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9-9-9 is no good. It’s bad. How do I know? 7-7-7

Oct. 6, 2011 5:34pm Will Cain

9-9-9 is no good. It’s bad. How do I know? 7-7-7.

Now…Herman Cain’s 9-9-9 tax reform proposal sounds good. The plan would scrap all federal taxes and replace them with a 9 percent personal-income tax, a 9 percent corporate-income tax, and a 9 percent federal sales tax. In the process, Cain would eliminate the payroll tax, the estate tax, and tax credits and deductions for everything from the production of wooden toy arrows to your home. This is all actually good. And again, the plan sounds good…meaning, it has an awesome sales pitch: 9-9-9.

But in truth, it’s bad. And not just a little bad. Bad like…we could look back on this moment and say 9-9-9 was a turning point in American history…a turning point in the wrong direction. Why? 7-7-7.

In 1913, the 16th Amendment to the Constitution made the income tax a permanent fixture in the U.S. tax system. It debuted that year with a top marginal tax rate of 7 percent. Within 7 years the top marginal tax rate had gone to 72 percent. Seven years to go from 7 percent to 72 percent. 7-7-7.

At a Fox News debate Chris Wallace asked Herman Cain if there wasn’t a danger that some future administration, after President Cain (I like the sound of that…), would raise three forms of taxation on the American people. Cain dismissed the question…

9-9-9 supporters suggest you could control the national sales tax rate through statutory or constitutional limitations. I think that’s wishful thinking. I don’t think you can give the federal government a completely new revenue source and expect that it will forever be kept at 9 percent. History and a look around the world suggests otherwise.

France has a national sales tax. It’s 20 percent. The UK has a national sales tax. It’s 20 percent. Italy has a national sales tax. It’s 21 percent. It’s completely realistic – likely even – that within seven years of its enactment, Herman Cain’s national sales tax would 20 percent.

Within seven years we could go from 9-9-9 to 39 (personal income tax)- 35(corporate tax) -20 (consumption tax). And with a brand new source of revenue in the national sales tax… do you think the federal government will spend more or less…what do you think the size of the government would resemble?

This isn’t an argument in defense of the current tax code. I’ve written that tax reform is one of the top issues in this election and one of the most important issues facing the country. But 9-9-9 is not the answer. The risks are too high. It’s bad.

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Comments (37)

jbranstetter
Posted on October 11, 2011 at 11:25pm
Practical explanation for how the 999 plan will HELP not burden lower income families. If you under stand this well you will be able to explain it to people when they say that his plan creates extra burden on the poor. That’s just not true. I am using an example of how this plan will affect a family with an annual gross income of $29,000 but it will apply in other amounts as well in the same ratios.

Under the Current Tax Plan:

If the total yearly income = $29,000 GROSS INCOME
Federal income tax is currently 15.3% on gross income in this tax bracket = $4,437 per year. This makes the net income = 24,563 in actual yearly income. (net income)

**When the 9-9-9 plan goes into affect it will bring that tax rate down to 9% and introduce a 9% federal sales tax. That is 9% on Gross Income and 9% Sales tax. That IS NOT 18% tax on gross income!!**

Under the 9-9-9 plan:

Total yearly income = $29,000 GROSS INCOME

Federal Income tax would be 9% on gross income in this tax bracket = $2,610 per year. Net Income = $26,390 ($1827 more in pocket per year)

Out of $26,390 of net income, a family normally spends 32% of that income on items that are charged with sales tax.

$26,390 X 32% = $8,445

The family spends about $8450 a year on (food, entertainment, apparel and services/taxable items)

$8450 x 9% new federal sales tax = $760.50 due per year from this family for the federal sales tax.

This family saved $1,827 off their yearly tax rate and will pay

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Thurston Bell
Posted on October 10, 2011 at 2:39pm
Yes, someone is thinking now after my posts.

Flat Tax Armey and Freedomworks do not really believe that it is so, for this was where Armey comes from.

