1 VAT is the most bureaucratic imposition imaginable.  It has France written all over it.

2 Obama wants to land the death blow on the republic. Let's beat him to it!

3 Giving Congress a new tax is insane on it's face. How much analysis needs to be done? Herman is naive to believe otherwise.

4 I get and share the frustration with the field and the dislike of Mitt but the idea the GOP should nominate a guy whose main policy idea (only one really) is imposition of a national sales tax is little nutty.

And by "little", I mean a lot.

5 I want to see a national sales tax that is linked to the repeal of the 16th Ammendment, short of that, I don't support it. I've herad Cain in the past express this same sentiment, and I like that his 9-9-9 takes a baby step towards opening the door to the discussion on it, but I don't take the plan seriously in the slightest.

6 I'm really disappointed to read this. I thought Cain was pushing a retail sales tax, not a stinkin' VAT. This totally sours my mood today - I was really starting to like the Hermanator.

7 If Cain's national sales tax is an idea to supplement the income tax, it's a boneheaded idea.  I haven't heard that totally clarified, but I've heard both.  Cain needs to fill in the blanks.

8

Posted by: DrewM. at October 13, 2011 08:46 AM (plesI)

+1

9 Damn, Gabe, that is one weakass opinion even for your meager monetary and fiscal sensibilities.  For starters, you have the psychological effect of a consumption tax precisely backwards.

A consumption tax nails the ultimate taxpayer - the individual - where it hurts most and it does so each and every time.  You claim he won't notice...and that he already notices his income taxes?

Wrong.  He wrongly sees his income tax refund as an annual boon, which is why Washington loves it so much!

And the notion that trading the hours of a man's life for a taxable wage has no bearing on his legal standing before the IRS is positively socialist.

The rest of your opinion is superficial at best.  Learn to think at least an order of magnitude deeper into how all these systems work together to destroy economies, liberties, and property.

Dude.  You resemble a doctrinaire statist.

10 Gabe, have you seen the details of the 9-9-9 and know if it will be implemented like a VAT?

Regardless though, I am against both a sales tax and an income tax at the same time.

11

I was warming up to Cain after Perry screwed himself over but after the debate the other night I realized the guy just ain't ready. 9-9-9 is a new doorway for the Govt to add up more taxes/intrusion into our lives. Further, his Greenspan was awesome comments still bother me.

12

Sigh.....well there goes Herman Cain.

 

I can't support someone who supports a VAT even if they promise to eliminate the current income tax, because the income tax will be brought back the next time a democrat takes the white house.

 

This is awful, just awful.  We haven't had a better chance since 1980 to get our dream candidate and we're going to get Romney. Damnit

13 Gabe, i see your point.  it is a valid one.  but let's say you sell TVs where the VAT is 5-10%.    when you have a sale or any other time that you tout the low prices of your TVs, you will list the horrid govt tax to show how that drives up the price of your TV.  I see that this will be advertised on many many products.  Therefore, the 47% who never pay anything will suddenly realize that they are paying taxes on everything.

14 Who the hell starts a post by quoting themselves from another post?

You insist upon yourself Mr. Malor.

15 Herman Cain: NOT Ready On Day 1!!! Catch The Fever!

...or on day 321...or day 637...or on...

Cain ain't the one. As much as people are desperate for someone, anyone to vote for other than Mutt, Cain just is not up to the job of being president...from this VAT nonsense to Cain following right along with the MSM's desire to get him to play the race card on Perry to not having a single, friggin' clue about any foreign policy topic he's had the misfortune of being asked a question about during the campaign...Cain is not the answer. He's not qualified for the VP slot either.

16 If Cain's plan is how you've laid it out, then every point you make imo, I agree with.  It isn't that the current system is only unfair, it's that it promotes corruption, or at the very least, abuse in our political system.  The federal government should only rarely have to send money back to the states.  The whole term 'federal money' is a corruption.  Yeah, I know, going off the reservation...

