Dumas exposes Herman Cain's 9-9-9 plan | Arkansas Blog

Tuesday, October 18, 2011

Dumas exposes Herman Cain's 9-9-9 plan

Posted By on Tue, Oct 18, 2011 at 6:27 AM

Herman Cain is the hot Republican candidate at the moment, so Ernest Dumas' examination of some of his ideas is timely. His easy 9-9-9 tax plan? The details aren't so hot. More like appalling.

He would replace all federal taxes—individual and corporate income taxes, and social security, Medicare, disability, unemployment, gasoline, cigarette and all other excise taxes—with three simple tax rates: 9 percent on personal income, 9 percent on business income and a 9 percent sales tax on all commercial activity. That sounds fair enough. There would be no exemptions and deductions. Well, only a few. Investment income—capital gains, interest and dividends, the income of the leisure class—wouldn’t be taxed at all. Your social security? Yes, tax it. As for the 9 percent business tax, it would apply only to the share of a company’s revenue that was spent on wages.

It would be a mammoth tax cut for the rich and corporations and a giant tax increase for the middle class, the elderly and disabled. For the 47 percent of tax filers whose incomes were so low after the standard deductions and credits last year that they owed no taxes, they would pay 9 percent of their gross income plus a 9 percent sales tax on everything they bought, from a haircut to a hospital visit. Citizens for Tax Justice put its calculators to work. The richest 1 percent of Americans would pay an average of $210,000 less a year while the poorest 60 percent would pay an average of $2,000 more. The government this year would take in $340 billion less. Add that to the national debt.

But the 9-9-9 reform would be only to get working people used to paying a bigger share of the cost of government. After several years of personal adjustment, those taxes would be halted and the country would go to a 30 percent national sales tax on every single commercial transaction.

How's a $45,000 tax on a $150,000 house strike you? More on the jump. Entertaining guy. Terrible ideas.

SPEAKING OF THE HERMANATOR: He's apparently directing some campaign money to his company promoting his book. Wasn't there another political candidate who purchased copies of his own book with campaign or PAC money to give away at fund-raising and other functions?

By Ernest Dumas

Herman Cain may be only the Republican flavor of the week, but he is the frontrunner and he is actually going to campaign in Arkansas next week, seven months before the usually insignificant Arkansas primary. We are flyover country for all the others.

The theory goes that a firebrand populist government hater like Cain is just the kind of Republican who could not only fetch Republican votes but also overcome blue-collar racial bias in Arkansas. After all, he’s leading in places like South Carolina, where bigotry is still ascendant, and among corn-fed Iowans.
It is a nice theory. It might work if Cain could keep up the populist charade through a long campaign when people would start to look behind catchphrases like “fair tax,” 9-9-9 and “save social security” and see what Cain actually wants to do.

When Cain gets to Fayetteville for the Republican Lincoln Day address, he should take Route 94 a few miles over to Monte Ne, or as close as he can get to Coin Harvey’s underwater shrine, to find out what populism really is. Harvey defined it for 35 years though he was in his dotage in 1932 when he launched his only run for president as the head of the Liberty Party. Cain, in fact, would find Coin to have been an interesting fellow. As a young lawyer in his native West Virginia he successfully defended a white man who had violated the law by marrying an African American. Prove that the man doesn’t have any African-American blood, Coin told the jury. Cain is on a tour this month trying to sell his book, My Journey to the White House. In the midst of a long depression more than a century ago, Coin sold 12 million of his tract, Coin’s Financial School. Coin Harvey wanted to get even with the oligarchs of Wall Street and raise living standards of the common folks by coining unlimited silver and outlawing usury, which would lift people out of debt and put them to work.

Were Herman Cain not an African-American and something of an authentic self-made man, no one would hesitate today to call him an oligarch, certainly not a populist. His political career and his campaign for president are managed and heavily bankrolled by the billionaire Koch brothers and the rich boys club, Americans for Prosperity. They want to eliminate taxes on the rich and corporations, remove environmental restraints on the oil and gas industry, turn social security over to Goldman Sachs and Merrill Lynch and wipe out unions. Cain is their apostle but he is not their only Manchurian candidate. Even Mitt Romney, who a few years ago loved to tax corporations, is suitable. They know Cain will never be president.

One reason that Cain may be momentarily atop the polls is that, unlike Romney and all the rest except the iconoclast Ron Paul, he hasn’t changed his stripes to fit into the milieu. Well, not until this week, when Cain said he had been spoofing when he told cheering crowds that he would wall off Mexico with a high-voltage fence and electrocute Mexicans who tried to get through it. But unlike the others he even stands by his stance on social security. He would take a cue from Chile and require people to send part of their paychecks every week to stockbrokers to invest for them in lieu of social security.

Cain’s tax reform, which he calls 9-9-9, has helped raise him in the polls. Everyone loves simplicity. The phrases are appealing but the mechanics appalling. You have to assume that people would get it if it comes down to him and Barack Obama.

He would replace all federal taxes—individual and corporate income taxes, and social security, Medicare, disability, unemployment, gasoline, cigarette and all other excise taxes—with three simple tax rates: 9 percent on personal income, 9 percent on business income and a 9 percent sales tax on all commercial activity. That sounds fair enough. There would be no exemptions and deductions. Well, only a few. Investment income—capital gains, interest and dividends, the income of the leisure class—wouldn’t be taxed at all. Your social security? Yes, tax it. As for the 9 percent business tax, it would apply only to the share of a company’s revenue that was spent on wages.

It would be a mammoth tax cut for the rich and corporations and a giant tax increase for the middle class, the elderly and disabled. For the 47 percent of tax filers whose incomes were so low after the standard deductions and credits last year that they owed no taxes, they would pay 9 percent of their gross income plus a 9 percent sales tax on everything they bought, from a haircut to a hospital visit. Citizens for Tax Justice put its calculators to work. The richest 1 percent of Americans would pay an average of $210,000 less a year while the poorest 60 percent would pay an average of $2,000 more. The government this year would take in $340 billion less. Add that to the national debt.

But the 9-9-9 reform would be only to get working people used to paying a bigger share of the cost of government. After several years of personal adjustment, those taxes would be halted and the country would go to a 30 percent national sales tax on every single commercial transaction.

No, the Fair Tax adherents protest, it would be a 23 percent tax, not 30 percent. But that is mumbo jumbo. Here is how they reach 23 percent: You buy a house for $150,000. The national sales tax on the transaction would be $45,000, making the final price $195,000 plus local taxes and closing costs. See, the $45,000 would be only 23 percent of the final cost including the tax.

Using Cain’s methodology, Arkansas’s statewide sales tax is not 6 percent but a little over 4 percent. Not so high, is it?

Tea party crowds cheer when Cain and the Fair Tax’s other adherents say the IRS would be abolished. States would collect the taxes. But think what kind of bureaucracy the state would have to erect to enforce a law that requires everyone who sells something—from your lawn man to, as Huckabee liked to say, a prostitute, pimp or drug dealer— to collect and remit a mammoth tax on penalty of prosecution.

You want another tea party rebellion? Try that.

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