The Author on this matter is a bit misguided in only one thing I noted, and that is that the USSCT, not me, said in Stanton v. Baltic Mining, that the 16th Amendment ‘gave Congress no new power of taxation’.

This creates all the more reason that the Congress cannot be trusted with creating more legislation to return America to greatness, but that it must be forced to return to the Fundamental Natural Law, for that is where People are FREE and America can be something actually and truly Great.,

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Stonedage
Posted on October 9, 2011 at 1:07am
Ex head of the Kansas city FED wants to add a new tax and people believe that he would go on to “phase 2″ the fair tax? No I would trust no one from the FED to do this we would never see phase 2. After phase 1 all we would get is lip service.

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CrismaFire
Posted on October 8, 2011 at 2:28am
Pooer people would pay more and that is good. I think it is a privilidge to pay my fair share of taxes but I shouldn’t have to pay all my neighbor’s taxes too. I don’t think richer people should pay a higher rate than me but nor a poor person either. Must be flat tax but libs might come in later and make it 20-20-20 too and that is not acceptable. Lets make it against the law to be liberal and stupid.

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sullinsea
Posted on October 7, 2011 at 1:25am
I understand Will Cain’s concern about Herman Cain’s 9-9-9 tax policy very well. In 1986 I followed and applauded the bipartisan effort of the Reagan administration and Chairman Rostenkowski to reform the Internal Revenue Code by reducing the marginal rates to three and reducing the top to 28%. That was reform – probably the last instance of bipartisan action that was in the public interest. Of course, as soon as they could the “progressive” collectivists raised the top marginal rate to 39% Will Cain suggests 9-9-9 will bring a problem with its implementation. But the problem he describes isn’t one caused by 9-9-9. It is a problem we have been living with since at least the passage of the 16th Amendment in 1916. He is wrong to reject the actual good of 9-9-9 for fear it will do harm that already exists. His way of thinking would have prevented the actual (if temporary) good that passage of the Tax Reform Act of 1986 brought.

My recommendation is a Constitutional Amendment limiting government spending to a certain optimal range of GDP, calculated in a fixed manner. Ultimately the “progressive” collectivists will not be satisfied until we have a 100% effective tax and spending rate because so-called “social justice” demands nothing less than that everyone has the same stuff in their house, as Rev. Sharpton recently put it. My own opinion is that the feds should be limited to about 15% and the states to about 10%. Don’t reject 9-9-9 for the wrong reason

Report this comment
- Okie from Muskogee
  Posted on October 7, 2011 at 2:05am
  Again, if Cain believes in the Constitution why not tax how the Constitution and founders envisioned?
  
  Why doesn’t Cain simply speak the truth, the Progressive Income Tax Amendment divides and discriminates by wealth and was not a part of the vision of how our Government was to function. Explain taxing wealth, income, was not the plan and is actually discouraging prosperity. Explain taxing differently on how much you make is the same as taxing by color, weight and IQ. Explain the tax system in the Constitution pre 16th amendment discourages Government over taxation and checks government from spending to much. Explain if our Government can not run off the Tax system setup by our founders we are doing something wrong.
  
  I’m not too stupid to understand that and neither are you. It is that simple. It is truth and it is Constitutional. Cain’s 9-9-9 plan is not.
  
  This is simply another progressive tax system and is not based on our Constitution or founders vision.
  
  Peace out!
  
  Report this comment
- SoGirl
  Posted on October 7, 2011 at 11:26am
  In you didn’t read my earlier post regarding Cain’s 9-9-9 Plan, I will repeat: With Cain’s 9-9-9 idea, we would be paying more in taxes. I don’t know how he figures, but taking my average salary from my last W2 and what I paid in taxes was just over 9 %. That is figured on withholding for 2 people. Since there would be no deductions when completing my tax form, my salary 9 % would be paid. That means I would be paying additional tax to IRS for everything I buy, including food. My average grocery bill is $500.00 weekly for family of 4. So, I would be paying $2340.00 more in taxes, just for food. Now figure 9 % tax on anything else I might have to buy. That puts me paying much more in taxes with this plan than I pay now! I suggest you check your personal income and expense before getting taken in by the catchy phrase of 9-9-9. It would be bad for the majority of Americans!
  