17

This is awful, just awful.  We haven't had a better chance since 1980 to get our dream candidate and we're going to get Romney. Damnit

Posted by: Ben at October 13, 2011 08:53 AM (wuv1c)

Ive already prepared to join the dark side

18 I am against both a sales tax and an income tax at the same time.

Me too.  The only fair tax is a consumption tax, i.e., a sole VAT.  It's also the only tax suitable to get the individual off the hook at the IRS and to tie taxation strictly to the economy and thus tie government revenue to the fruits of its infernal meddling.

All other taxes must end.

Why the right loves itself the cursed personal income tax is mystifying.  And why it sees tax-free corporations as a good thing doubly so.

19 if the code would just be simplifed life would be easier. the assholes who write it don't ever hurt themselves/ if you ever made enough money to take some real business deductions you know what i mean. im to the point of eliminating all deductions over perhaps a ten year period of warning. cant just stop, people need to plan. why should i get a deduction for having kids? why should you get a deduction for 'charitable giving'? and they all lived happily ever after

20 Who the hell starts a post by quoting themselves from another post?

Most of the NYT.

21

I donÂ’t support 9-9-9, but there is no VAT in CainÂ’s plan.  The Fair Tax plan is the only way to go.

22

Time for a second look at Ron Paul?

23 No, the only fair tax is a flat tax on all income and all amounts with no exceptions and no deductions.

24

I live in Washinton State, our main tax is a sales tax. It started out at 2%. It's 9.5% now. The problem is that it is an easy tax to raise. Everytime they raise it they say it's only 2/10 of a penny on a dollar purchase. Next year they do the same thing.

Then of course through the sales tax it's easy to super tax things they don't like. Cigarettes here are around $9 a pack, booze is around $20, they just taxed beer another $1.25 a 6 pack. No one knows how much tax they pay each year.

25 One of the horrible things about Cain's silly and destructive "9-9-9" proposal is that it opens the door for a VAT.  Soon the government will define a "sale" as everytime money is spent at every point of production... the very definition of a VAT.  We'll get an effective VAT without ever having voted for it... how European.

26 i fully agree with the VAT or national sales tax as the revenue source for the Fed Gov

27 Big surprise, Gabe is not only dead wrong, but lies to prop up his stupid position.  A VAT and a sales tax are two different beasts.  Proponents of social engineering through the income tax code often lie, and pretend they are one and the same.

Nothing is more "blindingly obvious" than seeing a sales tax imposed on receipts for things you buy. It's the income tax, which uses withholding, estimated tax, self-employment tax, and its lefty's wet dream of exemptions and deductions that hides what the government is getting and from whom?

I ask once again.  Why is Gabriel Malor allowed to post here?   Is Ace a softy and gives him a spot became he couldn't meet the high standards of the DUMmies, the Kos Kidz, and the Toast Huffers?

28 I'm really disappointed to read this. I thought Cain was pushing a retail sales tax, not a stinkin' VAT. This totally sours my mood today - I was really starting to like the Hermanator.

Oh get ready to feel more disappointed then. Cain is proposing a retail sales tax. That's the third '9' in '9-9-9.'

His plan in a nutshell:

9 percent tax on wages
9 percent VAT
9 percent national retail sales tax

29 Herman Cain needs to change his 9-9-9 plan to a 9-0-9 plan.

30 >> 10 Gabe, have you seen the details of the 9-9-9 and know if it will be implemented like a VAT? Read the Josh Barro link.

31

Posted by: Ben at October 13, 2011 08:58 AM (wuv1c)

yeah I picked my dark side, Paul ain't it

Posted by: Vic at October 13, 2011 08:58 AM (M9Ie6)

I hate doing this to a Vic post... +1

32

Vats are an absolute necessity. Vats and Hydrochloric acid...and Lime.

Just sayin.

 

33  Oh, and Chuckit, you should probably actually take a look at Cain's plan before you call me a liar.

34 One of the many bad things about a VAT is that it compounds.  Thus, for every widget I produce in my factory, each component costs me its base price plus the VAT.  Each vendor that buys my widget to retail pays my "profitablility" cost plus the VAT.  Each consumer that buys a widget pays the retailer's "profitablility" cost plus the VAT.  This is a very simplistic case, but it shows how pernicious the VAT approach is.

