Where's The Outrage?
 

If we go back a couple of months on this forum, there was wild enthusiasm for Michelle Bachman. Then came Rick Perry. All along was the thought that Sarah Palin would throw her hat in the ring. Now the "flavor of the month" is Herman Cain.

Cain's a nice enough fellow, probably smart enough to do the job. But he's spent the last week or so flogging his 9-9-9 program for balancing the budget and beginning to reduce the national debt. What is it all about? Why are conservatives so wildly enthusiastic about the man and his proposed fiscal policy? What is 9-9-9? What do we know about it?

• Not a whole lot has been written down about the plan by Mr. Cain. The entire plan is described in 32 bullet points on his website, leaving an awful lot of detail to be filled in or explained by someone.
  
• Cain explains that several noted economists helped him design the plan, except he refuses to say who they are.
  
• The plan is heavily based on the enactment of a 9% European-style VAT tax. Conservatives have been steadfastly against VAT taxes because of the proven pattern that the tax rate escalates upwards consistently.
  
• Cain says that the plan is not regressive. The only problem is that everyone who has attempted to analyze his plan (except Cain) has concluded that taxes on corporations and the wealthy will be reduced with the increased tax burden to be picked up by the lower income classes--a textbook definition of a "regressive tax".
  
• Those that have attempted to "do the arithmetic" with Cain's plan have concluded that if enacted it would actually increase the annual deficits and national debt.
  
• Other than the bullet points on his website, Cain has not proposed to fill in the balnks in his plan. Nor has he agreed to permit any of the unnamed financial advisors who he says assisted him in designing the plan to explain its details.
  
• One of the bullet points on Cain's website explaining the 9-9-9 plan says, "Amidst a backdrop of the economic boom created by the Phase 1 Enhanced Plan (presumably after he is elected POTUS), I will begin the process of educating the American people on the benefits of continuing the next step...."

Where is the conservative outrage in response to this plan from this candidate? There are enough non-conservative...liberal actually...elements in this plan that if it were proposed by a Democratic candidate, the conservative right would respond with indignation and outrage.

But that's not happening with Herman Cain. In fact, he seems to be gaining in popularity. I'm baffled at the absence of conservative outrage over the economic plan proposed by this candidate. Why? Is anyone paying attention to what is being said, to what he's proposing? Unbelievable!

Cain's website will be a little more specific on the 9-9-9 farce, as soon as Rich Lowrie explains it to him.

I'm at a loss at trying to understand your call for "conservative outrage". Even with all your words above, your reasoning is eluding me.

Where has the "consumption tax" been morphed into a VAT tax?

You've completely lost me on this one.

Maybe there is no "outrage" because there is nothing "outrageous" about a federal tax plan that people can understand, is fair, and eliminates the current DISASTER of a tax code that has crippled us into the mess we are in now.

As for VAT, that's not what Cain proposes. A national sales tax of 9% at the cash register is not the same as VAT added every step of the way (and hidden) before the product got to the store.

In another thread, someone metionad about how much money you'd pay in taxes to buy a car under the 9-9-9 plan.

It got me thinking.

If I buy a car for $30,000 (bottom line) and I sell it years later for $10,000, there's a big difference between a VAT and a sales tax.

Under a sales tax, I have to pay $900 on that $10,000 sale.

Under a VAT, I pay nothing since I sold the car for less than I paid for it. VAT, for those who don't know, means Value Added Tax. In short, if I buy something for $100 and sell it for $120, I pay tax on the $20 - the 'value added'.

Yesterday in explaining Cain's 9-9-9 plan on t.v., he or another person speaking for it said that the 9-9-9 plan does not call for the 9% sales tax on used cars or goods. It's only on new purchases.

Cain's plan is not a VAT though. It's a Federal Sales Tax. I guess you would pay the $900 bucks extra to the Feds. But just to remind you, you've only paid 9% on your income, so you have more money available to you.

Not Quite True
 

Not quite accurate...the car would have cost you a lot more than $10,000 to buy it in the first place.

Each of the following classes of businesses would have added 9% to the value they added to the car you bought (the tax would be paid on the difference between what they paid for raw materials and parts to make their product or component and what they sold their product for)...