  Report this comment
- Okie from Muskogee
  Posted on October 7, 2011 at 11:50am
  One other point I would like to add and curious if addressed by Cain as I couldn’t find it spoken about is how much will a 9% Sales Tax cost the Federal Government in Government expenditures? Meaning: will Federal Government items bought cost an additional 9%? How will that impact Federal spending and budgets…..
  
  Report this comment
- Capitalist Mama
  Posted on October 7, 2011 at 6:44pm
  Actually Okie,
  
  Cain’s second phase of the 9-9-9 plan calls for the fair tax which taxes a consumption based tax and eliminates the income and corporate taxes. Cain does want to tax like the Constitution outlines, but he is doing so in steps.
  
  And to the author, you are a journalist! You should do some research on the proposal and the steps on Mr. Cain’s website. You can’t say that a tax plan is bad because the legislature CHANGES the plan for the worse. That’s the worst logic I have seen in a long time.
  
  Report this comment
sullinsea
Posted on October 7, 2011 at 1:03am
I understand Will Cain’s concern about Herman Cain’s 9-9-9 tax policy very well. In 1986 when I began my career as a tax attorney I followed and applauded the bipartisan effort of the Reagan administration and Chairman Rostenkowski to reform the Internal Revenue Code by reducing the marginal rates to three and reducing the top to 28%. That was actual reform – and probably the last instance of bipartisan action that was in the public interest. Every time since “bipartisanship” has harmed us. Of course, we now know that as soon as they could the “progressive” collectivists raised the top marginal rate to 39% and gradually eliminated even more deductions and credits without reducing marginal rates. Bush’s tax cuts partially reversed the damage, albeit temporarily. Will Cain suggests 9-9-9 will bring a problem with its implementation. But the problem he describes isn’t one caused by 9-9-9. It is a problem we have been living with since at least the passage of the 16th Amendment in 1916. He is wrong to reject the actual good of 9-9-9 for fear it will do harm that already exists. His way of thinking would have prevented the actual (if temporary) good that passage of the Tax Reform Act of 1986 brought.

Here in WA we have had perennial debates about the adoption of a net personal income tax since the Great Depression. Its advocates have always lost. Since the ‘30s we have had an arcane and dysfunctional B&O (Business & Occupations) gross receipts tax on busine

Report this comment
- sullinsea
  Posted on October 7, 2011 at 1:04am
  (continued 2)
  
  Here in WA we have had perennial debates about the adoption of a net personal income tax since the Great Depression. Its advocates have always lost. Since the ‘30s we have had an arcane and dysfunctional B&O (Business & Occupations) gross receipts tax on businesses – even startups that have not yet achieved profitability. Many consider it a victory to defeat the enactment of the income tax. It is. Yet WA remains a very highly taxed state anyway. Blocking enactment of a net income tax has not prevented the Legislature from increasing our tax burden – often in opaque forms such as the B&O and other taxes that do not immediately make clear how much each individual pays.
  
  Here in WA the people also passed Initiative 601 in 1993 limiting state government spending. Here is a description of the skirmishing it has taken to keep the Legislature from slipping out of the restraints we intended to bind them with.
  
  http://www.elc.wa.gov/sub/chronology.pdf
  
  This tells us what we already know – an untrustworthy political class is infinitely creative in the ways of obviating the limitations we try to impose on it and the real problem is spending more than taxation, especially at the federal level where debt can be incurred.
  
  http://www.elc.wa.gov/default.asp
  
  Report this comment
RestoreCapitalism
Posted on October 6, 2011 at 11:34pm
The 999 plan sounds like a step in the right direction, but I don’t want to get stuck there. Firstly, income taxation was never intended by the founders. The progressives amended the constitution to allow it. By taxing the purchase of goods, taxes become voluntary again. Income tax is not voluntary. You can choose not to buy taxable goods, but income taxation is draconian. When the people opt not to pay a tax by not purchasing taxable goods (to whatever degree they can), government is checked by the people, and another balance of power is exercised. Income tax leaves the people at the mercy of their government, and our wise founders never intended this. So then if the 999 is a temporary stop gap to the fair tax, which Mr Cain previously said he favored, then I would be for that. As for a two thirds majority vote in the senate, I am not sure if that is really enough of a barrier because the senate tends to be controlled by liberals. We also need to correct the way senators are elected to the original manner.

