Herman Cain’s 9-9-9 Plan | The Swindle Examined
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How to Fundamentally Transform the U.S. Economy, Open the Doors Wide For Fiscal Corruption, and Diminish the Influence of the Tea Party Movement
By PolitiAC Editors
Here's How the 9-9-9 Plan Could Be a Con
Every con job must have goals and these would be very ambitious; 1. how do we get conservatives to support a tax increase and a massive new Federal revenue stream that will fundamentally transform the consumer driven U.S. economy? 2. How do we get rid of the IRS and it's omniscient revenue oversight so that we can control the flow of trillions of tax dollars? 3. How can we get the Tea Party Movement involved in order to frame the Tea Parties as no longer fiscally conservative and splinter their mostly Republican base?
The Sales Pitch
In order to be effective the sales pitch must convince "potential Cain voters" that the new plan is better than the old plan. The old tax plan is so bad that it makes any new plan seem good, even a really bad new tax plan. That means all we have to do is convince conservatives the new plan will reduce their taxes even though it increases taxes for most Americans. Here's the pitch; we tell everyone the new plan is revenue neutral. The income tax is a 'flat tax' of 9% that doesn’t discriminate in any way and treats all income tax payers as 100% equals. The revised payroll tax of 9% will put more money in the pockets of people who have jobs. Taxes on gasoline will be reduced which will reduce the cost of getting around. Everything looks good and seems to be well thought out until we get to the all new Federal sales tax of 9%. Thankfully, the first two parts of the plan will be attractive enough that no one will closely examine the worst part.
“The worst idea is a proposed national sales tax, which is a disguised VAT (value added tax) on top of everything we already pay in federal taxes.” - Herman Cain
11-22-2010, The Daily Caller, Op Editorial
The Swindle Exposed
Herman Cain has avowed the 9-9-9 Plan is transparent, and he hasn't hidden the fact that his new national sales tax will force consumers to pay 9% more for everything they buy at the grocery store including prescription drugs. That means the new tax will end up costing most Americans more than a month’s worth of groceries a year (5.2 weeks worth). Part of the swindle was exposed when the Tax Policy Center revealed the 9-9-9 plan would tax most Americans more, and It gets worse, low income Americans would pay 900% more. The truth came out after Mr. Cain had already announced that most Americans would pay less. Herman Cain scrambled and introduced the 9-zero-9 Plan but didn't immediately post any details about the new revision on the 9-9-9 Plan page of his Website. The new plan calls for "opportunity zones" in America's inner cities except a lot of households making less than $22,000 a year don't live in inner cities. Mr. Cain clumsily claimed the 9-zero-9 Plan was part of his original concept that hadn't been revealed yet. Unfortunately, that was after he had already said his plan was transparent. Because the last minute 9-zero-9 patch job doesn't eliminate the new sales tax for every American, it would still impose a heavy burden on the U.S. economy. Back when Herman Cain wrote "The worst idea is a proposed national sales tax" he was right, and then he was telling the truth.
The 9% sales tax will be a 100% increase in the national sales tax because America doesn't currently have a national sales tax. Although the new national sales tax is a completely separate tax and what Mr. Cain calls "a replacement tax" it will have to be paid by the consumer whenever a purchase is made. For example; if your current sales tax is 8.5% and you add Mr. Cain's 9% tax to the receipt, the total sales tax will be 17.5%. The result will be a sales tax increase of over 100% for most Americans. That will be one of the largest tax increases in American history. The separate tax also has an impact in other ways...
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The popular tax holidays for back to school shoppers will only curtail State and local sales taxes and not the new national sales tax unless retailers agree to absorb the additional 9% by paying it for their customers (not very likely)...
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At the same time the payroll and business tax improvements are putting the pedal to the metal of the economy the new sales tax would slam on the brakes and possibly grind the economy to a halt. The national sales tax is a tax on consumption that would reduce consumer spending power by making every purchase cost 9% more and that would slow the economy down. There is a ton of pressure applied to the brakes because the entire tax code will be deleted when the 9-9-9 Plan becomes law; business owners will no longer be able to take depreciation on new equipment, vehicles, and software. The increase in operating expenses will have to be made up somewhere, most likely with higher prices that consumers will have to pay. Eliminating depreciation deductions eliminates the incentive to stay up to date and purchase the latest equipment, vehicles and software which will obviously result in reduced sales of new equipment, vehicles and software. That will reduce the flow of money through the economy and contribute to slowing the economy down. The new tax will certainly reduce consumer spending power and that will decrease the overall number of purchases made each week, each month, and each year. Taxes that decrease spending power encourage people to hold onto their money and that hurts the consumer driven U.S. economy. Any gains made by reduced business and payroll taxes would be more than wiped out by reduced consumer spending and an overall reduction in consumption.
The drag on the economy caused by the reduction in consumer activity would signal a need for consumer spending to be stimulated. The only reliable way to stimulate consumer spending is to prices which reduces profit margins. When profit margins get too thin; businesses lay off workers. The most viable alternative would be for businesses to get rebates from the government on discounts provided to consumers. If businesses have to give consumers a 10% discount to get them to buy, and then get a 10% rebate from the government; wouldn't it be better to not impose a 9% sales tax in the first place?
