jump in and say that won’t work, but we can try something like this. Instead, I see the looming of a VAT and that is the last thing I want. I know tax reform is hard, but if we can’t figure out what to do about that issue, it seems all the talk about cutting spending and balancing budgets goes nowhere.
[…] Would You Buy Used Clothes From This Man? (tammybruce.com) […]
I am completely, totally and utterly OPPOSED to any National(VAT)Sales Tax. Though we have no State Income Tax here in Texas, my Sales Tax rate is 8.25%. Which is 2.25% too much.
This is from Cain’s website:
•Business Flat Tax – 9%
◦Gross income less all investments, all purchases from other businesses and all dividends paid to shareholders.
◦Empowerment Zones will offer additional deductions for payroll employed in the zone.
•Individual Flat Tax – 9%.
◦Gross income less charitable deductions.
◦Empowerment Zones will offer additional deductions for those living and/or working in the zone.
•National Sales Tax – 9%.
Notice his use of ‘EMPOWERMENT ZONE’—that sounds creepy. So who determines ‘The Zone’? Of course! Politicians!!!
But now whenever I hear 999, I really hear $9.99 which is a Pizza special price, ironic, isn't it?
What I read and hear is that the ONE single thing that could get the economy and jobs growing is the reduction of the Corporate Income Tax. Palin mentions it in her speech she just gave at the 'Defending the Republic' event on October 7th. (posted on the palin-tv website just a few hours ago)
Until we get control of the US Senate and a new President nothing's going to change for the better, but it'll get worse(by design) by then.
posted 10/9 655pm Texans for [Fill in the Blank] Time.
Dennis is right on, in my opinion. Palin’s elimination of the corporate income tax and all its associated kickbacks and loopholes, is the way to go. And Cain’s use of “empowerment zones” is the worst kind of big-government cronyism. Just think of the opportunities for lobbyists to sink their teeth into the “empowerment” map. Cain really needs to dump this whole 999 thing before it becomes his Gardasil.
I think he’s referring to the inner cities, which are a shambles. This might be red meat to bring the dems along. Empowerment zones exist today in my state. Can you expand on your concerns with some examples or scenarios? I’d like to understand your comments better. Wouldn’t this entice businesses to move back into the city?
One side of your street is ‘in the zone’ and the other side of the street isn’t. So why not just draw a big yellow line down the street to seperate the businesses that had the political connections to have the lines drawn so they’re on ‘priviledged’ of the street?
Taking this to the extreme,why not have the Federal Government draw a 10 yard wide yellow ‘Empowerment Zone’ line around the entire city of Detroit?
Economic Segregation.
Not related, but a ‘handy’ reminder of the Power of Government:
Kelo v. City of New London, 545 U.S. 469 (2005) was a case decided by the Supreme Court of the United States involving the use of eminent domain to transfer land from one private owner to another to further economic development. The case arose from the condemnation by New London, Connecticut, of privately owned real property so that it could be used as part of a comprehensive redevelopment plan which promised 3,169 new jobs and $1.2 million a year in tax revenues. The Court held in a 5–4 decision that the general benefits a community enjoyed from economic growth qualified such redevelopment plans as a permissible “public use” under the Takings Clause of the Fifth Amendment.
The ‘Economic Development’ never happened, it was a Fraud.
posted 10/9 1040pm Texans for [Fill in the Blank] Time.
I agree with Flagg. I was very pleased with this piece BTW. I’ve been having big apprehensions about 999.
By far her plan is the best. Unfortunately, no one is running on her plan.
$9.99= special pizza price? LOL
999 is upside down 666 and like foozball, iz da DEVILLLL! LOL
(from The Waterboy)
the one way cain’s idea is a bad one is that over time ALL taxes get increased, so at some point the govt WILL RAISE all those 9’s to 20’s
Come on guys this Cain is a phoney.