If you try to redefine Cain's approach to say it is only an end point "national sales tax" on the ultimate consumer, then what Federal Government Agency is responsible for deciding who qualifies for intermediate consumer status (who is really a retailer and not an end user) and thus does not pay the VAT?

If you think the income tax will ever go away, you misunderstand the embedded corruption of K Street.

35 Aren't current tax collections about 60% of outlays? How about enormous budget cuts first?

36 What I get from following the links is that people are deciding that Cain's idea (the second "9") is a VAT because they want to see it that way.

I'm as much in favor of no taxes at all as the next person, but that's an unrealistic idea at best. It's a knee-jerk reaction.

There must be a far better solution to raising the money necessary to fund what little government we must have. I'm not savvy enough to come up with it, though. It strikes me that the first step is to severely restrict they was government can spend money and then find the least painless way to come up with necessary revenue.

At least Cain has a proposal on the table to counter the stuttering clusterfuck of a miserable failure's take-everyone's-money-and-give-it-to-the-protected-unproductive-classes bullcrap. Plans from Mutt? The Newt? Perry? Not so much.

37 thats pretty cold, chuck. who else is going to get up at 7 am? i like Gabe

38 Also, Obama is a stuttering clusterfuck of a miserable failure.

39 A value-added tax (VAT) is a form of consumption tax. From the perspective of the buyer, it is a tax on the purchase price. From that of the seller, it is a tax only on the "value added" to a product, material or service, from an accounting point of view, by this stage of its manufacture or distribution. The manufacturer remits to the government the difference between these two amounts, and retains the rest for themselves to offset the taxes they had previously paid on the inputs. A VAT is like a sales tax in that ultimately only the end consumer is taxed. It differs from the sales tax in that, with the latter, the tax is collected and remitted to the government only once, at the point of purchase by the end consumer. With the VAT, collections, remittances to the government, and credits for taxes already paid occur each time. A BUSINESS IN THE SUPPLY CHAIN PURCHASES PRODUCTS. The suggestion that Cain wants a Vat tax is a lie. To even put 999 and vat in the same sentence is disingenuous. This entire "Vat is still a bad Idea" article is a half truth half ass explaination as to what a Vat is and how it would damage business and America.

40 Read my lips " No New Taxes" And this time I mean it

41 No, the only fair tax is a flat tax on all income and all amounts with no exceptions and no deductions.

How is being taxed on the working hours of your life - on your sweat and mortality - "fair"?

Obviously, the only fair tax is a tax you pay for your sole choosing to use the economy.  Tax purchasing.  As a benefit it hits the tax payee where it hurts most and is therefore most visible: In his sales receipt.

Hopefully he keeps his representatives phone number on the wall next to the phone.  Right next to where he hangs the car keys.

42

And let's take a clear look at 9 percent taxation of corporate income:

How the hell would that "eliminate the IRS"?

Doesn't Cain & Company realize that most of the Internal Revenue Code is precisely about defining what corporate expenses do or do not subtract from corporate income?  Should R&D be expensed or capitalized?  How are various financial products accounted for?  Can corporate losses/income be carried back/forward?  What depreciation methods are appropriate?

Simply saying the rate for corporations will be 9 percent does NOTHING about simplifying how you arrive at the taxable income subject to that rate.  How you do THAT is what the IRC is for.

43 restrict they was government

Damn. Al Sharpton hijacked my comment!

44

From what I understand a VAT is a tax scheme where a tax is added as a material is handled from one processor to another.  So if I sell cotton to a clothmaker a tax is placed on the cotton, then a tax on the cloth produced, then a tax on the cloth that is cut and sewed into clothing, then a tax on the clothing. The consumer pays all of these taxes at the end with the purchase of the clothing.

 

The Fair Tax and the 999 Plan have a singular National sales tax.  That's not a VAT.  There are no other hidden taxes upstream (except the 9% Business Flat Tax that is passed on to the consumer, as is the case with business taxes now and always).

