Cain’s 9-9-9 plan missing an important piece

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 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.

About Alton Drew

Alton Drew brings a straight forward and insightful brand of political market intelligence. Alton Drew graduated from the Florida State University with a Bachelor of Science in economics and political science (1984); a Master of Public Administration (1993); and a Juris Doctor (1999). You can also follow Alton Drew on Twitter @altondrew.
This entry was posted in Herman Cain, taxes and tagged , . Bookmark the permalink.

One Response to Cain’s 9-9-9 plan missing an important piece

  1. Kenneth J. Ciszewski says:

    “…poor and middle class Americans are going to have to get on the entrepreneurial kick.” This reminds me of George W. Bush’s comment a few years ago: “Lost your job? Start a business!”

    Really. With what? And, remembering that a large percentage of new small businesses fail within a fairly short time (2-5 years), how is “…get[ting] on the entrepreneurial kick…”supposed to work for the masses?

    This reminds me of a man I know who has an MBA who has his own business advising small business and setting up tax payment plans so business can pay its quarterly taxes. He thinks anyone can do what he did. He doesn’t realize that he has special qualties and skills that not everyone has. When I tried to explain this, he didn’t get it. In my opinion, his belief that anyone can do what he did is just an excuse to blame those who aren’t successful for not being successful.

    Ironically, if Mr. Cain’s proposal were law, my friend might lose his business. Or, maybe not, if he’s resourceful.

    There’s nothing wrong with encouraging entrepreneurship–in fact, it’s a good idea. It’s another thing entirely to expect that entrepreneurship is something everyone is capable of. Using entrepreneurship as an excuse to level a regressive tax on the middle class and poor is just one more act of class warfare on the middle class and the poor.

    More interestingly, for Mr. Cain’s tax proposal, Mr. Drew has proposed the first tax loophole. I can’t wait to see the snowball that becomes an avalanche should Mr. Cain’s tax proposal be taken seriously. The lobbyists will descend like locusts on Congress to get special favors for business.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s