Will Herman Cain Survive 9-9-9 Scrutiny?
The sudden emergence of Herman Cain as the Republican presidential front-runner has been fueled in large part by his “9-9-9” plan. Yet now that Cain’s candidacy is receiving a thorough once over, it could be the 9-9-9 plan that ultimately brings his candidacy crashing back down to earth.
First, here’s what the 9-9-9 plan would do:
1) Eliminate all existing federal taxes
2) Set the federal corporate income tax at 9 percent
3) Set the federal individual income tax at 9 percent
4) Create a 9 percent federal sales tax
Sounds simple enough, right?
Gone would be capital gains, payroll and estate taxes. Of course helpful tax deductions would also disappear – except for exemptions on charitable giving and tax breaks for living or operating a business in low-income area of the country.
According to Cain, his 9-9-9 plan would lower all Americans’ income taxes while generating roughly the same amount of money for the federal government – although the revenue neutrality of the proposal is up for debate.
And Cain has been selling the 9-9-9 plan for months with a zeal befitting a street preacher.
“If ten percent is good enough for God, then nine percent ought to be good enough for the the federal government,” Cain likes to say.
First, let’s give credit where credit is due. Cain is the only candidate in this race who is thinking outside of the box and offering a bold idea on taxes. Countless politicians have talked about reforming or replacing America’s existing anti-competitive tax code, but Cain is the only one offering a plan that would accomplish this objective. For that alone, we salute him.
Of course as U.S. Rep. Michele Bachmann correctly noted, Cain’s plan is indeed deserving of further scrutiny.
“The 999 plan isn’t a jobs plan, it is a tax plan,” Bachmann said, adding that “when you take the 9-9-9 plan and turn it upside down, I think the devil’s in the details.”
One of the main criticisms of the 9-9-9 plan is that it wouldn’t generate as much revenue as it claims. We’re not concerned with that line of attack, however, because as we’ve noted on numerous occasions we’re not slaves to the doctrine of revenue neutrality. If 9-9-9 were to bring in less money than the system it replaced, fine by us.
We’re also intrigued by the plan’s inherent fairness – which treats individual taxpayers and business alike, no matter how big or small they may be.
Say what you want about shifting the burden from one class of taxpayers to another, but there’s something to be said for a system that treats people and companies equally. Hell … isn’t “equality” one of the watchwords of the progressive movement?
What don’t we like about 9-9-9?
Well, we don’t like the idea of creating a federal sales tax – not because of its regressive nature, but because it seems like the sort of thing the federal government would establish and then raise repeatedly.
And while we have no problem with tax cuts for the wealthy – i.e. the people who create jobs in this country – we believe that offsetting those tax cuts with a tax increase on the middle class would be devastating to our still-jittery consumer economy. For example, a recent analysis of Cain’s plan found that a family of four making $50,000 a year would pay as much as $2,700 more a year in taxes.
As far as we’re concerned, that’s the anchor that will ultimately drag down Cain’s plan – and his candidacy.
Cain has been aggressively defending his plan against the incoming salvos.
“Some people will pay more, but most people would pay less,” Cain said Sunday on Meet the Press.
Again, that’s debatable. Also Cain’s plan – which some say was lifted from the city-building video game Sim City 4 – hurts him in the early primary state of New Hampshire, where there is no income tax. Mitt Romney is still expected to win the Granite State’s primary easily, but Cain and U.S. Rep. Ron Paul have been rising in recent New Hampshire polls.
Rather than incentivizing joblessness – which Barack Obama’s “second stimulus” would do – America desperately needs to start incentivizing job creation. Lowering taxes on the wealthy and particularly on America’s businesses (large and small) would do that – but we can’t cripple the consumer economy in the process.
In fact, the need to stimulate job creation without wrecking our nation’s consumer economy in the process is the best argument yet for Republican politicians to abandon the doctrine of revenue neutrality, which has done nothing but kill reform as it perpetuates the reckless growth of government at all levels.
As we noted in our critique of Jon Huntsman’s tax plan, these proposals “don’t have to be ‘revenue neutral.'”
“Beyond the stimulative effect of tax relief on the economy (and the corresponding decline of the culture of dependency), there is an optimum rate of taxation at which government revenues would be maximized,” we wrote. “Needless to say, we’re way, way above that optimum level – which is actually choking off tax revenue rather than expanding it.”
Translation? We can pay for tax cuts with reductions in government – and with growth in the economy.
Sadly, none of the Republican presidential candidates – Cain included – have the balls to meaningfully cut government. Nor do they have sufficient faith in the American consumer economy to at long last abandon the failed doctrine of revenue neutrality.