YES WE CAIN! Unlike many TAMS, I have seen Herman Cain up close and personal. He is nothing short of inspirational, and he is a businessman. Most importantly, he is not an establishment politician.
Yes, I would buy used clothes from him. (probably wouldn’t fit me very well)
Frankly, I’m tired of hearing, “He’s not ready” or “He doesn’t have enough experience.” That’s just what they said about Sarah Palin.
Is Cain perfect. By all means no. Is he better than Obama or the rest of the GOP candidates? YOU BETCHA! America could use a little inspiration right no. Just listen to Cain and give him a chance. No, I don’t work for Cain. I work for Bachmann. (just kidding)
TAMS, let’s not get too smart by half and screw ourselves once again.
ps. Cain is talking about the 9 9 9 plan because it is easy for the public to understand. He is really a fair tax guy and simply using the 9 9 9 plan as a launching point because frankly, our public schools have graduated a bunch of dumbasses that can’t understand complex tax issues. (not any TAMS of course)
I was going for a twist on the political cliche, “Would you buy a used car from this man”.
Cain is a snappy dresser.
BS
Hmmmm, perhaps a chain of TAMthrift stores…
pss. He also said he would build a fence across the southern border, told the occupests to get a job, and he loves Israel. How many other politicians would say or do that?
Instead of The Undefeated, I’m going to watch my new favorite movie: Silence of the TAMS.
So Mr. Cain, if I buy a “Used Car” I pay 0% VAT, but if I buy “New Car” I pay it?
Then the ‘workaround’ is to have the dealership let the sales dude or dudette drive my “New Car”(that I’ve picked out from the lot) for say, 50 miles(up and down the interstate a couple of times, maybe bring back some BBQ so it doesn’t ‘smell new’) and then sell it to me as “Used” when they bring it back to the lot the same day? Genius! As soon as this is in place, going to the BMW dealership and picking out that kick-a** M5!!!
posted 10/9 830pm Texans for [Fill in the Blank] Time.
That wouldn’t work if this bill is written properly. There are laws pertaining to transferring a vehicle across state lines for sale. For example, in New York, a diesel car can’t be called used when transferring it into the state, unless it has 7500 miles on it. The sales of new diesel cars are banned in the state. The problem you pointed out is easily prevented with a similar policy. For example, they could say the federal sales tax applies to cars with 5000 miles or less. Or some other number.
Ummm, a “new car” is defined as a car on which the VAT has never been paid. Doesn’t matter if you drive it around the block and hit it will a ballbat; it’s still “new” under the law until you pay the tax.
So, if I’m understanding you correctly, the drive it ’till it’s “used” work around wouldn’t work anyway. Even better.
It is truly not fair to condemn an idea you haven’t thoughtfully considered or understand yet. I’ve been looking at the 999 plan and there are things I understand and some questions I need answered, before I can support it whole heartedly. The 9% business tax is a great aspect. We have the highest or almost the highest corporate taxes in the world, at 35%, and that is a job killer and it’s killing our middle class 401k retirements. The 9% income tax is included in phase one of the plan. Phase 2 is the Fair Tax Plan, which eliminates the income tax. 9% income tax is low compared to the current rates. Bear in mind the social security taxes would be eliminated. For self employed that cuts the 15%+ self employment tax (to zero). For those like me with an employer, It would eliminate the 6%+ I pay plus the 6%+ my employer contributes to ss tax. I need to know what happens to the 6%+ my employer no longer pays. Does it go to me or stay with my boss? The 9% sales tax would throw a broad net over money that is currently hidden in the underground cash economy. Illegal aliens, and all criminals, as well as dishonest operators who deal in cash and avoid taxes will be forced to pay something every time they want to buy something new. When we receive a larger portion of our gross pay, most of that increased net income will be spent on the new sales tax. Cain claims we’d have $2000 left over, that we didn’t have before. That needs to be confirmed. I think we’d fare better under the Fair tax in that regard. He also includes a business expense deduction that can be taken when a business purchases something from another American source. It wouldn’t apply to offshore purchases! The argument that 999 could become 20 20 20 is silly. Every tax rate in existence can be hiked. As long as there are liberals, we’ll have to fight tax increases. Then there’s the question of buying new vs used. I buy used whenever I can. I’ve never bought a new car in my 54 years and I never will. But for those who prefer new, what would stop you? If Cain’s calculations are close to accurate, you’re keeping more of your own money to spend on things. If you save an extra 1000/yr (because you can now), in 5 years your fed sales tax is covered… just in time to trade your 5 year old ride in. More info is needed, and obviously, a president can’t do this without a buy in from congress. All the details would be debated and fought and argued. I do have a problem with sales tax on unprepared food. Oh, and Capital gains and inheritance taxes would go away. So, if the Cain’s numbers are correct, this plan would boom our economy in short order. Then on to phase 2.
