Herman Cain’s “999 Plan” Cannot Work

Posted by | Filed under Tax Policy | Oct 10, 2011 | Tags: , , , , |

999 Plan - No Relation to Domino's or Godfather's Pizza

Presidential hopeful Herman Cain, along with several economic scholars[1] have developed a very serious, radical plan to change the tax structure in the United States if he is elected. But can it work?

Herman Cain and expert economists worked tirelessly to determine the perfect mix of business, individual, and national tax rates to ensure economic growth in the United States. Coincidentally those numbers are each precisely 9%, which is very lucky considering “999” plan has such a terrific ring to it.

Imagine if it turned out that it would be optimal to tax business at 11.5%, individuals at 7%, with a national sales tax at 14%. Then it would be the 11.5-7-14 plan. Say that out loud: “Eleven-point-five, seven, fourteen plan.” Yikes.

Even worse, imagine if it were optimal to retain marginal income tax rates. What if his advisers advocated a regressive tax, where tax policy would reward the wealthy for their success? Then it would be the 11.5-regressive-tax-starting-at-7%-14 plan. Fortunately for Herman Cain, the 9% business, individual, and national tax rates are like perfect laws of the Universe such as Fibonacci numbers, or Newton’s gravitational constant.

Some disagree with Cain’s plan, however. Mitt Romney released a 59 point plan that is far too complicated for really anyone to read. Thankfully, the first thing he mentions is a reduction of the corporate income tax rate to 25%[2]. Jon Huntsman agrees with Romney in a twelve page plan that includes a corporate income tax rate of 25%, but favors a very complicated 8%, 14%, 23% bracketed system for income tax[3]. Michele Bachmann, on the other hand, considers 25% and 9% to be far too high. She offers a much more humble tax rate of 0% [4].

These are all very reasonable alternatives; however they lack the simplicity of Herman Cain’s proposal, except for Bachmann’s. It seems as though the best plan would incorporate the good points of each of the contender’s suggestions.

Get rid of the long 12 page plans, the confusing weird numbers, and the 59 points. Surely any candidate that adopts the following plan will prosper:

The 88 plan
8% individual flat tax,
8% business tax – we need to encourage growth (9% is not as attractive as 8%)
0% sales tax – there is no need to punish consumption, that is a disastrous recipe for ruining the economy.

This is one number (and two percentage points) less than Herman Cain’s plan, 11 pages less than Huntsman’s plan, and 57 less points than Romney’s plan. Some may argue that the 88 plan will not bring in enough income for the government to run, or to eliminate our national debt. It will be totally revenue neutral. It’s fine. Will the government have to cut some pork spending? Absolutely. That’s the beauty of the 88 plan.

Some might ask, why not the 777 plan? Taken. Florida Governor Rick Scott already did it [5]. 666 plan? Alienates Christian demographic, and republican base. 555 plan? Too much like Domino’s 555 deal. 444, 333, 222, 111 plans are still up for grabs, but some consider them too low to get independent voter turnout. 000 plan is Bachmann’s. 101010 plan, or anything above has too many numbers, obviously. That is why 88 plan is perfect for America, and perfect for any candidate that would like to win the Presidency in 2012.

Make America Fair, institute the 88 plan.

[1]We assume he didn’t just come up with those numbers out of nowhere?
[2]http://mittromney.com/blogs/mitts-view/2011/09/believe-america-mitt-romneys-plan-jobs-and-economic-growth
[3]http://www.jon2012.com/jon-email/TimeToCompete.pdf
[4]http://www.foxnews.com/politics/2011/09/22/fox-news-google-gop-2012-presidential-debate/
[5]http://www.tampabay.com/news/business/article1141465.ece

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