• All the raw materials suppliers (steel, copper, aluminum, plastic, glass, etc.)
• The suppliers who manufactured the parts that went into the car (engine, transmission, electronics, wiring harnesses, carpeting, seats, trim, etc.)
• The car company that assembled the car
• The transporter that hauled the car from the assembly plant to the dealer
• And the dealer himself.

At each level, the supplier or sub-assembly contractor pays the 9% tax on the difference between what he paid for the parts and raw materials he used to make his product and what he sold it for to the next level in the supply chain.

So as you can see, it's a virtual certainty that you would have paid a lot more than $10,000 for your car. By the way, that's one of the criticisms of the VAT tax--the tax simply gets burined in the cost of the products purchased and no one is particularly sensitive to the actual tax rate itself.

Herman Cain's proposal is not a VAT. It is a Federal Sales Tax. Your analysis does not apply.

I think you need to look closer at the "32 bullet points". Among others (no Death tax, no Capital gains tax, no Payroll tax, no tax on repatriated profits) are 3 main 9% taxes as such-9% personal income tax, 9% business tax, and 9% national sales tax...Very specific detailed points!


http://www.hermancain.com/999plan

Actually, A Sales Tax Is Worse
 

Actually, Richie, a sales tax puts more money into the government's pockets and results in much higher prices to consumers than a VAT tax. In that sense, I hope you're wrong and that Cain's plan really is a VAT tax.

Let's take a really simple example. A fabricator buys steel from a steel mill, fabricates a product, and sells it to a consumer. Let's assume that each company in the supply chain marks up his costs by double to create a selling price for his product.

VAT Tax Example

• Steel company buys taconite from mining company for $1,000 (that includes $90 in VAT tax buried in the selling price)
• Steel mill produces and rolls steel and sells it to the fabricator for $2,000 (that includes $180 in VAT tax included in the selling price of the steel)
• The fabricator produces a product and sells it to a consumer for $4,000 (that includes $360 in VAT tax)
• Total VAT tax paid to provide the product to the end-user is $630.

Sales Tax Example

• Mine sells taconite to steel company for $1,000. Steel company has to pay $1,090 including a 9% sales tax of $90
• The steel company produces and rolls steel and sells it to the fabricator for $2,180. The fabricator has to pay 9% sales tax on the purchase steel, a total of $2,376
• The fabricator sells his product, made with the steel, to a consumer for $4,752. The consumer has to pay a 9% sales tax of $428, bringing his purchase price to $5,180
• Total "sales taxes" collected in the process of producing and selling this product to an end-user = $714

Many have described the plan Cain sets forth as a VAT tax. If it is actually a sales tax as you assert, the total taxes paid to the government would be $714, about 13% more than if the tax regime was a VAT tax. More importantly, the consumer would have paid a purchase price of $5,180 instead of $4,000 under the VAT tax regime, almost a 30% premium in purchase price.

Pretty sure that you are correct. Mr. Katz has voiced the same concerns. Then add this: 9% national sales tax AND 7+% state sales tax here in Ohio=16% total!

A good link is below.

"“Relative to regression, no, it is not,” Cain said. “If you take a family of four at $50,000, and $25,000, start with the fact that if they're getting a paycheck, they pay 15.3% in the payroll tax. That 15.3 becomes 9 percent. That's a 6 percentage point differential.”

Cain explained that the proposed 9% national sales tax would only be applied to new goods that change hands and not to the sale of used goods. Asked on CBS’ “Face the Nation” what the impact of that would be on the auto industry, Cain said it would lead to the depletion of the existing inventory of used cars. "And, eventually, people are going to start buying new cars. So that's not a big negative," Cain said.

Cain also insisted that, notwithstanding the new additional 9% national sales tax, the poor would not pay more in taxes. Cain reasoned that the lower individual income rate of 9% under his proposal would save lower-wage taxpayers money relative to the amount of payroll taxes they currently pay. Specifically, because of the differential between the current 15.3% payroll tax rate and his proposed 9% flat individual income tax rate, Cain said "9-9-9" would generate savings on individual income taxes for all taxpayers.

