This should put the argument to bed once and for all.

From page 7 of the Fiscal Associates report (PDF) linked to Cain's website:

A business transactions tax would radically broaden the base for businesses. Each business would pay tax on gross receipts less payments to other businesses. Allowing the subtraction of payments for intermediate goods yields the value added by the company. Subtracting investment as well yields a subtraction method value-added tax.

In keeping with the basic value-added structure, the tax is treated as border adjustable. That is, the tax is on a territorial basis and applies only to sales in the U.S. rather than the worldwide treatment under the current tax system. This approach exempts exports while subjecting imports to the tax. (emphasis and color coding added)

From Cain's description of the business flat tax on his website.

Gross income less all purchases from other U.S. located businesses, all capital investment, and net exports. (color coding added)

Differences:

• Receipts versus gross income. Receipts implies cash-basis, while gross income implies accrual. There could be other differences as well.


• Payments to other businesses versus purchases from other U.S. located businesses. The same cash versus accrual question plus a little protectionism thrown in.

So according to Cain's own experts, his business flat tax is a modified VAT.

Also, there's an old but good piece at Forbes where Bruce Bartlett explains what a subtraction-method VAT is and how it is different than a Flat Tax.

The flat tax, originally devised by Hoover Institution scholars Robert Hall and Alvin Rabushka, is a subtraction-method VAT with one twist. Businesses are permitted to deduct cash wages paid from the base on which they calculate the VAT.

... a point which has been made countless times here at the HQ.

In summary, Cain's business flat tax and a VAT are like apples and apples.

I encourage you to read the full report (PDF). It doesn't specifically support 9-9-9 as much as it does list several alternatives and say choosing one would be nice.

Posted by: andy at 08:19 AM | Comments (152)
Post contains 361 words, total size 3 kb.

Grubby.

Some would argue that there is something profoundly inappropriate about a vice president of the United States politicking to fourth-grade students about a jobs bill — and, perhaps subtly trying to scare those children into believing that, if the bill is not passed, they will be deprived of the necessary care and attention of their over-taxed school teachers.

...

Biden actually told the schoolchildren that, in order to rehire some 400,000 teachers nationwide, along with thousands of police officers and firefighters, all that needs to be done is tax wealthy individuals at a higher rate than they are currently taxed.

Then, in a move perhaps intended to woo, Biden told Lenid Keebaugh’s class of fourth-graders, “We’re going to give you some money to hire them back.”

Then he apparently hands out stuffed dogs.

more...

Posted by: Ace at 08:05 AM | Comments (110)
Post contains 168 words, total size 1 kb.

Via Lachlan Markay.

At last, some honesty. All Democrats care about is increasing the public workforce, enriching public sector unions and eventually, themselves.

"It's very clear that private sector jobs have been doing just fine, it's the public sector jobs where we've lost huge numbers, and that's what this legislation is all about," Reid said on the Senate floor.

Reid was responding to comments from Senate Minority Leader Mitch McConnell (R-Ky.), who accused Democrats of purposefully pursuing higher taxes as part of the teacher/first responder bill, S. 1723, so Republicans would oppose it. McConnell said the bill was meant to fail in order to give Democrats an issue to run on in the 2012 election, but Reid said the Republicans are simply trying to defeat President Obama in any way they can.

Reid reiterated his emphasis on creating government jobs by saying Democrats are looking to "put hundreds of thousands of people back to work teaching children, have more police patrolling our streets, fire fighters fighting our fires, doing the rescue work that they do so wellÂ… that's our priority." He said Republicans are calling the bill a "failure" because they are "using a different benchmark for success than we are."

Yes, Republicans use wealth creation as a benchmark for success. Democrats use wealth consumption and redistribution. There's a big difference and it's nice to see Democrats admitting to their definition.

I'm just trying to imagine if a Republican had said that job creation was doing just fine in a time of 9%+ unemployment. They would be pilloried (rightfully so) for being out of touch with reality.

Now on an empirical level, Reid is right(ish). States have been shedding workers while the private sector has been adding them. However that rate of private sector job creation is so anemic that it barely manages to keep pace with population growth. It does nothing to put a dent in the number of jobs lost over the last 3 years. Yet the top ranking Democrat in the US Senate thinks that means the private sector is "doing just fine"?

Thanks for the ad material Harry!

By the way, Obama does this all the time too. On his bus tour touting his jobs bill he always talks about putting teachers and cops back to work. It's always about public sector workers, never anything about the crushing burden this hiring puts on people not working for the state.

Posted by: DrewM at 06:49 AM | Comments (231)
Post contains 431 words, total size 3 kb.

PSA: This will be a shorter-than-usual DOOM today (which will probably cause rejoicing among those who grow weary of reading my lengthy rants). Time doth run fleetly away while other obligations press upon me.

Moody's to Spain: BAM!

