Sales Tax: Cain’s Half-Baked Idea


Herman Cain, who is not a credible Presidential candidate since he has never held an elected office, was nevertheless allowed to participate in the Republican Debates, because they felt they needed a black face on stage. After Cain explained his 9-9-9 Plan, including a proposal to impose a 9% national sales tax, he remains too frightening to even consider for President, since his sales tax idea is regressive, and would hurt everyone, except the very rich.

The untested Cain would throw out the entire Federal Tax Code, including individual and corporate progressive income taxes, capital gains taxes, estate taxes, and individual and matching Social Security payroll taxes. He would instead implement a 9-9-9 plan, (if he could ever find a Congress to agree), which would establish a flat 9% income tax on corporations and individuals, and a 9% national sales tax.

His flawed plan is based in part on incorrect assumptions. In a recent debate, Cain thought individuals now pay 15.3% in Social Security Payroll Taxes, when in fact they only contribute 7.65%. It is the matching 7.65% employers pay that pushes the total up to 15.3%. He tried to suggest individuals would save 6%, since they would pay only 9%, instead of 15.3%. In fact, the cost of most goods for the unemployed would go up 9% under his sales tax, without any offset whatsoever.

A 9% National Sales Tax would be regressive and would fall disproportionately on the unemployed, and what remains of the working and middle classes. It would force Americans to pay a 9% tax on necessities, like food, clothing, and other essentials, and this would be on top of state sales taxes, typically 6% or so.

On the other hand, his plan would be a major windfall for the rich. At present, when someone dies, only those estates worth more than one million pay any federal taxes at all. Cain would completely abandon this source of revenue, which in recent decades has already been significantly depleted by Republicans.

He would also give away taxes on Capital Gains. When people work hard and actually earn money, they must pay taxes on their income. If someone is so rich they do not need to work, and can realize Capital Gains from investments, without working, Cain would completely excuse this source of income from taxation.

Cain’s plan would also substantially give away federal revenues from any person or corporation currently in Income Tax brackets above 9%. Once again, individual millionaires, and those corporations making millions or billions, would profit the most.

Cain would also gut Social Security Payroll Taxes. In one debate, he said he wanted to phase out the Social Security retirement system, the most popular government program ever invented. His tax plan would not phase it out; it would destroy it over night.

Perhaps the worst part of Cain’s ill-conceived 999 Plan, and his National Sales Tax, is the hypocrisy. While he wants revenues to equal spending, and opposes raising the national debt, he dries up the federal coffers, and yet supports our unfunded wars abroad.

Frankly, Cain’s plan is about as dumb as he is, as it would bankrupt the U.S. Treasury. Where do the Republicans find these Sarah Palin types? Why do they give them give them center stage? It is time to send Herman Cain back to the kitchen of his pizza place, where his time would be better spent throwing something other than his half-baked ideas into the oven.

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