My intent wasn’t to critique the plan. My question is about how Herman Cain is selling it. The average voter will judge 999 without studying it. Cain has to present it better than he did on CNN Sunday.
The fact that he presented his plan on CNN makes me suspicious. He is an amature, I don’t like him, he is out of his league.
He’s been presenting his plan all over. I don’t get CNN but I’ve seen it discussed on CBS and in speeches. I’ve seen clips of him on MSNBC too. He has to go everywhere because he doesn’t have the name recognition a candidate needs. Seems like a smart thing to do.
I’m sorry. I didn’t see the CNN presentation you’re referring to. You’re probably right about the average voter. That may make it even tougher to sell. He may not have access to enough air time to do it justice and answer all the questions adequately. It might be a good idea to post a more complete presentation on his web site.
I’m working on an article on taxes, tax proposals, and so on, largely because of Cain’s 9-9-9, but I’d like to state something up front before we talk taxes: The problem we have is that we tend to concoct tax schemes in an attempt to fund all the spending we do now. That’s no good. If you want to live within your means, you look at what your income is likely to be and then budget accordingly. At present, we write a budget and then try to figure out how to beg, borrow and steal the loot to pay for it all. We’re doing it exactly backwards.
I agree that no new tax plan should be implemented unless we include in the process a substitute for the 16th amendment, or we’ll just add the VAT or whatever consumption tax we concoct to what we already have. No good.
I am most interested in some rather novel approaches for a voluntary form of revenue generation first proposed(to my knowledge) by Ayn Rand, in the form of an in-and-out fee on every transaction in goods and services and anything of value. The idea is that you can waive the fee, but then you waive the right to seek remedy before the bar of justice,as an individual, or as a member of a class.
The idea is that sellers will always be inclined to pay the fee as a hedge against legal liabilities while the average consumer will tend to waive the payment when it is something inconsequential like a loaf of bread, but will pay it when it’s something like a car or other such big ticket items. The rate could be fixed somewhere around 2% on each side of the transaction, and it would apply to all transactions. Buying stock? Selling it? Buying a loaf of bread? Paying an attorney? A mechanic?
Remember that this would replace ALL existing taxes. 2% from the buyer and 2% from the seller. All levels of the production chain. No exceptions, except that you can waive it, but with it, you waive access to standing in a court of law. I know. It sounds far out, but even assuming a waiver loss of 50%, it should raise sufficient funds to pay for the constitutionally permissible expenditures of government, which are few. The problem becomes, as ever, living within our means.
Somebody mentioned that a sales tax will affect demand, but this is a demand-side argument that has no real application in our world. Supply drives economies. Not demand. Put another way, people don’t understand what demand is, in economic terms. They also don’t understand the difference between demand and quantity demanded. People make the mistaken assumption that price affects demand. Nope. It affects quantity demanded. This subtle but important distinction is why even in Texas, with our 8.25% sales tax, it has zero effect on demand, and only a marginal effect on quantity demanded.
That’s the view from here, anyway.
