It’s moving in the right direction, but after digesting many of the pros and cons of Republican nominee Herman Cain’s 999 plan, I’d have to give it a thumbs down.
I think he’s a great candidate, just like many of the other potential nominees, but there is too much uncertainty about 999 to give it an endorsement, yet. There are some features that I like and there are some that I hate.
It’s good start, but only just that.
That doesn’t mean I wouldn’t like Cain as the conservative nominee. Today more than ever, policy is written by constituencies, not candidates. So I don’t see 999 as a un-get-aroundable road-block to his nomination. In fact, he should get high marks for raising the level of debate and introducing serious tax reform into the national conversation.
It’s something that politicians with more miles and more experience have failed so far to do on the campaign trail. But it’s just another damning piece of evidence to be used against leaders who got us to this point in history to begin with.
I won’t go into the dispute about how much money 999 will raise. Differing assumptions net different results among economists and so-called fact-checkers. But economists I trust, including our contributor Larry Kudlow, think the plan will raise enough to pay.
But still there is no consensus on exactly what the plan entails or if a national sales tax is even constitutional for transactions that happen within one state.
Will it create jobs? I think it will be a wash.
The double taxation effect of a sales tax on top of an income tax and a business tax (VAT) has to be a drag on the economy, in my opinion. It also radically shift taxes to lower income families disproportionately while lowering taxes on high income/high net worth families.
I think everyone should pay taxes, including the idle rich, like Warren Buffett, who makes mainly investment income. Under Cain’s plan investment gains and investment income in Warren Buffet’s portfolio would be tax-free. That doesn’t wash with me, especially if earned income is going to be taxed across the board.
Before you know it, people will be compensated solely in preferred stocks that pay a dividend. I’m not kidding about that either. It’s human nature to avoid paying taxes if you can get around it. By creating a favored, tax-free income source through investment gains and income, you will see more and more compensation move to the tax-free sources, especially on the upper income end of the scale.