Editors Note: Politisite is reprinting the Candidates Rebuttals Verbatim.
“9-9-9” Would Wreck the U.S. Economy
Herman Cain’s signature “9-9-9” levies a brand new national sales tax and would further weaken the U.S. economy, leaving American taxpayers vulnerable to skyrocketing rates imposed by future Congresses.
FreedomWorks recently illustrated how 9-9-9 lays the groundwork for a growth-suppressing European-style “value added tax”:
“[A]dding a national retail sales tax on top of the federal income tax (even a flat tax) is a bad idea, because it creates the infrastructure for a federal-level, European-style VAT …. And if Cain’s 9% personal flat tax failed to remain flat …. we would end up with the worst of both worlds: a confiscatory income tax and a job-crushing VAT.” (Dean Clancy, “Herman Cain’s ‘999 Plan’: The Good, the Bad, and the Ugly,” FreedomWorks, 10/6/11)
The Wall Street Journal and others warn against the ultimate deleterious effects of 9-9-9:
“European nations began adopting national sales and value-added taxes on top of their income taxes in the 1960s, and that has coincided with the rise of the entitlement state and slower economic growth. Consumption tax rates usually started at less than 10%, but in much of euroland ‘the rates have nearly doubled and now are close to 20%’ …. we would see regular campaigns like ‘a penny to fight poverty,’ or ‘one-cent for universal health care’ that would be politically tough to defeat.” (“Cain’s Tax Mutiny: Creating a new national sales tax on top of the income tax is a political killer.,” Wall Street Journal editorial, 10/10/11)
“The national sales tax, which would help fund the federal government, would be on top of state and local sales taxes, which fund state and local government. In Florida, that would create a hypothetical tax rate of 15 percent in most parts of the state …. Most economists agree that a national sales tax would raise the relative tax burden on low- and middle-income earning taxpayers.” (“The facts about Herman Cain’s 9-9-9 tax plan,” PolitiFact.com, 9/27/11)
“It’s also uncertain whether a consumption-based tax can coexist ‘alongside an income tax, no matter how low the rates,’ said Mike Franc, vice president of government studies for the conservative Heritage Foundation. Also, Franc said, the rates would increase as the government needed more money. ‘Will a 9-9-9 plan inevitably over the years become a 15-15-15 plan, and ultimately a 30-30-30 plan? Or worse?’ he asked.” (“Is Herman Cain’s 9-9-9 tax plan fair?” USA Today, 10/10/11)
Mr. Cain’s plan has a worthwhile intention, but 9-9-9 would cause more problems for the U.S. economy and job-creation than it would solve. Sensible tax reform will lower the burden on American business, simply the tax code for all taxpayers, and make the U.S. the most competitive engine of economic growth in the world.
As a former federal tax litigation attorney, Congresswoman Michele Bachmann has seen firsthand the how the current code devastates American job creators. As President, she will reform the tax code to produce real jobs, right now, without creating new taxes.