“That 6 percentage point difference makes up for a lot of the sales tax that people will have to pay,” Cain said on CNN.

When asked by CNN’s Candy Crowley if he thought the plan is fair, Cain pointed out that under his plan, used goods would not be taxed.

“Yes, it does sound fair, because of the other point that I'm about to make,” Cain said. “If they need to buy a car or a home or some hard goods that are used, they pay no taxes. So they have an opportunity for them to leverage their income.”

http://politicalticker.blogs.cnn.com...e-under-9-9-9/

Don't worry your little conservative heads over this one. Herman Cain will NOT be your GOP candidate. Your candidate will be Mitt Romney and Herman Cain will not be anywhere on this ticket.

I Hate To Keep Saying It...Do The Arithmetic!!
 

Without getting into a long debate on this, just a couple questions on Cain's detailed proposals...

• Who will get the majority of the benefit of the elimination of the death tax and capital gains taxes? Lower income Americans or those wealthy enough to have built up enough wealth to be subject to those types of taxes? Seems like another sweet deal for those wealthy campaign contributors.
• What does the "payroll tax" that will be eliminated pay for? Medicare? Social Security? Unemployment benefits? If the funding for those programs is eliminated, who will pay for them? Will they be eliminated?
• A 9% corporate tax rate? Guess what percentage of the total profits of American companies are actually paid to the federal government? A quick look at the GDP of the U.S. and the amount of taxes collected from businesses shows an average tax rate of 1.55%. (In 2009 total business tax payments were $225 billion on a Gross Domestic Product of abouit $14.55 trillion.) Forget about the IRS rate tables, think about how much companies actually pay the federal government! My guess is that Cain's "all corporations pay 9% in taxes on their profits" will be roundly rejected by corporate America.
• Making the same calculation for personal taxes paid shows an average tax rate for individual Americans in 2009 was 8.1% Cain's proposals might be terrific for the wealthy, whose tax payments would go down with a 9% rate, but not so good for poorer people. A 9% individual tax rate will actually increase the amount collected in individual income taxes!
• And a 9% national sales tax? That's 9% more than it is now.

I'll ask again...how come no outrage?

The answer? Because no one has bothered to do the arithmetic!!

Herman Cain will NOT be your candidate nor will the 9-9-9 plan ever come to passage.

YOUR candidate will be Mitt Romney and some other snake oil salesman who will lose once again to YOUR current president, President Obama.

'Nuff said. Next topic, now.

Good to see you back.

Keep drinking the Kool-Aid, Obama is done, over, kuput, out the door. We are just talking about who will be the next Republican President sworn in on January 20, 2013.:MOJE_whot:

I'm not wrong as far as I can clearly read Cain's own words on his own website. It's is a sales tax and not a VAT. Maybe if you read his own words it's might help to understand his reasonings of the revenue raised and the costs saved by his plan which combines the FLAT TAX with the FAIR TAX.

You do know that the corporations in your example have lower costs and increased revenue due to the new 9% Corporate Tax Rate. Their products most likely will still be cheaper.

You know, also, that all American's will have the option to buy or not buy these products, with the resulting effect of Americans being control of their own Federal Tax Bill.

This simplified Tax Code eliminates the vast bulk of the $430 Billion Dollars it cost to collect taxes under the present system. Quite a savings for the Government, isn't it?

I know I'm only a retired truck driver and not a financial services guy, but I think everyone needs to dig a little deeper and explore all the angles a little better.

Maybe this can eliminate everyone's speculation if you've got his plan,in his words, in front of you.

http://www.hermancain.com/999plan

P.S. to my good friend Buggy. What's the difference what your predictions are. They are irrelevant to the conversation here. How about starting another thread where all of your people and you can pat each other on the back and laud Obama and bask in the gloriousness of his presidency. I promise, I'll leave you alone on that thread. Or we can have a big discussion over an adult beverage if you want; or I can just listen to you pontificate on Obama's greatness and I'll just roll my eyes. Whatever you want.

http://www.hermancain.com/999plan

I applaud you on the diversity of your drinking friends. Your definitely a more calmer man then me.