 

Your point that a VAT is terrible because it hides taxation is very true.  The idea behind the fair tax (and by extension the 999 Plan) is to establish a flat rate that is clear and visible to all.

 

The system we have now is a dog's breakfast where no one really knows how much is actually paid or owed in taxes because of the thousands of pages of regulations written in a language that is not clearly understood but somewhat interpretable to accountants and Tax Lawyers.

 

     

45 9 percent tax on wages
9 percent VAT
9 percent national retail sales tax

Posted by: Gabriel Malor at October 13, 2011 08:59 AM (XVaFd) '

I don't like Cains plan but you are wrong about that i think.

9% wages

9% corporate income

9% sales.

46 The suggestion that Cain wants a Vat tax is a lie. To even put 999 and vat in the same sentence is disingenuous.

I didn't say Cain wants a VAT.  I'm saying instituting a national sales tax will open the door to a VAT for those that want one.

47 "but don't think for a second that future Democratic Congresses and Presidents will leave the 9 percent rate untouched."

Yup.  We would need a Constitutional amendment that kept Congress from doing that unless in time of declared war or some other massive emergency.  As if the Constitution means anything to them anyway... 
We aren't Switzerland, with a deficit of 1.3% of GDP and under 3% unemployment.  If culturally as a nation we can't keep ourselves from binging at the ATM, then we need something else.

48 the appeal of Cain's 9-9-9 plan is that it seems so simple.  Even the smartest of us wants the govt. to be more transparent, understandable, approachable, etc.  This is part of the same mind-set.

49 Oh, and Gabe, you just need to stop lying.  You're the one who mixes features of the VAT and a sales tax to argue for keeping your beloved "progessive" income tax.  Your economic ignorance is bad enough.  Your dishonesty doesn't help the reputation of a "conservative" site.

50 WTF? Am I missing something?

I had heard Cain's - [9%] was a National SALES Tax.

I missed the part where it morphed into a VAT. Those are two different critters

Oh, and BTW, screw the 'Fair Tax'...

FLAT TAX or nuthin!

Repeal the 16th!

Snatch the Left's biggest 'club' from their hands!

51 a national sales tax will open the door to a VAT for those that want one.

A mandatory national income tax has already opened the door to far, far worse ... for those that specifically want it that way.

52

>>>I ask once again. Why is Gabriel Malor allowed to post here? Is Ace a softy and gives him a spot became he couldn't meet the high standards of the DUMmies, the Kos Kidz, and the Toast Huffers?

 

He has naked photos of Ace, creepy, sickening, dare I say soul destroying photos.

That and Gabe's posts are well written and enjoyable, even if you disagree with the substance, but mainly because of the naked photos.

53 Chuckit, you beclown yourself as Cain's plan includes both a VAT (his "business tax") and a national sales tax. You're also free to leave at any time.

54 We seem to be getting a LOT of Gabe haters on this morning thread lately. Most of them with names and hashes that I don't recognize. To them I have a recommendation:

If thine eye offends thee, pluck it out. (translation, if you don't like what you are reading go elsewhere)

That is not to say everyone must agree, but there is no need for a lot of vitriol and disagreement just because it is Gabe.

55 Barack Obama is a stuttering clusterf*ck of a miserable failure.

I get and share the frustration with the field and the dislike of Mitt but the idea the GOP should nominate a guy whose main policy idea (only one really) is imposition of a national sales tax is little nutty.

Then get behind Perry, Drew.

I've been saying this since I wanted Perry to get in the race: He's not perfect, he's weaker than I'd like on a couple of issues.  But he's better than the rest of the field.

His verifiable history proves that- even if he's unable to do multi-candidate debates well.

56 This is pretty much the weakest argument against the VAT I have ever heard: people are too dumb to calculate how much they are consuming... are you serious? This is analogous to democrats argument against voter id: people are too dumb to go to the dmv. Since when should policy be dictated by the standards of the retarded?

