In the recent weeks GOP presidential nomination battle has turned towards the hot topic of tax reforms. One candidate for the job, Herman Cain, has begun advocating a radical change in the tax system. His plan, labeled the “9-9-9 Plan” has drawn attention from Republicans and Democrats alike. Many have debated whether this plan is plausible or foolish.
In the most basic sense, Cain’s plan has three aspects (these are very simplified explanations):
1: A 9% “flat tax on businesses”. More specifically it is a 9% tax on businesses’ gross income once purchases from U.S. located businesses, capital investments, and net exports have been accounted for.
2: A 9% “Individual Flat Tax”. This facet would tax individuals 9% of their gross income once charitable donations have been accounted for.
3: (This is a new idea) A 9% “National Sales Tax”. This would be a 9% tax on-top of current state sales taxes.
His own outline can be seen here.
Already it has been questioned how much revenue this plan will raise and whether it would do so in the right ways. Major opposition to the plan keys on the fact that this would raise taxes significantly for low and middle-income houses. In addition to that, the wealthy would receive substantial tax cuts due to increased revenue from the rest of the population. The major worry is that the new plan would actually decrease the government’s tax revenue. One analysis suggests that this plan would have raised $2 trillion if it were in place for 2010; when in fact the country’s current tax schedule raised $2.3 trillion in 2010.
While these opinions have been validated by many other political activists and economists, Cain’s campaign shies away from a lot of these topics and makes several different claims. Rather than speak about increasing taxes for low-income and middle-income houses, Cain consistently talks about “expanding the base” of whom they tax. Essentially, he argues that his plan will raise more revenue because it taxes more people. It’s pretty obvious that saying “expanding the base” sounds a lot better than saying they are going to tax more people. Cain’s campaign also strongly advocates that their tax schedule will raise more money than the previously projected $2 trillion. They argue that their plan would actually raise $2.3 trillion in tax revenue, which would be higher than last year’s $2.2 trillion.
When it comes down to it, it is undeniable that Cain’s proposition is radical and revolutionary; especially when you take into consideration that his 9-9-9 plan is a temporary plan until a “Fair Tax” is put in place. This tax would be a uniform tax for the entire country that would end the IRS that we currently know and repeal the 16th Amendment. This is Cain’s ultimate goal with the economy. While this is a very radical move, it is beside the point right now because it would take place years down the road.
I find it interesting that this tax plan was created and that it has not only spurred arguments between Republicans and Democrats, but it has also sparked debates within the Republican Party. This plan is actually very unique and interesting, considering that most tax reforms discuss taxing the rich more, and giving breaks to those with less income. I understand that Cain wants to make taxes fair in the sense that everyone is being charged the same rate, but is that really what’s best for our country right now? Marx discussed class struggle and how it is inevitable until everyone is on an equal playing field, but this is not the way to accomplish that. Furthermore, Rousseau talked about how the worst part of modernity was that some people were rich and some people were poor, yet this would help make the rich richer and the poor poorer. When you take into consideration the mount of “Occupy” protests, I find it hard to believe someone is actually advocating for taxing the lower-income families more, and ultimately giving tax cuts to the rich. This would only separate the classes even more, and increase inter-class struggles. While I am in no position to validate whether this plan is ingenious or naïve, I did want to bring up the topic here and talk more about how it would actually tax the lower class more than they are already. What are your thoughts? Do you think this is a legitimate plan or a foolhardy attempt to make changes in our tax system? What do you think political theorists like Marx and Rousseau would think of this?