I Like 9-9-9, BUT….

I have considered Herman Cain to be a legitimate contender from the moment he got in the race, I like him, and if it comes down to him and Romney, I will be backing Herman Cain.

That being said, I have some serious concerns about his 9-9-9 plan.

Let me begin by saying that I think his plan would be a genuine improvement over our current tax system because it would flatten and simplify the tax code, lead to more economic activity, and spur job growth.

Of course, I would say the same thing about replacing our income tax system with a flat tax, a national sales tax, or the Fair Tax. The reasons we don’t have any of those tax plans in place, despite the fact that they’d also be better than our current system, are the same reasons that 9-9-9 is going to be an extremely tough sell.

#1) It’s a radical change from our current tax system and Americans tend to naturally be extremely suspicious and skeptical of big legislative shifts. Radical plans are also very easy for the other side to demagogue.

#2) There are a lot of people with low incomes and fixed incomes who will see their taxes GO UP SIGNIFICANTLY under 9-9-9. That’s just something that happens when you move from a more progressive tax system to a flatter tax code. Those people are going to show how unhappy they are about the tax increase at the ballot box.

#3) It is EXTREMELY unlikely that 9-9-9 would get through Congress. My gut instinct is that it would probably take the same margin we have in the House today and 65 Republican Senators to push 9-9-9 through. We don’t have that and even if the GOP has a phenomenal year in 2012 AND 2016, we’re still not going to have those kind of numbers.

#4) The 9% corporate tax in Cain’s plan is essentially a Value Added Tax. A VAT is VERY DANGEROUS for taxpayers because it’s a hidden tax, kind of like the tax on gasoline. The price of goods goes up, but consumers don’t necessarily realize that tax increases are causing the increase. Replacing the income tax with a revenue neutral VAT tax would be risky, but you could justify it by saying it would be good for the economy (it would flatten the tax code). However, mixing in a VAT with other forms of taxation is a bad idea because in other countries where that has happened, the politicians keep raising the VAT over and over again to pump out more revenue.

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