Lawrence O’Donnell conducted an interview with GOP presidential contender Herman Cain this evening. Mr. Cain got a grilling, which wasn’t surprising given that The Hermanator is tied in at least one poll with former Massachusetts governor Willard “Mitt” Romney.
Mr. Cain wanted to discuss his 9-9-9 federal income tax plan before Larry ran out of time. Mr. Cain made it clear that the plan eliminates the tax code as we know it, and replaces it with a 9% tax on corporate earnings; a 9% tax on individual income; and a 9% national sales tax. I wrote a piece on it for Politic365.com. Check here for the link.
People hated the piece. Got all types of comments about social security taxes, payroll taxes, etc. These critics did not take into consideration that the 9-9-9 plan assumes that the old tax code is gone, and in addition, only addresses the federal income tax, with a national sales tax thrown in to discourage frivolous spending. This was the reason for my focus on federal income taxation in the piece.
Revenue neutrality is a non starter when discussing the impact of a new federal income tax-consumption tax hybrid as the one Mr. Cain is proposing. Revenue neutrality was also mentioned as part of the critique of my piece.
Come on. Do you really believe that a poor person gives a damn about revenue neutrality? The main issue is the burden of the tax, and on poor and middle class alike, it’s going to be regressive. You don’t need a doctorate in economics to see that.
What is missing from Mr. Cain’s plan is a “change in mindset” incentive for consumers. If the nation is to get back to its productive ways, poor and middle class Americans afre going to have to get on the entrepreneurial kick.
Government needs to have a tax infrastructure in place that encourages entrepreneurship. For example, where a consumer can show that purchases subject to sales tax are really expenses for productive activity, the consumer should be able to deduct these expenses. That would be the only deduction I would keep under 9-9-9.