Your expertise and posts are great, but here I think your Sales Tax Example is wrong under Cain 9-9-9 Plan in which sales tax is paid only by the end user, and not by the steel company and fabricator when they buy materials "from other businesses" in your Sales tax example.

This is a quote from Cain's website on 9-9-9 plan:

"Business Flat Tax – 9%
Gross income less all investments, all purchases from other businesses and all dividends paid to shareholders."

You are misleading.
 

Herman Cain has a background in Mathematics. I am sure HE "has bothered to do the arithmetic!!"

After reading several of your post, it is evident, that you do not have a complete understanding of what Herman Cain's 999 plan is about. Seriously, go read the darn plan. This constant referal to a VAT tax leads me to believe you either don't know exactly what the plan is about, or want to steer to some kind of un-related VAT discussion.

This is just a question and not an arguement - With the 9-9-9 tax plan of Herman Cain, exactly what is the difference between a National Sales Tax and a Value Added Tax?

It all doesn't matter......it is already crystal clear that the 9-9-9 plan is opposed by Repubs and Dems alike. Gimmics won't get him the nomination anyway. :boom:

Read And Listen
 

Richie, one of the rerasons that 9-9-9 will never see the light of day is the fact that on average a 9% tax rate will be a dramatic increase in taxation on American companies. Their costs would increase, as would their selling prices as the result of higher tax payments. A high percentage of American companies don't pay any tax at all. What do you think they're going to do when faced with the prospect of paying 9%? They will unlease their lobbyists on Washington like a large pack of mad dogs.

Again, look at the facts and do the arithmetic. Don't just listen to the nice-sounding campaign speeches. Other than Herman Cain himself, have you seen even one economist or someone or some organization knowledgeable in government finance who supports this plan? Even one? Even Grover Norquist was on TV this morning. No one is more conservative on fiscal matters than Norquist. He's on the far right of the Tea Party for crying out loud. He said that 9-9-9 was not only a bad idea, but could never be enacted into law.

Businesses pay less than 9%??? Really?? Is that why so many are uprooting for foreign shores?

Of course the establishment doesn't like this plan. They make a fortune from the current tax structure; from tax lawyers, to tax shelters (Berkshire Hathaway for an example, company of the always lovable Warren Buffett, the President's main man), to all the people and resources in the $430 Billion Dollar tabulation and collecting sectors of the government.

I never said it was anywhere near easy to get something like this passed. I've previously stated on an earlier thread that the legislators would be giving up a humongous portion of their own personal power in simplifying the tax code to this extreme.

It takes a real American and not a self-centered politician to even promote such a thing, and to promise to try to get the process in motion towards implementing such a thing.

Grover Norquist is but one of many who resists change, and doesn't share Herman Cain's economic assumptions on the real world outcome of his 9-9-9 plan if it ever came to fruition.

Does anyone know if the 9% sales tax includes services?

Clearly, selling a widget would incur the 9% tax.

Would a consultant's visit (like talking to a lawyer) be subject to that?

Gimmicks and BS sure got the nomination in 2008!!!

btk

VK, Are these incentives to bring business back to the States?
~Features zero tax on capital gains and repatriated profits
~Lowest marginal rates on production
~Allows immediate expensing of business investments
http://www.hermancain.com/999plan

Everybody's so caught up in the aspects of this plan on the surface, that they're failing to see what's deeper in the strategy.

Take A Look Back
 

I tried to give an example. Using the example I created, the national sales tax would collect more taxes and make products more expensive for the consumer to buy.

The other big difference is that the national sales tax would be very visible to the consumer. He'll know when 9% is added to his purchase to pay a sales tax. The VAT tax is much more "invisible". It is added to the selling price of products at every level of production. Only when the product is sold to the consumer does he become aware of the additional cost resultant from the VAT.

What are ya saying??

I was agreeing with your previous post and extrapolating. I guess my brevity didn't make that clear enough.

Greatly respect your insight and opinion and so was curious to know if you were letting me know that I am being mislead...ThanKs! :ho: