Okay before I get started being critical of Herman Cain and is 999 Tax Plan I’ll give him some credit. At least he has come up with a plan and has articulated it fairly well, unlike most of the candidates to this point. I will also say much like the Fair Tax it is a step in the right direction. For those of you who don’t know what his plan is, it is essentially a 9% Income Tax, a 9% Corporate Tax, and a 9% Sales Tax. Both the Corporate and Income Tax would be lower than they currently are under his plan fostering economic growth, as all lower taxes do that. Then a 9% Sales tax would get instituted and this would hopefully be a transition to just a Fair Tax system, but of course that has some problems too as it has been pointed out.
Here are the two main concerns I have with the 999 Plan
1) It’s adding a Sales Tax on top of a Corporate and Income Tax Plan
2) How long will these tax rates stay capped at the 9% level
So like many a Pizza Deals, which I am sure Herman Cain as head of Godfather’s Pizza has given in the past, they never last.
Note: I am not concerned about the criticism that the 999 Plan is not revenue neutral, as government has grown too big. We don’t need a tax plan that accommodates spending, we need a tax plan that encourages business.
You can make the argument that the plan, in addition to being straightforward, encourages reduction of tax liabilities via increased investment activity, and relocating/working in empowerment zones, hopefully generating economic activity in areas in the most need.
Adding a 9% federal sales tax on top of existing state sales taxes is a sure way to fuel the black market. Plus a “consumption-based” tax will discourage consumption – the very thing this economy needs to get started again.