One more thing. Someone mentioned letting the dealership run their mileage up before buying the new car, so it would be used. My state of UGH New York, actually forces car purchases from out of state to be transferred into the state as new unless they have over 7500 miles on them. It would be easy to stop unscrupulous tax cheaters from pretending their new car with 500 miles on it is used. Just apply the sales tax to any car with 5000 (debatable number) miles or less. Instead of trying to figure out how you can cheat on your taxes, why not learn the details of a radical new idea? By the way, 999 would save us 430 billion dollars a year in compliance, reporting, filing, and legal expenses. That’s more money we keep, and spend, and grow the economy with.
Maynard, I’m not a political scientist. I program machinery. I’m appreciating your comments on this tremendously. And learning. Thanks to everyone here as well.
ChrisL, I do tech work too, so it’s my natural inclination to contemplate the mechanical framework of a problem, to the extent that a problem can be addressed mechanically. Some questions are entirely subjective, such as your favorite flavor of ice cream. Issues such as taxes are largely mechanical, although there’s a human component that can’t be ignored: A system may be technically optimal in theory, but we’ve also got to feel comfortable with it, or else it will grate against us and function sub-optimally. So I’m a proponent of the consumption tax for the logical reasons I give, but I see the practical and emotional reasons to humanize the structure.
Maynard, ChrisL, I guess that makes three of us in technology. Like you Maynard, I wind up trying to break every problem down into components within a framework to spot the flaws.
I actually prefer systems that are technically optimal, even if they grate in some respects, because feelings exist for a reason. I think that “grating” you describe is an important part of what you said here:
“Second, I want every citizen — or at least every voter — to feel the pinch of taxes. Rich or poor, I want everyone to understand that there’s a connection between what the government spends and what comes out of your pocket. Otherwise, it’s just an abstraction.”
I would equate the “grate” to the “pinch.” The other thing is I think about this is that I prefer the harsh, unfeeling, mechanical system that works optimally because it doesn’t pay respect to subjectivity. (Yes, I know, almost everything can be made subjective in some sense, but I think you understand my meaning here.) 2+2=4. Simple. Neat. No arguments if we’re speaking the same language and both using the decimal system of counting. My point is that I want all laws, and therefore all forms of taxation to be reduced to simplicity in that sense, where I’m not favored because I have a kid, and you’re not favored because you’re married, or Joe Blow isn’t favored because he chose to purchase a house.
Of all the points you made above, the one I think is critical to our understanding of our current morass is aptly encapsulated in this:
“Right now we’re consuming at a rate that’s not supported by either our production or our capital (savings); that’s got to change.”
Absolutely. To extend on the previous remark, you cannot consume that which has not been produced. It’s not possible. What our country has done is to leverage consumption by eating into its productive fuel, thus depriving it of the production needed to maintain the production.
Worse, we’re doing something very ugly through our entitlements/welfare programs: We’re subsidizing autonomous consumption(or expenditure.)
The theory of autonomous consumption says that all else being equal, there is some basic amount of consumption that we will each do on an annualized basis without respect to income. Most of us will work to provide that basis amount. Some will borrow where earnings don’t cover it. Some will turn to charity. A few will steal it. Most with a shortfall will indeed sell off existing assets to fund this necessary consumption.
What all of our welfare programs(and similar) offer is to subsidize that basic subsistence level of consumption, and by the way, at the expense of the capital formation of those who have earned in excess of that amount. As long as we have a system that pays to subsidize autonomous consumption, we will always get this result, which is the reason why welfare states always fail in the long run.
Anyway, excellent observations Maynard! I hope to read many more. Thanks
Mark, if it were up to me, I’d set up the tax framework along the lines that you describe, sticking with the rules that do measurable good rather than drifting into a structure that “feels good” in a squishy way. But, as much as I might claim that my plan is objectively and provably optimal, I know that someone else will argue the opposite, and the crowd will scratch their heads in confusion. Maybe it’s because not everyone is as smart as I am. Or maybe it’s because I’m not as smart as I think I am. I can’t say why we can’t all get on the same page, but I know that’s the way it’s going to play out. So at some level I’ve got to shrug and hope we can find a compromise that keeps most people at least slightly happy and does more good than harm.