57

"The Fair Tax and the 999 Plan have a singular National sales tax.  That's not a VAT.  There are no other hidden taxes upstream (except the 9% Business Flat Tax that is passed on to the consumer, as is the case with business taxes now and always)."

Yes, but all that has to happen in order to convert a national sales tax into an effective VAT is to redefine "consumer" to include a company "consuming" resources and "services" and there you go.

Come on, does anyone REALLY think 9-9-9 wouldn't quickly turn into 20-20-20?  That Congress wouldn't look for ways to apply a sales tax anywhere and anyway it possibly could?  Hasn't that been the lesson of the entire last century??

I don't want the PRECEDENT of a NEW form of taxation, especially one that is a giant step in the direction of a VAT.  The present forms of taxation are enough.  Let's make those reasonable and sustainable, and stop inventing new taxes.

58

 

Like I said, I don’t support this plan, but I don’t think people who are using the term “VAT” know what that is.

Here is Cain’s plan – absolutely no VAT.

Business Flat Tax – 9% Gross income less all investments, all purchases from other businesses and all dividends paid to shareholders. Empowerment Zones will offer additional deductions for payroll employed in the zone. Individual Flat Tax – 9%. Gross income less charitable deductions. Empowerment Zones will offer additional deductions for those living and/or working in the zone. National Sales Tax – 9%. This gets the Fair Tax off the sidelines and into the game.

HereÂ’s the definition of a VAT:

The "value added" to a product by a business is the sale price charged to its customer, minus the cost of materials and other taxable inputs. A VAT is like a sales tax in that ultimately only the end consumer is taxed. It differs from the sales tax in that, with the latter, the tax is collected and remitted to the government only once, at the point of purchase by the end consumer. With the VAT, collections, remittances to the government, and credits for taxes already paid occur each time a business in the supply chain purchases products.

A “VAT” is a hidden tax that is easily manipulated, where a sales tax is totally transparent, with any upward adjustment quickly noticed and opposed by the voters. 

 

Using VAT and sales tax interchangeably is a serious mistake in terminology.

59

Gabe, you really screwed the pooch on this, you didn't do your homework.   And all you morons probably need to read about Cain's 999 Plan yourself . Look for the VAT:

From the Cain 999 website: 

Phase 1 - 9-9-9Current circumstances call for bolder action.The Phase 1 Enhanced Plan incorporates the features of Phase One and gets us a step closer to Phase two.I call on the Super Committee to pass the Phase 1 Enhanced Plan along with their spending cut package.The Phase 1 Enhanced Plan unites Flat Tax supporters with Fair tax supporters.Achieves the broadest possible tax base along with the lowest possible rate of 9%.It ends the Payroll Tax completely – a permanent holiday!Zero capital gains taxEnds the Death Tax.Eliminates double taxation of dividendsBusiness Flat Tax – 9%Gross income less all investments, all purchases from other businesses and all dividends paid to shareholders.Empowerment Zones will offer additional deductions for payroll employed in the zone.Individual Flat Tax – 9%.Gross income less charitable deductions.Empowerment Zones will offer additional deductions for those living and/or working in the zone.National Sales Tax – 9%.This gets the Fair Tax off the sidelines and into the game.

 

60

9% wages

9% corporate income

9% sales

This is correct: This is the Cain plan. 

Which means a 9% tax on corporations and a 18%+ tax on individuals after the bullshit double taxtion occurs, at least the way I'm seeing it.  Or does Cain generously allow the lowly serf to deduct his sales tax?  I haven't studied the bullshit thing so put me some knowledge.

61

Posted by: Minuteman at October 13, 2011 09:09 AM (CGxxU)

does it have a plan to stop it from becoming 20-20-20?

62 Since when should policy be dictated by the standards of the retarded?

Posted by: Heartless Janitors_4_Jesus at October 13, 2011 09:08 AM (tazG1)

Umm....hello.

