Now that Herman Cain is in the lead pack in the presidential race, even leading one recent poll, his 999 plan is getting a major roasting. He's proposing getting rid of all social security taxes and going with a 9% personal income tax rate, a 9% corporate tax rate and a 9% national sales tax.
First of all, Congresswoman Bachmann's cheap shot at it being a flip away from 666 deserves to be called out as a false witness. Just because 6.66% is about where she is in the polls doesn't give her the right to call a serious proposal demonic.
Liberals won't like the plan since it doesn't let the tax the rich at higher rates, nor let them direct behavior via tax breaks. IRS-haters don't get the stake through Count Taxula's heart that they long for. However, it seems to be a viable halfway house between a 20% or so national sales tax as a full substitute and the status quo.
One major game that would wind up being played if we had a national sales tax is to figure out what would and would not be taxes, and synching up the state income taxes with the federal one. In Canada, they have tried doing a harmonized sales tax where their federal and provincial taxes are done on the same group of items, but such synching doesn't always go harmoniously, as the British Columbian government found out.
The numbers might not quite add up, if this analysis is correct. The 999 package comes up about 15% short of current revenue; that would mean that we might need to do 10.5-10.5-10.5 to get the numbers to work or play some Laffer and count on growth to get the numbers up in short order.
Such a plan would actually help the little guy, as they currently pay about 15% of their pay in FICA and Medicare taxes, when you count the amount employers kick in for their half of the tab. However, liberals would bemoan the lack of progressivity and a variety of K-streeters would see their deductions trimmed; clearing out K-Street is a big advantage of a flat tax with no exemptions.
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