Report this comment
- spirited
  Posted on October 7, 2011 at 12:30am
  term limits?
  
  Report this comment
- Okie from Muskogee
  Posted on October 7, 2011 at 12:46am
  Cain’s whole plan is UnConstitutional without using the Progressive Income Tax Amendment. With the Progressive Income Tax Amendment powers Cain’s 9-9-9 Plan is still UnConstitutional. So basically all we the people will get is a new sales tax beginning at 9% and a revamped Progressive tax scheme.
  
  Notice phase 2, “fair tax”, is not detailed.
  
  http://www.hermancain.com/999plan
  
  If Cain stood for the Constitution he would repeal the Progressive Income tax and follow the Constitution. Cain’s plan is nothing but rhetoric that people remember, 9-9-9. Cain and his plan clearly do not.
  
  Good post!
  
  Report this comment
- Capitalist Mama
  Posted on October 7, 2011 at 6:47pm
  Okie,
  
  There’s an entire book as well as a bill written detailing the Fair Tax. Do your homework.
  
  Report this comment
Trenaway
Posted on October 6, 2011 at 9:25pm
The liberal that wrote this on the blaze, how did you sneak this on. So ******* you want to stay with he current system that 52% do not pay and gives the government a lot of control over our lives.

Report this comment
- SoGirl
  Posted on October 7, 2011 at 11:19am
  With Cain’s 9-9-9 idea, we would be paying more in taxes. I don’t know how he figures, but taking my average salary from my last W2 and what I paid in taxes was just over 9 %. That is figured on withholding for 2 people. Since there would be no deductions when completing my tax form, my salary 9 % would be paid. That means I would be paying additional tax to IRS for everything I buy, including food. My average grocery bill is $500.00 weekly for family of 4. So, I would be paying $2340.00 more in taxes, just for food. Now figure 9 % tax on anything else I might have to buy. That puts me paying much more in taxes with this plan than I pay now! I suggest you check your personal income and expense before getting taken in by the catchy phrase of 9-9-9. It would be bad for the majority of Americans!
  
  Report this comment
- Capitalist Mama
  Posted on October 7, 2011 at 6:51pm
  Actually no! Sogirl, food is not taxes under the 9% sales tax- only NEW goods. You could reduce your sales tax burden by buying used clothing, cars, and homes.
  
  The 9-9-9 plan also reduces the FICA taxes that you pay from 7.65% to 4.5% (your employer pays the other half. EVERY SALARY is taxed at 15.3% right now! Mr. Cain’s plan reduces that tax to 9%, half for you, half for your employer. As a small business owner, that’s HUGE).
  
  Report this comment
jedi.kep
Posted on October 6, 2011 at 7:59pm
Couldn’t disagree more. If government wanted to raise it, they would have to go through the American people. And we are gaining our government back every day. Government left to itself becomes corrupt. If we maintain our diligence to keep things in check, we can maintain a new tax code of 999.