One of the most disturbing aspects of Mr. Cain's plan is it doesn't put controls in place to prevent the 9-9-9 Plan from eventually becoming the 29-29-29 Plan or worse. Mr. Cain likes to point out that Congress needs a 2/3 majority to increase his tax rates. Congress makes its own rules, not Mr. Cain, and Congress’s own requirement of a 2/3 majority has never stopped them from raising taxes before. Herman Cain says he won’t sign any bill that will increase tax rates, except no one is President forever, and no new tax ever goes away. The national sales tax in France started at 5%, now it's 20%, and it will never go away.
Eradicating the IRS Would Empower Criminals
Herman Cain's plan is to eventually do away with the Internal Revenue Service. The IRS enforces all U.S. laws concerning tax compliance, which makes the IRS the cash flow police. Eliminating the IRS would mean losing an essential branch of law enforcement that knows where the money flows from and where it flows to. Obviously, eliminating law enforcement is something criminals such as con artists and embezzlers would prefer. That raises the question; who would you trust more, someone that wants to get rid of the police or someone that wants to keep them? Getting the IRS out of the way would allow for unchecked corruption and make it possible for the flow of tax dollars to go into any bank account. Now that Herman Cain has been forced to introduce the 9-zero-9 plan the IRS should stay in place in order to determine who is and who isn't exempt. That makes Mr. Cain's pledge to eventually eliminate the IRS so much more disturbing and also doesn't make it clear what Herman Cain's intentions are. Why would any former employee of the Federal Reserve want to eliminate the branch of law enforcement that enforces U.S. tax laws? Is it because the IRS keeps tabs on trillions of tax dollars dollars that if unchecked could end up anywhere?
Bye, Bye, Blue Collar Jobs
Two nines in the 9-9-9 Plan are good and one nine is very, very bad. The 9% national sales tax kills the 9-9-9 Plan because tax rates will go through the roof on new homes and cars. In defending this aspect of his plan Mr. Cain asserts that used cars and used homes won't be taxed. Mr. Cain ignores the fact that new products create new jobs. The construction of new homes creates construction jobs and the manufacturing of new cars creates manufacturing jobs. Creating an all new tax that encourages people to purchase used goods will reduce jobs in construction and manufacturing because demand for new items will go down. People in construction and manufacturing have already been hit harder than people in other sectors of the economy. The 9-9-9 Plan will hurt the troubled housing market and punish the rebounding auto industry just as car sales are improving. The excessive new tax could add up to millions of lost jobs. The new national sales tax will also be especially hard on retired and disabled people who live on fixed incomes. People on fixed incomes can least afford to pay an additional 9% for medicine and groceries.
9-9-9 and 9-zero-9 Are the Beginning of the Great Unknown
In the final analysis, most Americans will refuse to vote for any tax increase that could have a negative impact on construction and manufacturing jobs. The question of the day is this; why would anyone propose such an excessive increase in taxes on consumption and disguise it as an innovative plan to fix America? Herman Cain must be impressively smooth to get away with attracting so much conservative support for such a liberal idea. Herman Cain has said of other problems "we don't need to replace it, we need to fix it." Why doesn't he apply that wisdom to the current tax code? When you consider the 9-9-9 Plan is Phase One of what will be an entirely new tax system that eliminates all U.S. tax laws and the IRS; it becomes apparent how little transparency there is regarding the entire plan. Could Phase Two put the Federal Reserve in charge of tax revenue when the Internal Revenue Service is taken out of service? Mr. Cain used to work for the Federal Reserve and the big picture of his taxation formula is extremely mysterious. There is no transparency whatsoever regarding Phase Two except it calls for an eventual "fair tax." If Phase Two is such a great idea, why don't we start with Phase Two? Because a fair tax isn't fair at all. The fair tax would be a communist's dream because consumption is punished and discouraged by a very high sales tax of about 25% (or more) and millions of consumers could feel forced to turn to stolen products, bootleg merchandise, and used goods to avoid the tax. That could put millions of Americans out of work, empower the criminals that don't charge any taxes, and conclude with the government taking in a fraction of the tax revenue it does now (epic fail). Anyone that hates capitalism should love the fair tax.
The End Game
Excessive taxes on consumption have historically led to revolts. Two of them led to all out revolutions and one of them started what is now the U.S.A., which is why this might be a good time for the Tea Party Movement (named after a consumption tax revolt) to back away from Herman Cain. As this is being written, the Tea Party Movement is closely associated with Mr. Cain and that could prove to be a liability for the conservative movement in 2012. Tea Party conservatives have framed the argument over taxes by pointing out that revenue isn't the problem, spending is. The 9-9-9 Plan does nothing about stopping excessive spending. The 9% income tax and 9% payroll deduction tax would appear to be attractive smoke screens of misdirection to take everyone's attention away from the creation of an entirely new revenue stream that would be massive in scope. Because the 9-9-9 Plan includes a liberal Federal sales tax it comes across as a serious attempt to discourage economic consumption, punish Americans on fixed incomes, kill jobs in construction and manufacturing, and increases the possibility of profound fiscal corruption. It would drive a stake into the heart of American conservative politics. The 9-9-9 Plan could just as easily be called "Cloward & Piven Two Point Oh My God."
The Emotional Bond
All Presidential candidates try to establish a personal connection with potential voters and some of them succeed better than others. Herman Cain has bonded with American conservatives and become a political star; largely because he’s a man with a plan. As more and more Americans realize how flawed and liberal his plan is, they will leave the Cain Train. The strongest bond in politics will always be the love of America because the U.S.A. must always come first, ahead of any plan, and ahead of any candidate.
