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Herman Cain’s 9-9-9 is a Good Start

Posted by Larry Doyle on October 14, 2011 10:50 AM |

Why is it that people always find it easy to shoot holes in other people’s plans while not providing any outlines of their own? Time and again I witness that reality at play in business, politics, and almost every other pursuit.

To this end, I commend Republican Presidential candidate Herman Cain for at least presenting a plan which might serve as a blueprint for simplifying a tax code which is badly in need of reform.

Whether the plan is 9-9-9 or 10-10-10 or 11-11-11, I appreciate the concept of Cain’s thinking for a few reasons. There is no doubt that it will widen the tax base. By requiring everybody to have some skin in the game, Americans broadly speaking should become more engaged in how our political system and government works. This development has got to be a good thing. 

For those who view Cain’s plan as regressive, I would offer that I think it will stimulate the economy and create jobs. Are we better off as a nation with job growth and everybody chipping in than the current status quo. Do we really want to continue down our current path? Not me. I firmly believe that the greatest form of liberty for those in the lower income strata is a job.

Are there drawbacks to Cain’s plan? Of course there are. Eliminating the mortgage deduction will hurt. Discontinuing the deduction for charitable contributions will also be unsettling. However, how much hurt do we currently have? How unsettling is our current situation? Most importantly, how do we root out the loopholes and special interests that circumvent our current tax code?

I am not endorsing Herman Cain’s candidacy. Some may deem him unelectable.

Isn’t it time we start thinking differently as a nation?  I do believe Americans like and respect Cain’s straightforward style. Don’t discount his staying power.

Bloomberg offers an interesting conclusion on this topic in writing, Cain Needs to Give Voters His 411 on 9-9-9 Plan,

Cain ultimately would eliminate individual and corporate income taxes in favor of a national sales tax. We have said before that a consumption tax offers the best route to broader tax reform, if coupled with tax credits for the elderly, low- income workers and the very poor.

A revamped tax system must offer more than a snappy slogan that fits on a bumper sticker. We encourage Cain to keep refining his plan to make it truly fair, transparent and neutral. As for rival candidates who say 9-9-9 is unworkable, show us your plan.

I would maintain that Herman Cain’s stock is soaring in recent polls because Americans are buying this plan.

What do readers think?

Larry Doyle

Isn’t it time to  subscribe to all my work via e-mail, an RSS feed, on Twitteror Facebook? Do your friends, family, and colleagues a favor and get them to do the same. Thanks!!

I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets, our economy, and our political realm so that meaningful investor confidence and investor protection can be achieved.

 

  • Old Pal

    I’m glad to see you’re keep up to date on the twice divorced Catholic Gingrich’s campaign and posting his video. Oh sorry, I know you like to refer to that as Gingrich’s past. NO word if a woman beaten by her husband could have gotten permission from her local cath parrish as easily as Newt got divorced after f**king around on his wives.

    Some other news I wanted to make sure you caught. You might want to send his Popeness a red envelope to show your support during this difficult time for “the church”.
    http://www.kansascity.com/2011/10/14/3207527/bishop-finn-diocese-indicted.html

  • LD

    You would seem to be like an old sore that just won’t go away….

    Let’s see when I wrote about Newt I think I referenced that I was not making apologies for his past personal transgressions. I also will not apologize for my faith and belief in Jesus Christ. Nope, never going to turn my back on HIM.

    This is still a financial blog and not a religious site, although I have taken the church to task but you must have missed those.

    If any priest is found guilty of any of these heinous transgressions, I hope they are prosecuted and punished to the fullest extent of the law. May their ultimate penalty be for eternity. May Bishop Finn and every other bishop in a similar position be held accountable as well for failure to protect and be held accountable as well.

    My advice for you, though is long runs…cold showers…and open up to JC as well. HE will be your friend.

  • lizzy

    I think that Cain is to be commended for providing concrete reform proposals. Hopefully he will expand his ideas as time passes. It is refreshing to hear someone espouse positive ideas and optimism.

  • Dr. N

    We definitely need more details from Mr. Cain; however, I am not sure 9-9-9 is regressive.

    The sales tax paid by lower income individuals should be less than the amount prices should decrease because of lower corporate taxes (up to 26% lower) (in a perfect world, our goods should be that much cheaper and more competitive with lower corporate taxes).

    Income taxes, Cain explains would be less than the amount now paid in payroll taxes. (He uses 15 % savings, but that would include the employer contribution. He has some explanation why that 1/2 benefits the employee, but I haven’t heard the details.)

    What the treatment of a small business that is not incorporated or services (like medical costs) is not clear.

    The best part of widening the tax base is including the underground economy. Here in CA, the marijuana business itself is the largest agricultural producer I have heard that is true in Oregon and Hawaii, too, and maybe CO.

    The mortgage deduction need to be phased out and probably that should not start until housing prices are back on track. He has said that charitable contributions should remain.

    I agree that a consumption tax is likely the fairest in the long run per Bloomberg.

    I continue to enjoy your posts. Thx!

  • coe

    I’m of the opinion, LD, that a simpler tax code is long overdue. I also think it is “fair” that those with more means can and should contribute more…we have seen that implemented in corporate America in the past decade or so by scaling shaing contributions to employee health care costs based on compensation levels – seems both intellectually and socially reasonable and responsible…I’m not uncomfortable in phasing out the mortgage interest deduction, either, but all would agree that this is merely a math and transfer pricing calculation – house prices and housing markets would have to adjust themselves to take that this into account…the charitable contribution deduction seems, for the most part, linked to “good works” (medical research, education, religion) – and if stricken, I think we would quickly discover that folks are quite a bit less charitable if there is no deduction allowed..I wonder whether any of those “good works” would simply fade away, or whether they would find themselves priced into the social cost of federal, state and municipal budgets – I think the latter is quite possible..the reality is that this is a two variable equation – revenues- of which taxes play a huge part, and expenses…having been a budget officer for a very large public school system in my checkered past, I can assure you that there is a massive amount of fat in every budget I have encountered (with the exception of household budgets where folks are scraping by paycheck to paycheck)…I, for one, am sick and tired of the explosion in municipal, state, and federal budgets – tied to entitlement programs, pet pork projects, education, and yes, even defense, and I would make book on the absolute truth that our budgets and programs are managed so poorly that we all face expense ruin…and when you tie this bona fide problem to a President and an administration that is growing government and trying to redistribute wealth through painfully flawed economic and social policy, I’m pretty disgusted and suspect it will be difficult to get the expense side of the equation back under control…I confess I don’t know much about Mr. Cain, who might be a gem in the rough or hopelessly unelectable, but as to his “idea”, let’s separate that, if we can, from the man, and see if he is on to something that can move the needle in the right direction. Good to have you back and mixing it up again, LD!

  • Peter S.

    Our 13 foot high tax code needs an overhaul for sure. I have no idea how many pages concern my middle class standing – but I would imagine it is about a quarter of an inch at most.

  • Wall St.

    Arthur Laffer, not exactly a lightweight, offers the following thoughts in today’s WSJ, Cain’s ‘Stimulating’ 9-9-9 Tax Reform,

    A static revenue-neutral tax change requires static winners and losers. And this 9-9-9 plan has made certain that even on static terms those below the poverty line will be better off—period. Once the dynamics take hold, many of those below the poverty line will find good jobs and thus will rise above the poverty line and start paying taxes.

    Isn’t this what we’re looking for?

  • fred

    Before you make it fair, you have to make it right.

    The problem I have with 9-9-9 is that it exempts income below the poverty level and eliminates the estate tax.

    1. Everyone should have skin in the game; it would be better to raise poverty level entitlements and then tax the entitlement (net neutral).

    2. I have always had a problem with inter-generational transfers. I deny noone the opportunity to make as much $ as they can, and to enjoy it, but I detest trust funds providing vast sums of wealth to future generations who did nothing to earn it.






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