I am a graduate from UCLA in the Poli. Sci Department, I have two degrees among others. We don’t need to do anything but maintain the system as it is. We did fine under Bush until he started messing around out of Constitutional bounds. These liberals are wrecking the country so they can bring in a socialist regime; they are violating the letter and the intent of the Constitution. Cain would be no better; he knows nothing about government and I don’t like his patronizing attitude.
There’s only so much used stuff that isn’t used up yet, and the population is relentlessly growing. You’ll have to buy something new soon enough.
I like Cain but am really worried about his tax plan.
My question is does he mean to add 9% on top of the State sales taxes? We are paying 9.3 now in the Peoples Republik of WA. Whenever we go to Canada we always save receipts to get a refund of their VAT tax. We absolutely do not want a National sales tax.
Ladybug, you have a 9.3% sales tax? Do you also have a state income tax? (I’m going to assume yes.) Perry likes to take credit for jobs creation in Texas, but I will insist it is structurally better here because of this. As a teenager in Ohio, I noted they had a hefty sales tax(if memory serves, something over 6%) and also an income tax. Meanwhile, Texas has no state income tax(although they have instituted a franchise tax on businesses) and a 8.25% sales tax. Still, the totality if it makes it clear that for consumers and businesses alike, this is a much more business-friendly environment.
Hey Mark,
One of the reasons we retired here is because we don’t have a state income tax. The Dems tried to start one during the last election..only for the “rich”. Everyone knew that once they got their foot in the door they would slide it down to all of us, so it was defeated. I am sure they will try again especially with Obama’s class warfare campaign. We lived in Ohio from 73-79. They had a hefty sales tax and state income tax. Our electric bill was as much as our mortage. Fortunately, since we were military and not residents, we escaped the state income tax. My oldest son, who is in the military, is a TX resident. I know business owners who have moved to TX. This state is not business friendly at all. I can’t count the number of small businesses we have lost in the local area in the past 3 years. Our yearly license tabs renewal are now based on the value of the cars. No one in my family buys new cars. We even have state run liquor stores. They tried to privatize them in the last election and lost.
It is depressing to live in a very blue state. Every year as Halloween approaches, the local witches covens will try to have trick or treating abolished. If a military vehicle runs over a squirrel, there will be protest at the gate of the nearest military base on the 6:00 news. 🙁
I really like what HERMAN CAIN, has to say. He makes more since then a lot of those now on the campaign trail.. He and MICHELE BACHMANN are my favorites.
Could you not foresee a whole industry of “used” merchandise. Best Buy Used.com. They open a box, turn it on, sell it as used… no tax.
???
On the whole, I think the plan has merit. I like consumption taxes, it proportionately taxes the “well-to-do”.
Dang it! I forot to bring my lunch to school with me today! 🙂
All of you – Maynard, Mark America, Chris L, Flaggman, etc. – are waaaay too smart!! I’m a just a simpleTAM (get it, simpleton…simpleTAM….thus my reason for having to spell it out – ha!).
I usually start hearing the voice of Charlie Brown’s teacher running through my head when this kind of talk happens; however, thanks to everyone here, I am actually starting to understand some of this and I truly appreciate everyone’s insight!
I’ve felt like I owe Tammy some couch fees for being my shrink these past few days after the Palin no-go and now I feel like I need to pay a tuition fee for what I’m learning on this thread. At this rate I’ll be broke by the time this tax stuff is figured out and there will be nothing left for the gov’t to take from me anyway 🙂
All I can say is here’s to hoping there isn’t a Lucy, lying in wait, in whoever our GOP nominee may be.
