9-9-9 plan

Perry’s “Flat” Tax: Good Policy or Hail Mary?

Rick Perry has found himself at the bottom of the second tier after what seemed like a cake walk to the presidency.  But the Rick Perry bankroll has pundits on the ready for the next move upward.  On Monday, Perry tickled the media with a preview of his 20/20 Flat tax.  His overall plan which is named “Cut, Balance and Grow” seems much less catchy, especially if he has his eye on a primetime ABC host slot.

If one were going to summarize the plan, they might suggest that Perry believes in “caps”.  His 20% flat tax is optional, so essentially everyone paying more than 20% currently can move to 20% while everyone paying less can still pay their current rate. It also moves the corporate rate to 20%, kills the death tax, and removes taxes from qualified dividends and capital gains.  The plan also includes capping spending at 18%.  I believe talking about caps on spending as a percentage of GDP are a mistake for the simple fact that if you do this, what are the odds that congress will ever spend less than this amount?  Then again, after what we’ve seen in the last three years, it doesn’t sound half bad.

James Pethokoukis breaks down Perry’s plan over at The American:

—A choice between a new, flat tax rate of 20 percent or their current income tax rate.

—The new flat tax preserves mortgage interest, charitable and state and local tax exemptions for families earning less than $500,000 annually, and it increases the standard deduction to $12,500 for individuals and dependents.

—Abolishes the death tax once and for all, providing needed certainty to American family farms and small businesses.

—Lowers the corporate tax rate to 20 percent—along with a tax holiday for foreign earnings—and moves toward territorial taxation.

GOP Presidential Power Rankings

It’s been another interesting week in the battle for the Republican nomination for president. Rick Perry continues his free fall as Herman Cain benefits from a substantial amount of press coming off his straw poll win in Florida. Of course, Romney stands to benefit from this as he hasn’t had much of a tea party appeal.

In this latest version of our Power Rankings, Cain and Newt Gingrich are moved up, Bachmann drops down into the bottom tier. And while may disagree with this, Romney moves back to the top.

The News

Herman Cain thinks he still matters

Herman Cain, who exited the race for the GOP nomination early last month, announced last week that he would launch a bus tour in support of his gimmicky “9-9-9” plan, which was panned by several prominent conservatives, hoping that the push will lead to support in Congress:

The one-time Republican front-runner announced his “Cain’s Solutions Revolution” during a Fox News interview with Sean Hannity on Wednesday night.

“I started a new movement. The biggest comment I got when I ended my candidacy was to keep 9-9-9 alive. That’s what this is about, and I’m going to keep it alive with what I’m calling Cain’s Solutions Revolution,” Cain said.

“You have a bus,” Hannity interjected.

“Yes, sir. I have a bus with my picture on it,” Cain said, smiling, as Hannity displayed a photo of a vehicle that looked similar to the campaign bus he used on the trail until the day he pulled up in it at the early December rally in Atlanta when he ended his campaign.

The Atlanta businessman said he plans to “get commitments from members of Congress in 2012 before Election Day” and that the legislation is currently being drafted.

Cain also announced that he’ll be making an endorsement in the race on Thursday, January 19th — just before the primary in South Carolina. Given that he is from Georgia and is close to Newt Gingrich, you can probably guess who he’ll wind up backing.

Herman Cain unveiles “9-9-9: The Movie”

Desparate to get his campaign back on track — especially in the face of an alleged affair, Herman Cain unveiled a new video, dubbed 9-9-9: The Movie, that criticizes the current federal tax code and stresses the need for simplification:

The video notes that it would do away with the 35% income tax while also pointing out that the 9-9-9 plan eliminates a host of other taxes, including the payroll tax. Yes, it lowers the rate, but it doesn’t get rid of the tax itself. They don’t outright say it, but that the way that is presented could lead the average voters to believe his plan does something it simply doesn’t do.

They also note the hidden taxes that are embedded into the cost of goods and services, but Cain’s campaign fails to explain how the 9% sales tax isn’t a value added tax (VAT), which has been a frequent criticism of the plan.

Herman Cain is a joke and should drop out of the race

More information keeps coming out from Herman Cain’s recent interview with the editorial board of the Milwaukee Journal Sentinel, and at this point, the fact that he was ever considered to be a frontrunner in the race for the GOP nomination for president should be an embarrassment.

“I’m not supposed to know anything about foreign policy. Just thought I’d throw that out,” he said, a dig at his critics.

He defended his view that presidents and presidential candidates don’t need to be immersed in the fine print of world affairs – they simply need to be leaders who can surround themselves with the right people and sift through their advice.

“I’m not supposed to know anything about foreign policy. Just thought I’d throw that out,” he said, a dig at his critics.

“I want to talk to commanders on the ground. Because you run for president (people say) you need to have the answer. No, you don’t! No, you don’t! That’s not good decision-making,” said Cain.

And his reasoning for not attacking Iran? According to Cain, it’s not a practical idea because the country is “very mountainous.” By that reasoning, we shouldn’t have bombed Afghanistan either since al-Qaeda was hiding in Tora Bora. Don’t get me wrong, I don’t believe we should engage Iran either, but not because of its topography.

If you’re going to run for the nation’s highest office, you damn well better have some idea about foreign policy. This isn’t the type of job that that allows for a learning curve, the current occupant of the White House is evidence of that.