63 Gabriel Malor at October 13, 2011 08:59 AM (XVaFd) My God are you getting money from Romney to put out a hit on Cain? WTF Gabe. It's a 9% flat tax on corporate income. If you are in the Tank for a Candidate maybe Ace shouldn't let you do this anymore. You have to be in the tank for someone because there is no way you are stupid enough to confuse a Vat with a flat income tax. Either that or you were too lazy to research what Cains plan really is and cut and pasted that bullshit you put up there from some prog blog.

64 Since when should policy be dictated by the standards of the retarded?

That's no way to talk about the Establishment Right, man.

65

My conservative radio guy (love this guy) Chris Plante is doing a segment on the leaked Obama apology tour to Japan. This should be funny. Enjoy if you can. http://tinyurl.com/6hll7o

66 OK enough with the "everyone saying the national sales tax = a VAT is a liar" crapola.  From the perspective of the consumer they are identical.

Strictly speaking, you guys are correct, it's not a VAT.  But if I'm a consumer I pay the tax rate - whatever you call it - on the full purchase price of the affected goods.  The only difference - which is utterly irrelevant to me, the consumer - is that all of the proceeds from a sales tax go the government, whereas with a VAT only the portion attributable to the difference between production cost and the sales price goes to the government while the rest stays with the seller to compensate for the taxes he paid on the front end for his production inputs.

Blah, blah fucking blah.  Accounting gymnastics notwithstanding, my stuff would still all cost 9% more, no?

67

I don't like Cains plan but you are wrong about that i think.

9% wages

9% corporate income

9% sales.

Details, details. Cain calls it a 9% corporate income tax, but if you look at the details its "Gross income less all investments, all purchases from other businesses and all dividends paid to shareholders." In other words, he's proposing a 9% tax on gross sales less the costs of inputs (and dividends paid). That's a VAT because the seller is getting taxed on the value he added to whatever he purchased (investments, purchases, dividends).

It amuses me how insistent (downright strident, Chuckit) people are that because Herman Cain is proposing a VAT it can't possibly be a VAT.

68

we have a candidate who is tax lawyer AND a congresswoman who presumably has some grasp of this issue.  & she is wacky.

9-9-9 seems simple.  & catchy.  i think it is one reason Cain is moving ahead as he is.

69

that is not clearly understood but somewhat interpretable to accountants and Tax Lawyers.

There's a reason that the various tax bills are known as The Full Lawyer Employment Act of _____.  Don't for a second think that accountants and tax lawyers know what the language means either.  Ask five lawyers what any random portion of the tax code means and you'll get seven different opinions.  Hell, I believe the IRS still says that following the advice given by the IRS does not protect you if the IRS changes its mind.

As far as the Gabe haters, yaaaaaaaaaawwwwwnnnnnn.  Boring whiners are boring. 

 

70 That is not to say everyone must agree, but there is no need for a lot of vitriol and disagreement just because it is Gabe. No Vic, there is need for vitriol and disagreement because the Man is posting bullshit.

71 I'm pretty sure Gabe went to law school with the Skipper. You might say he is grandfathered in

72 Posted by: jwest at October 13, 2011 09:08 AM (qeYI9)

Yeah, I haven't seen where the flat 9% sales tax is actually a VAT.  It sounds like a flat sales tax.

I'm not entirely sold on the idea, because I think it opens a door we may not be able to close.  I'd much prefer a sales tax with no income tax.

73 Consumption Taxes are fundamentaly regressive.   question answered.

74 Read the Josh Barro link.

Posted by: Andy at October 13, 2011 09:00 AM (PeERp)

OK, if that is true, and it must be since he quotes Cain's own site, it is a VAT.

And it looks like we had the same idea for the "others".

75

>>>does it have a plan to stop it from becoming 20-20-20?

Indeed.

Look at it this way people, if Republican add a VAT or Sales tax, we will have donet he democrats job for them.

We need to stop with the unforced errrors. If the Dems want a VAT or Sales tax, let them do it.

If Cain were to win and implement this, you need to remember he'd only be president for 4-8 years. We're not going to control the House, Senate and Presidency for the rest of time.

The Democrats when they regain power will just raise those taxes and we'll be stuck with a high EIT and VAT or Sales tax.