Re: Cain. Thanks but no thanks. Don’t know him, don’t trust him. Who knows what
he will do if he gets elected to office. I want someone that speaks for me and
the rest of America. Palin, Gingridge, even Trump but the rest of them are a bunch
of bums, rinos and liberals. I’m going underground or getting a cabin in the woods.
Perot now Palin both let their supporters down. Don’t give me that family crap, when I and every other GI went to war we left our families behind not knowing whether we
would return, that’s a laim excuse for someone who is going to be President of these United States, please don’t insult me.
Tammy, would you consider having Herman Cain as a guest and then ask him questions, some of which would be submitted ahead of time by TAMS? I would be interested in how he responds on the spot, and whether or not he could put any of the valid concerns posted here to rest OR more definitively put him in the “No Way” camp.
For that matter, I would love for you to interview ALL the legitimate candidates (left) in the field. You have a very effective way of cutting to the heart of things that would be very informative and revealing.
I’m digging that idea, Kim. Excellent!
G’day,
We introduced a VAT called the Good & Services Tax (GST) in Australia in the mid 90’s. I had a small business at the time, a bookshop so have first hand experience in its introduction. In general, take care but don’t be afraid of it.
First, remember, it not about discouraging consumption, its about encouraging savings. In fact its a progressive tax on the rich. If your billionaire plutocrat buys a multimillion dollar yacht or a dozen Ferraris they will pay a tax on their consumption. But they don’t pay a tax on their savings and investments which is exactly what you want as those savings form the capital used for production, the creation of jobs and industry.
In Australia we have a 10% GST. Exceptions include fresh food and medical expenses. it was used to replace a whole swag of State and Commonwealth taxes as well income tax was reduced including significant cuts to the marginal rates. People on fixed income-pensioners and the like were compensated by having their entitlements increased and of course ordinary workers benefited from the income tax cuts.
As a retailer is was a pain to introduce but once in simple to administer. The main hassle was except items which caused confusion, so a flat tax on everything is actually the best way to go.
Note, this was introduced by the conservative Howard government, the overall result of the Howard years was strong economic growth, low unemployment , paying of all the national debt (yes you heard that right converting an 18% of GDP deficient into a surplus) and tax cut after tax cut. However now the socialists in Canberra have know wracked up over $200 billion in debt and will be introducing a carbon tax in parliament this week. Dear God I miss John Howard.
ta
Ralph
I would donate money for him to be elected the Republican nominee for President of the United States/ (This I’ve already done)
I would vote for his delegation to be seated at the Republican National Conventional as the official delegation from the State of New York.
I would donate money for him to campaign to hold the office of the President of the United States of America.
I would vote for his slate of electors to be chosen as the official electors of the State of New York who cast their ballots for President and Vice President separately in Albany sometime in December.
Is that enough?
Oh, yeah, I think it’s worth mentioning that Cain has a degree in mathematics and a Masters in computer science. So that makes him an official numbers wonk, which is perhaps why my gut reaction is to receive his proposals with favor.
I had the same reaction.
Folks here are proven to be right, that Cain hasn’t done a good job presenting his plan, and that includes last night’s debate. When Santorum asked the audience how many people want the Federal government to have a new revenue stream, Cain should have responded by asking how many would like to see the end of the IRS as we know it. (Show of hands!) Because that would be one of the benefits.
When Bachmann made her point against the new revenue stream, I interpret that as being very self-serving. She repeatedly reminds us that she’s a tax attourney. She’ll soon be unemployed, and the 999 plan would drastically reduce the need for tax attorneys. That’s another big plus. In addition, phase 2 of 999, the Fair Tax, would eliminate the need for attourneys all together, and eliminate almost all of the IRS. We’d be saving billions of dollars annually by eliminating the existing tax code and all of the compliance, filing, and legal costs it imposes on us. (Cain says 430 billion.) Americans would be more free.
