Comment

Is Herman Cain a liar or has he been misled regarding his 9-9-9 concept?

2
RoadWarrior10/09/2011 9:51:26 pm PDT

A few comments.

1st, low marginal rates and simple tax systems have their advantages: less evasion, low compliance cost, small changing of behavior

2nd, everyone who votes should pay a tax

3rd, the payroll “tax” is not a “tax”. It is a contribution to one’s own retirement. If your earnings are small, your expected rate of return, actuarially, is high. If your earnings are high, your expected rate of return, actuarially, is low. Therefore, the social security / medicare system is also a system for redistribution.

4th, yes, the employers contribution toward social security / medicare would, in equilibrium, be paid in full to employees, were the employer’s share cancelled—it would not be up to the employer. Competition would see to that. Only where employees are already paid above-market wages, due to unionization, would this not occur due to competition. Rather, in that situation, it would instead occur due to union bargaining power. This is not an example of a tax where we do not know precisely how its impact gets divided up, which can occur, for example, with an oil tax, where it does, indeed get divided between consumers and producers (more borne by producers when OPEC is restraining supply, as they currently are, and more borne by consumers when OPEC is not restraining supply, as in 2002).

5th, it sets a dangerous precedent to have payroll taxes subsumed by income and sales taxation.

6th, it sets a dangerous precedent to open the door to a national sales tax.

7th, Herman Cain cannot guarantee that we will not end up with the worst of all forms of taxation, including a 17% VAT and payroll tax and income tax after he leaves office.

8th, if he could guarantee all of the above by making 9/9/9 (or at least equality of all those forms of tax) a constitutional amendment, then his plan might be OK.

9th, I disagree that the appropriate statistic is the effective tax borne by the billionaire. I believe the appropriate statistic is how much tax he is paying as a percentage of his consumption, which is more than 100%. Whatever he is not consuming is still a resource available to society. If he burns the savings, it is like a tax on the whole thing—i.e. it goes back to society in full. If he invests it, it produces growth—and productivity—for the economy…and remains for the benefit of society…until he spends it…and pays the sales tax…or wills it and pays an estate tax.

10th, the whole bit of “ha, ha, I found an inconsistency, so you’re either a liar or a d-a” is getting a little tired. Keep the political discussion respectful and don’t be an assassin of character. Whether you agree with Herman Cain or not, he is in this at considerable personal expense, because he does care and I respect him for that. He is, if anything, much more than professional politicians, someone who does speak from the heart.