Wednesday, October 19, 2011

In the meantime, Cain's 9-9-9 plan gets stamp of approval....


Cain's Stimulating '9-9-9' Tax Reform

By ARTHUR B. LAFFER
October 19, 2011

A new sales tax could be raised in the future—but so can any 

other tax. And the low marginal rates would jump-start the 

economy.




Here's the highlights:

....federal tax revenues from the personal and business income taxes, all payroll taxes, and the capital gains, gift and estate taxes have averaged $2.3 trillion, while gross domestic product has averaged about $14.5 trillion. The total revenue from these taxes as a share of gross domestic product averages around 16%. Sometimes it's a good deal higher, as in the boom of the late 1990s, and sometimes its lower, as in today's "Great Recession." But a number in the 16%-19% range is as good as you'll get under our current tax code.
By contrast, the three tax bases for Mr. Cain's 9-9-9 plan add up to about $33 trillion. But the plan exempts from any tax people below the poverty line. Using poverty tables, this exemption reduces each tax base by roughly $2.5 trillion. Thus, Mr. Cain's 9-9-9 tax base for his business tax is $9.5 trillion, for his income tax $7.7 trillion, and for his sales tax $8.3 trillion. And there you have it! Three federal taxes at 9% that would raise roughly $2.3 trillion and replace the current income tax, corporate tax, payroll tax (employer and employee), capital gains tax and estate tax.
And: 

A static revenue-neutral tax change requires static winners and losers. And this 9-9-9 plan has made certain that even on static terms those below the poverty line will be better off—period. Once the dynamics take hold, many of those below the poverty line will find good jobs and thus will rise above the poverty line and start paying taxes.
And finally: 
This is the type of tax increase I wholeheartedly support. I support collecting more in taxes from people with high incomes who choose to actually pay taxes at lower tax rates than use lawyers and accountants to avoid taxes at higher tax rates. Some tax revenues at low tax rates is a heckuva lot better than no tax revenues at high tax rates.

Done deal.  9-9-9 is now a mainstream idea.  If Art Laffer believes this will work, I am behind it and Cain 100%.


Go Herminator! 

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