Round Up: Perry’s tax plan receives mostly mixed reviews

Rick Perry has rolled out his version of the “flat tax” and it has been met with mixed to very negative reviews. I noted yesterday that Perry managed to gain support from Steve Forbes, who pushed the concept during his two unsuccessful bids for the GOP nomination.

The good news is that tax reform, specifically the flat tax, matters again. Newt Gingrich was quick to point out yesterday that he has his own version of the tax, the concept of which has a lot of support among conservatives and libertarians (the flat tax in general, not necessarily Gingrich’s proposal). According to a new survey from ABC News, it’s more popular than Herman Cain’s 9-9-9 plan:

While a flat tax divides the nation overall, moreover, it resonates most strongly in a group of particular interest to Perry – “very conservative” Americans, a key GOP voting group. They hold favorable views of a flat tax by a broad 68-28 percent in this ABC News/Washington Post poll, suggesting a strategic rationale for Perry’s initiative.

More broadly, there’s greater division: Americans overall split by 47-48 percent on the notion of a flat tax – that is, removing most income tax deductions and charging all taxpayers the same tax rate, instead of charging higher rates on higher incomes. That’s almost identical to the 48-48 percent split on a flat tax in a different ABC/Post question back in August 1996.

Can we stick a fork in 9-9-9 yet?

Coming off what was arguably his worst debate performance, Herman Cain’s 9-9-9 plan is still taking fire from conservatives and libertarians over the fact that the national sales tax portion of the plan is essentially a value added tax (or VAT).

Chris Edwards, an economist at the Cato Institute, is the latest to express concern with Cain’s pitch for a VAT:

The Herman Cain campaign released details of the revenue expected to be collected from his 9-9-9 tax plan. Here are the estimates for 2010:

  • $701 billion from the 9 percent personal income tax.
  • $753 billion from the 9 percent retail sales tax.
  • $863 billion from the 9 percent business VAT.

Yikes! By far the largest tax haul under the Cain plan would be from the business VAT—a tax which would be hidden from most voters.

By the way, the Cain business tax is not a tax on “corporate income,” as some media stories are identifying it. The new revenue data makes it clear that it is a tax on all value added by all businesses in the nation—corporate, partnership, and proprietorship.

Cain’s 9-9-9 plan continues to come under fire

If you watched the Republican debate last night, you noticed the increased scrutiny on Herman Cain’s 9-9-9 plan. The criticism isn’t without risk. If they hit him too harshly, they risk victimizing him and emboldening his base of support. If they’re too lenient, the quick-witted Cain wll turn make sure that it blows up in their face.

But Cain has tipped his hand in what he has to come back with as conservatives lay out very serious concerns about the proposal; and it’s clear that he isn’t ready to argue on substance. His staff has responded to criticism with a simple line, “the problem with that analysis is that it is incorrect.” Cain’s own recent defense of the plan laid out in an editoral leaves more questions than answers.

Even the editors at the conservative National Review are unconvinced that Cain’s good intentions will bring the benefits that he claims:

Norquist on Cain’s 9-9-9 plan

As I’ve noted over the last week or so, Herman Cain’s gimmicky 9-9-9 plan is receiving increased scrutiny from conservatives weary of a value added tax (or VAT). Grover Norquist, president of Americans for Tax Reform and prominent conservative, elaborated on his criticism of Cain’s plan yesterday on the Morning Joe:

Grover Norquist, the president of Americans for Tax Reform, the anti-tax advocacy group best known for soliciting pledges from politicians not to support any legislation that would raise taxes, said Thursday that he did not support Herman Cain’s 9-9-9 tax reform proposal.

“It’s like having three needles in your arm taking blood out. It’s much more dangerous than just one,” Norquist said on MSNBC.

Cain’s proposal would replace the current code with a 9 percent tax on all personal income, corporate income and sales.

Liberals have argued that the plan would be regressive — raising the taxes of the poor and middle classes, while lowering those of the rich — and inadequate to fund the federal government, while conservatives have warned that enabling the federal government to impose a sales tax would open up a new way for future generations to raise taxes on Americans.

“With the caveat that I understand this cry of rage that people have about the present structure and wanting to do something radically different, I’m much more comfortable taking the present mess and chipping away at it like an ice sculpture to get it down to what you want,” Norquist said.

Herman Cain’s 9-9-9 plan a road to a VAT

The criticism of Herman Cain’s 9-9-9 tax plan has been ramped up over the last couple of days. It had already been knocked by Kevin Williamson of the National Review as unrealistic Dean Clancy of FreedomWorks explains that it could be used as cover for a VAT, and Grover Norquist also notes the problems with the proposal.

The possibility that Cain’s tax plan could be lead down this road is also bothering Cato Institute economist Dan Mitchell, who had already expressed an issue with the proposal:

it seems that I was too nice in my analysis of Mr. Cain’s plan. Josh Barro and Bruce Bartlett are both claiming that the business portion of Cain’s 9-9-9 is a value-added tax (VAT) rather than a corporate income tax.

In other words, instead of being a 9 percent flat tax-9 percent sales tax-9 percent corporate tax, Cain’s plan is a 9 percent flat tax-9 percent sales tax-9 percent VAT.

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