I couldn’t have expessed it as eloquently as Maynard has. But a sales tax would make everyone pay into the Federal coffers if they ever want to buy anything. Then, let the politicians try to increase that tax, when it has a direct negative impact on 100% of the American people.
(As well as all people visiting here for tourism, education, diplomatic, business or other purposes. Our visitors would also be paying into the Fed coffers.)
Also, the plan includes a requirement for a 2/3 vote to change the rate. It would be far too politically painful for 2/3 of congress to support raising that universal tax. They’d be signing their early retirement volunteer notice!
I’ve heard several people including Bachmann and Tammy speak negatively about the new revenue stream. I think it would actually be a very positive thing, if properly implemented. Several other revenue streams are on the chopping block in the 999 plan. The inheritance tax revenue stream would be eliminated. The social security tax revenue stream would be eliminated. Income tax would be reduced in phase one, and eliminated in phase 2. Once the income tax is eliminated, those of us who would like to see the 16th Amendment repealed, will have a substantial leg to stand on. “Look, we don’t need income tax to raise revenues, and it’s bad economic policy anyway.” But for obvious reasons, we’ll need to replace it with something new first.
I learned something new of significance in Cain’s post debate interview. The 999 plan would remove the majority of the income taxes that are imbedded in the production process. People are concerned it would open us up for the VAT tax to be implemented. I need to learn more before I can comment on that. But the reality is, as the plan is now, it would remove taxes from production. Corporate taxes are passed on to consumers. This would reduce prices, and enhance competitiveness at home and in the world markets.
Can someone please explain why the 999 would lead to the VAT? I don’t have a handle on that.
There are still some questions that need answering. But overall, this would be a much better system than we have now. I haven’t heard another idea with so many positive benefits. And the positives seem to far outweigh the negatives (I’ve agreed are negative), so far.
Interesting development. Art Laffer, the economist who is known as “the father of supply-side economics” as subscribed to by Ronald Reagan, has weighed in on Cain’s 999 plan. I won’t post a link because I don’t know the etiquette here. But Laffer clearly supports the plan. Easy to find the article.
Dr.Laffer served on President Reagan’s economic advisory board during both terms.
Hello Pat, I heard Tammy read some comments you sent her today. It sounded as if the 9% sales tax is being confused with a VAT. Cain is actually proposing a retail sales tax, which would be the tax we all pay at the cash register when we make purchases of new goods. A VAT is a wholesale sales tax, in distinction to a retail sales tax. This would be paid in a business to business sale. For example, a dairy plant buys the milk cartons it puts its milk in from a carton manufacturer.(VAT wholesale tax would be applied to that purchase.) And the carton manufacturer buys its carton paper stock (wholesale tax applied) and carton coating (wholesale tax applied) and adhesives (wholesale tax applied) from three other suppliers. Those three suppliers purchase raw materials to make their products from 9 other suppliers (wholesale tax applied). By taxing every wholesale transaction, a VAT embeds layer upon layer of additional HIDDEN sales tax in every product we buy. The retail sales tax Cain’s proposing, taxes goods only one time, at the register. Cain is absolutely opposed to a VAT. He has said they’re insane. What would be more insane is a combination of the two.
If my understanding of a VAT needs some adjustment, I would appreciate any input on this someone cares to offer. I’m learning along with everyone else.
Another point I would like to make is that we need to ask ourselves if something we view as a problem with 999, is unique to 999. For example, people have expressed the concern that the rate could be increased. That’s no different from any other tax. I’ve also heard the 9% sales tax could become a VAT. That’s no different than what we have now. All congress has to do is pass a VAT. I believe a year ago the Democrats tried to add a VAT on top of our current tax code. At least, it was proposed. This risk / threat isn’t exclusive to 999.
ALL tax plans are open to manipulation. That’s where we come in. It’s the voters who must apply pressure to hold the line, as we successfully did when the Democrats had dictatorial control of congress and the WH. Even the socialist Democrats didn’t let the Bush rates expire, when they had the power to do so.