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prm79
Posted on October 6, 2011 at 7:57pm
The second, and more important thing you failed to mention about 9 9 9, is that it is a bridge to the Fair Tax and elimination of the income tax. 9 9 9 is phase 1. The Fair Tax is phase 2. You were very unfair and should issue a retraction and apology!

https://www.facebook.com/fairtax.org/posts/125483917552863

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prm79
Posted on October 6, 2011 at 7:53pm
This is some sloppy, half-assed analysis!! I had to go to Talking Points Memo for some decent coverage! Will Cain should be embarassed! This is how you keep future congresses from raising it:

Cain responded, “In the legislation that I’m going to ask Congress to send me, I want a two-thirds vote required by the Senate in order for them to change it. That will impede cavalierly raising it.”
http://tpmdc.talkingpointsmemo.com/2011/10/cains-9-9-9-plan-makes-experts-dial-9-1-1.php

Report this comment
- HoosierHunter
  Posted on October 6, 2011 at 8:09pm
  Right on the money! I was going to mention the same thing.
  
  Report this comment
tmcsr69
Posted on October 6, 2011 at 7:51pm
And what is to stop our tax rates now from sky rocketing? No matter what tax system we have, the risk of our taxes being raised in the future is there.

Report this comment
- JazzGuy
  Posted on October 7, 2011 at 1:30am
  TRUE! As it is, King Obama is talking about increasing taxes ANOTHER trillion bucks! Oh woe is us, if don’t get him out of the White House…
  
  Report this comment
NOBALONEY
Posted on October 6, 2011 at 7:04pm
As a good friend had said whrn he first heard and understood the 999 of Herman Cain. It’s not perfevt, but he’s the first to make an adult conversation of dealing with our horrible taxation. The President and all other polliticians only have given lip sevice without any specifics. Just like President Obama said at his press conference today.
Saying something about changing the tax laws, but never mentioning any specifics.

Report this comment
- M LaChance
  Posted on October 6, 2011 at 7:29pm
  I agree, NOBALONEY.
  
  On a side note, a Zogby poll came out today.. first one I’m aware of that polls Cain vs Obama. According to that poll, Cain just passed Romney in the primary and if he does win it we can beat Obama with a CAIN. Why haven’t I seen it on Drudge, Fox, etc.? Is zogby a silly, meaningless polling company? Is everyone sick of polling news? I thought it was a big deal myself.
  
  Report this comment
- honor007
  Posted on October 6, 2011 at 9:33pm
  They categorized the race as between Romney and Perry and I will NOT let the MSM decide the candidate. word.
  
  Report this comment
My2
Posted on October 6, 2011 at 6:52pm
You are no Gary the numbers guy, but you are right, it is a huge risk to give them additional taxing powers. I thought they would have to state amounts and restrict other types that were eliminated in the constitutional language, however, as we’ve all learned if a word becomes inconvenient simply change it. So the SSI/FICA/Medicare payroll taxes go away and a new Worker Protection Tax gets implemented, someone slips a “war exemption” in the language and suddenly we have a War on People Who Got Too Rich Because People Voluntarily Gave Them Money in Exchange For a Desired Good or Service, which will allow Congress to override the constitutional restrictions so they can increase the percent or add a new tax.

But, you’ve got to start somehow and it would seem to me that if you can get a bunch of crafty lawyers to write this behemoth of a tax code, you should be able to find some crafty lawyers to right this hellish tax code!

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VORTEX1155
Posted on October 6, 2011 at 6:45pm
NOPE! Cain has actually beat you to that by explaining it on Chris Wallace Fox News Sunday.
9-9-9 is bold and comes from an extremely intelligent mind that understand marketing, math and business and can really take this whole mess and turn it around back into the AMERICAN DREAM again.

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Okie from Muskogee
Posted on October 6, 2011 at 6:45pm
Two thumbs up Will Cain!!!

9-9-9 or 7-7-7 or 30-30-30 are all opposite of our founders thoughts and would be deemed unconstitutional without the PROGRESSIVE Income Tax Amendment granting power to tax how they desire to Government.

Direct taxes are to be in proportion. Article 1 Section 9 Clause 4

Indirect taxes are to be uniform. Article 1 Section 8 Clause 1

Our founders in the Federalist Papers argued for a consumption tax as it would check over taxation of Government for if Government taxed to high, sales drop leading to lower revenue for Government.

Simple solution: follow the Constitution. Direct taxes be proportion. Indirect taxes to be uniform. If Government can not operate by the revenue generated Government should cut it’s spending. Anything less is nothing but progressive.