Many people don't understand that often, a forest fire is beneficial: it removes all the dead wood and rotten underbrush, and clears the land for new growth to emerge. It's the same way with businesses oftentimes -- the fire is traumatic and sometimes deadly, but in the long run it's absolutely necessary for a healthy ecosystem.

About that big European summit coming up this weekend? Don't get your hopes up. I have every expectation that the Eurocrats will continue their fecklessness, even in the face of DOOM.

When you're middle-aged, you kind of make peace with your gut. You're not happy about the flab, but you're not unhappy enough about it to embark on an exercise regime, either. You understand (or should) that carrying too much weight means increased risk of heart-attack and stroke and adult-onset diabetes. But slimming down means giving up a lot of stuff that you like -- beer, candy, cake, red meat -- and finally using that stationary bike in the corner of the room instead of just looking at it guiltily before turning on the television in the evening. It all boils down to choices you make, and whether you can live with the consequences of those choices. It's not a bad metaphor for the economy right now.

Is the "income inequality" trope a myth? Reagan used to say that a rising tide lifts all boats -- the rich get richer, but the poor get richer too. When even stinky hippies with no jobs can afford iPhones and cutting-edge laptop computers, the gap between rich and poor doesn't seem to yawn all that wide.

Teh Krugman acknowledges that the internet has leveled the econ-commentary playing field. Krugman insists that he's just fine with this brave new world, but you can still hear the bitterness behind his words. I get the feeling that he's a lot less fond of dissent from the internet "nobodies" than he lets on.

I've been waiting for GASB (Government Accounting Standards Board) to finally force states and municipalities to make real and honest accounting of their debts and obligations, and Lo! that day might finally be near. CalSTRS: BONED!

You keep using the word "unthinkable". I do not think it means what you think it means.

What do Friendly's Ice Cream and Rhode Island have in common? A pension mess. But Friendly's can't force the taxpayer to pony up the money, can they? (Well, actually, they can, kind of: they can go bankrupt and hand off their pension debts to the taxpayer-funded PBGC. Which is itself nearly insolvent.)

This has been a problem with the GOP for decades: they claim to be in favor of a more federalist approach to government...but they don't really mean it.

This is something that has confused me for years too: why do people assume that a college degree guarantees them a job? More importantly, when did a college education turn into a jobs-training program rather than the traditional "higher education" program? (My guess? Immediately after World War II with the introduction of the G. I. Bill.)
more...

Posted by: Monty at 04:48 AM | Comments (276)
Post contains 564 words, total size 5 kb.

This was the first debate with Herman Cain at or near front-runner status and it showed. Right out of the gate the questions and the other candidates challenged his 9-9-9 plan.

Here he is defending it:

The thing that I would encourage people to do before they engage in this knee-jerk reaction is read our analysis. It is available at hermancain.com.

[...]

I invite people to look at our analysis, which we make available.

Secondly, the -- the point that he makes about is a value-added tax -- I'm sorry, Representative Bachmann -- it's not a value-added tax.

[...]

And I invite every American to do their own math, because most of these are knee-jerk reactions. And we do provide a provision, if you read the analysis, something we call opportunity zones that will, in fact, address the issue of those making the least.

[...]

Once again, unfortunately, none of my distinguished colleagues who have attacked me up here tonight understand the plan. They're wrong about it being a value-added tax.

The value-added tax question hasn't gone away and it hasn't gone away because Cain never explains why his proposed business flat tax is not one. He just sends people to his website.

To the limited extent he tried to argue the issue, Cain gave the misleading impression that when candidates and commentators question his proposed VAT that they're talking about his retail sales tax. Here he is:

Secondly, it is not a value-added tax. If you take most of the products -- take a loaf of bread. It does have five taxes in it right now. What the 9 percent does is that we take out those five invisible taxes and replace it with one visible 9 percent.

So you're absolutely wrong. It's not a value-added tax.

This explanation is no explanation at all. Folks aren't calling his retail sales tax a VAT. They're calling his corporate flat tax a VAT. Here's Santorum and then Bachmann explaining why:

[Santorum:] [Y]ou have a sales tax and an income tax and, as Michele said, a value-added tax, which is really what his corporate tax is, we're talking about major increases in taxes on people.

[...]

[Bachmann:] But Anderson, how do you not have a value-added tax? Because at every level of production you have a profit, and that profit gets taxed, because you produce one portion at one level, and then you take it to the next supplier or vendor at the next level, and you have an exchange. That is a taxable event.

And ultimately, that becomes a value-added tax.

Bachmann is talking about exactly what we've been talking about here for a week. Cain's corporate tax, which is calculated by taxing gross sales less purchasing costs, investments, and deductions, is a VAT because the tax falls on only the part of the sales that is "value-added." And that compounds, as Bachmann explained, at every supplier or vendor until the final sale (where the 9% retail sales tax will get another bite of it).

