9-9-9 is getting a lot of play lately. Last night at the Republican debates in New Hampshire Herman Cain was getting it from all sides.
I've been trying to research the details to find out more specifics to see what it's all about. I have to assume that under this plan, new houses and new cars will have the new 9% national sales tax imposed on them. So now, in order to buy a new home, let's say $200,000, I not only have to come up with a down payment and closing costs for the loan, I will have to pay $18,000 in a sales tax? How's that going to work?
The big thing that I see is that it creates a new Federal sales tax without eliminating the income tax. Someone asked him yesterday how he can ensure people that the 9-9-9 plan wouldn't become a 15-15-15 plan. One of his responses was that as president, he would veto any attempt to raise the rates. That's great, but what happens when he's not president?
From his webpage on the plan , he says that this 9-9-9 plan gets us a step closer to Phase two, which is the Fair Tax. It's funny that I haven't heard him talk about Phase Two when he explains the 9-9-9 Plan. I guess the Fair Tax is a tough sell to many. People hear about a 23% sales tax and they immediately reject it. But isn't that a bit deceptive? If you want to eventually get the Fair Tax implemented, why not be bold enough to come out and tell people what your intent is? Why disguise it in some clever marketing?
I'm for the Fair Tax. I like it because it would abolish the income tax and it would abolish the IRS. But trying to sneak it through incrementally leaves a bad taste in my mouth. Creating a new sales tax while still having the income tax and IRS around makes me uneasy.
I also can't see how it will be revenue neutral. Herman Cain says that low income and middle income people will pay less in taxes. So who is going to pay more in taxes? The rich? How does that happen? If they pay 9% in income taxes and then spend all of their money, highly unlikely, the most they'll pay is 18%. I'm pretty sure that millionaires are currently paying much more than 18% income tax. So if everyone is paying less, how does it collect the same amount of money? I'm sure there are various assumptions that they have plugged into some kind of computer models to make the numbers all add up but my simple common sense doesn't see how all the numbers add up. I can only guess that maybe the extra revenue comes from big ticket items such as new houses being taxed.
To me, this 9-9-9 plan is a gimmick to try to get to the Fair Tax without having to educate the masses. The Fair Tax is too easy to demagogue so they sell it in a different package. Isn't that how they sold the people on the income tax? Didn't they start the income tax at only 1%?