With the first primary voting less than three months away (!), I suppose I should check in on the Republican Presidential candidates, who held a debate last night. I’d rather let Andrew Sullivan give me the nickel summary:
Huntsman I can understand and appreciate. Perry is an empty bad suit. Romney lies with such facility it unnerves me. Bachmann is a fanatic, as, although I am extremely fond of him, is Ron Paul. Santorum just seems like a lost child from the 1950s, trying to have the campaign he dreamed about when he was ten. Cain is an egomaniac businessman with a talk show host patter and a mild wit. Gingrich is a giant, gaseous asshole.
I think it’s Mitt Romney and the Jordanaires at this point.
But we might as well focus on Herman Cain, this week’s next big thing, particularly because of the policy initiative he rode to the top of the rest of the field. His 9-9-9 Plan is a flat tax dressed up in fluffier clothing. I think practically every GOP Presidential nomination campaign since Reagan has had at least one flat-taxer: Jack Kemp in 1988, Steve Forbes in 2000, Mike Huckabee in 2008, and now Herman Cain. The plans have a simplistic logic to them until people realize it’s basically another scheme to redistribute wealth upward.
Here’s the short version of 9-9-9:
A major source of contention at Tuesday night’s debate was Herman Cain’s 9-9-9 plan, which is basically a pair of proposals: deep cuts in the existing federal taxes on individual and corporate income, both of which would be reduced to a flat rate of 9 percent from existing rates that run above 30 percent, combined with a new 9 percent national sales tax.
Mr. Cain has provided only a broad sketch of how such a plan would work, making it impossible to evaluate exactly how much money the government would raise.
So there only is a short version with no details, then. But if it’s just a pure flat tax on individuals and corporations at 9% and a 9% sales tax, you’re talking about a plan where the poor will pick up the tax burden for the rich. Other taxes would actually be eliminated. All profits from multinational corporations made in foreign countries would go untaxed under his plan. All taxes on capital gains would be reduced to zero. The payroll tax would go away, at a cost of $800 billion a year to Social Security. The estate and gift tax would be abolished. The government would have massively less revenue than they acquire today. And in its place, poor people would pay 9% of their income in taxes, without exception, and a 9% sales tax on everything they buy, without exception. That means sales taxes on food, doctor visits, rent, housing purchases, car purchases, everything.
And 9-9-9 is actually a step to the actual Fair Tax, as explained by Republican economist Bruce Bartlett:
And here’s the kicker in the Cain plan. Phase 2 is merely a transition to yet another fundamental tax reform. In Phase 3, the United States would adopt the so-called Fair Tax, which would replace all federal taxes with a 30 percent sales tax on all goods and services. In a previous post, I explained why the Fair Tax is a bad idea. I went into more detail in testimony before the House Ways and Means Committee on July 26.
Whatever one thinks of the Fair Tax, it makes not the slightest bit of sense to have a plan that requires fundamental changes to the federal tax system twice to achieve its objective.
Veterans of tax reform attempts in the United States know reform is very difficult and time-consuming even once. If the Fair Tax is a good idea, Mr. Cain ought to just proposed it, without confusing the issue with his unnecessary and highly complicated 9-9-9 plan. After all, one of the prime selling points of the Fair Tax is its simplicity, and the 9-9-9 plan is far from that.
Cain has muttered about creating certain zones where low-income residents will get rebates. But either the government will have to get by on far less revenue, or poor people will have to shoulder the burden for huge tax cuts on the rich and corporations.
Cain got some heat from fellow Republicans at the debate last night for his dopey plan, and he responded that the plan is being misrepresented. Math has a liberal bias. Anyway, it’s hard to represent something that has a bumper sticker instead of realistic numbers attached to it. Even when the numbers are released, I suspect they will look something like the “dynamic scoring” dodge that is a feature of Paul Ryan budgets, where pretend astronomical growth makes up for huge tax cuts.
The point is that these flat-taxers always flame out, even in Republican primaries. The plan sounds real nice until you look past the bumper sticker.