And while we're talking about it, here's 9-9-9 plan architect Steve Moore having second thoughts:

I love the idea [of a 9 percent national sales tax]. As you know, Art Laffer and I helped design the plan. But IÂ’ve come to the conclusion that the American people and the voters do not want a national sales tax. HeÂ’s going to have to replace that national sales tax with a 9 percent payroll tax. And if you do that itÂ’s a total winner.

A 9 percent payroll tax on top of the proposed 9 percent wage tax? Every small business in America just cried out in terror.

Posted by: Gabriel Malor at 03:45 AM | Comments (208)
Post contains 612 words, total size 4 kb.

You shut your mouth when you're talkin' to me.

Posted by: Gabriel Malor at 02:47 AM | Comments (106)
Post contains 17 words, total size 1 kb.

Are You Smarter Than a Wall Street Occupier?

Well almost certainly if you're a regular reader of this blog. It's funny how members of the 'reality-based' community seem so unfamiliar with uh, actual reality. Apparently they're all being oppressed by the tyranny of facts.

If you're going to protest in the streets and demand actions of others, shouldn't you at least have a clue about what you're shouting about?

Knowing less about the world than any small business owner pretty much disqualifies you from offering advice about running the economy. Or anything else for that matter. more...

Posted by: Maetenloch at 05:10 PM | Comments (518)
Post contains 797 words, total size 7 kb.

Please, for all that is good and holy, make it stop!!!

Back to CNN this time, but with Anderson Cooper moderating instead of Wolf Blitzer. I'll take "Who is Gloria Vanderbilt" for $200 please, Alex.

Starts at 8:00pm Eastern. Livestream here

The usual suspects minus Huntsman are participating. He just got done with a New Hampshire town hall. Allegedly.

Drinking game:

• Do a shot every time someone other than Herman Cain says "9-9-9".


• Every time someone says "Occupy Wall Street" shout "Get a job you smelly hippies!" and drink 99% of whatever you have in your cup.

Standard reminder: Your comments do not automatically display. So don't ask "Why aren't my comments displaying?" They don't display.

They're not posted comments a la chat room. Instead they go to queue, which the producers (cobloggers) read, and we post them, by hand, if we think they make a good point.

Liveblog thingy below the fold. more...

Posted by: andy at 03:45 PM | Comments (788)
Post contains 177 words, total size 2 kb.

Also known as "so-so for a second-tier blog."

Keith Olbermann is not in the witness protection program, but he might as well be. His show on Al GoreÂ’s Current TV (AmericaÂ’s least watched network) has lost nearly a third of its viewers in four months.

Pretty impressive result for $10 million a year. ThatÂ’s just his salary.

Countdown with Keith Olbermann was a major draw when it was on MSNBC. On January 21, the network took a big hit when Olbermann announced on air that that would be his last show for them. Then in June, Current launched Olbermann and Countdown.

It was no surprise that Olbermann drew a big audience for its early shows - averaging 106,000 viewers a night. Unfortunately, by August it was down to 79,000. Last monthÂ’s numbers were even worse. OlbermannÂ’s average was down to 46,000 viewers and was in no danger of coming close to breaking into the top 30 cable TV news shows.

Thanks to JohnE.

Posted by: Ace at 02:21 PM | Comments (197)
Post contains 175 words, total size 1 kb.

I suppose that means it's not really his last chance. But he does need to do something, else he'll cede all the "Not Romney" vote to Cain.

In the last debate, Perry didn't make any gaffes, but neither did he impress. He did not seem eager to speak at all, and seemed to want the spotlight to pass to others.

A front-runner can do that; a fading third-placer can't. Perry says this time he'll be more aggressive.

Perry's strategy for tonight? "We're going to pay a little less attention to the rules," says a source in the Perry camp who asked to go unnamed. "One of the things the governor tried to do in New Hampshire [at the Bloomberg/Washington Post debate] was to live by the time limits set by organizers. No one else did. As a result, one could view the governor's performance as having less to say, when in fact he was simply trying to live up to the rules of the debate. They've rarely been enforced, and we're not going to pay much attention to them."

A number of observers remarked that Perry seemed to check out of the New Hampshire debate for long periods of time. Whatever the explanation -- whether he was trying to abide by the rules or simply wasn't engaged in the conversation -- it appears Perry will try to take a more active role in Las Vegas.

If Perry doesn't rise... Well, Ed Morrissey notes there is one last guy to look at.

Of all the other candidates on the stage, Newt Gingrich might be the one to watch. He has slowly gained momentum by being among the most positive on stage (except to moderators) and demonstrating his encyclopedic knowledge and quick wit. If it wasn’t for his personal baggage, he might already be the front-runner — and if both Cain and Perry stumble late, Republicans might be inclined to take on his baggage rather than hand Mitt Romney the nomination virtually unchallenged.

We're doing a liveblog tonight. Probably the last one for a long time.

A lot of people are sick of the debates.

The only reason I'm even doing it is I keep expecting something to change. But mostly the debates are exactly the same.

Posted by: Ace at 01:34 PM | Comments (299)
Post contains 390 words, total size 2 kb.