Report this comment
- Keyboard Junkie
  Posted on October 6, 2011 at 8:27pm
  I am so pleased that you pointed these details out regarding direct and indirect taxation.
  This clarifies the need for a consumption tax so well! And, if you impose any other tax, it should be the same percentage regardless of income. This is truly fair and equitable. I am so tired of us being envious and hateful toward those who have achieved wealth and prosperity! It would be such a blessing to see this type of taxation introduced and administered in America. But, I won’t hold my breath. This removes all of the power of the government to control the people, to solicit votes and to maintain inordinate power.
  
  Report this comment
- Okie from Muskogee
  Posted on October 7, 2011 at 12:12am
  @KeyBoard
  
  I look over the comments of this board and I get so sad at how ignorant we the people are.
  
  9% sales tax – Indirect tax
  9% income tax – Direct tax – UnConstitutional
  9% corporate tax – Direct tax – UnConstitutional
  
  Direct taxes are to be proportioned among the States by population, meaning take the number of revenue wanted and divide by population, and request States to collect
  
  Indirect taxes are to be uniform; the same % for all States; States collect
  
  Without using Progressives income tax amendment, Cain’s tax proposal is UnConstitutional and is truthfully Progressive.
  
  9% income tax is not proportioned, it is Progressive
  9% corporate tax is not proportioned, it is Progressive
  
  Cain’s plan does nothing but add a tax, not get rid of any and isn’t in-line with the Founders view of how to collect taxes. Cain’s plan is nothing but a final nail of the Progressive plan for it taxes us on every level, income and consumption. Sad so many are cheering for another Progressive tax scheme. Government will grow under this plan. thanks for the post!
  
  Report this comment
Cat
Posted on October 6, 2011 at 6:44pm
Posted in another thread …

Mr. Cain is proposing a change in the way taxes are paid, not spent.
Be careful with this one.

If you look at your personal income tax rate now, it’s close to 9%, maybe a little higher.
If you own a company, as I do, the company does not pay taxes, it’s not supposed to.
All wealth transfers to the personal wealth of the employees.
Yes, the company does pay taxes on the property the building sits on but it does not pay an income tax.
The firm’s profits are divided in several forms.
To start with, it’s set up as a cooperative with profit sharing.
Before the end of the fiscal year, bonuses are paid, benefits are modified and whatever has to be done to force the double ledger to reflect dollars in equals dollars out.

Yes, there are other write-offs, but Mr. Cain says there will be no write-offs under his plan
So, the firm will pass all profit to the members of the cooperative in the form of profit sharing.
The government will then make a guaranteed 9% on the companies profit through the employees personal income, which increases, but only if the company does well.

Next is Mr. Cain plans to impose a 9% national sales tax on goods and services.
EVERTHING will go up in price.
We do NOT have a VAT now.
The feds have been wanting a VAT for a LONG time.
This is their way of getting one, on top of the income tax.

Your state will also have a blast with Mr. Cain’s plan, and your money.

Report this comment
- honor007
  Posted on October 6, 2011 at 9:36pm
  Do you know all the hidden taxes that are incororated into everything we buy from a hairbrush to your milk???? all those would be gone?!
  
  Report this comment
mootsagootsa
Posted on October 6, 2011 at 6:39pm
Just because you think future politicians will raise taxes doesn’t make it bad. It just means future politicians are bad.

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- Amazona
  Posted on October 6, 2011 at 7:13pm
  Exactly, the plan is like he says common sense and you have to read the whole plan to understand his vision where he wants to go “The Fair Tax”. See his website, 9-9-9 its just a transition to that but Mr. Cain understands that the public has to be educated to embrace that. If he can’t do that in 8 years and it goes up it means the majority of the people went back to sleep and so would deserve the goverment they got.
  
  Report this comment
bikerr
Posted on October 6, 2011 at 6:07pm
Lotta if’s in your post. France? you use France as an example.

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