We need to have some foresight here. 

76 OMG...I am sooo cornfused. all arguments pro and con on this are making sense to me right now. This is some heavy lifting for before I've had my second cup of coffee. Can't we start the day with a lighter faire of boobies, gingers and guns?  

77 We seem to be getting a LOT of Gabe haters on this morning thread lately. Most of them with names and hashes that I don't recognize. To them I have a recommendation:

If thine eye offends thee, pluck it out. (translation, if you don't like what you are reading go elsewhere)

That is not to say everyone must agree, but there is no need for a lot of vitriol and disagreement just because it is Gabe.

Aw.  Shut up and buzz off, h8trz, says you.  CLOSE THE COMMENTS!

In other words that IS to say everyone must agree just because it is Gabe.  Lurkers need to toe the fucking line around here.

Except Gabe evidently still knows jack about how money works.  And word gets around anyway. 

78

Can't we start the day with a lighter faire of boobies, gingers and guns?  

+1,000,000

79 Posted by: jwest at October 13, 2011 09:08 AM (qeYI9) Read the definition of Cain's "business tax" that you posted and the definition of VAT. They're kissin' cousins.

80 That is not to say everyone must agree, but there is no need for a lot of vitriol and disagreement just because it is Gabe. Posted by: Vic at October 13, 2011 09:08 AM (M9Ie6) I agree but as this election season heats up I got a hunch you ain't seen nothing yet. It's gonna get really nasty. And not jut between Rs and Ds but intraparty as we creep to a nomination.

81

Can't we start the day with a lighter faire of boobies, gingers and guns?  

*in best souther accent* you trying to give me a hard on boy?

82

Gabe,

 

Cut your losses on this one.  YouÂ’re wrong.

83 "Almost a year ago" nobody had ever heard of Herman Cain.

Note who now wants to hide that fact from you.

Any proposal of Herman Cain has no effect on this fact:
A VAT is not a sales tax.

Anyone who sniffs "but Herman Cain said ..." needs to take (and accept) Logic 101.

84 The 9% withheld includes FICA and HITAX. = 7.65 or 15.3(self employed).

85 Maybe Cain's plan just needs some tweaking. As in no VAT but consumption (sales) tax, plus an income tax with exemptions of the first X dollars plus a per person as the only deducts. This way, the code still encourages families and children, gives everyone the same starting point on earnings income taxed, and discourages consumption but encourages savings. That starting point can be moved to reflect inflation as well.
 
This still leaves SS/Medicare up in the air though. I take it Cain's plan doesn't address that at all? It's still the biggest problem long term; there has to be a way to handle it too. It also whacks everyone on first dollar earned. Giving all that money to the gubmint to dole out as they wish is still killer to the idea of shrinking the federal role.

86  jwest and minuteman,

you both cut and pasted the 9% corporate income tax language from Cain's plan. Good, at least we're talking about the same thing now. That thing you just copied? It's a VAT.

Gross income minus the cost of purchases and minus the cost of investments is a VAT. Cain modifies it slightly because he also allows dividends to be subtracted from the gross income taxed.

87 VAT and National sales tax are the same thing. VAT is what it's called in Europe. In Canada it's called a GST (goods and services tax). Obviously there are variations in different places that have one. In Canada, for example, basic foodstuffs are exempt. In Europe, tourists from outside the EU are exempt from VAT on certqain things.

88 From the perspective of the consumer they are identical. Max Hitpoints at October 13, 2011 09:11 AM WTF, have you people all gone crazy? Imagine building a car. Imagine how many times you make that item more valuble during the manufacturing process. The tax hits every freaking time. It will come out to way more than a 9% flat sales or corporate income tax. It will have way more impact on jobs and your wallet.

89
being against an idea because of what the "democrats" would do to it is idiotic

thats like a libtard being against obamacare because the republicans will just repeal it.

...whole lot of groupthink going on here

90 Consumption Taxes are fundamentaly regressive.

Consumption Taxes are fundamentally flat.  That is: Fair.  Government-limiting and personally de-limiting.  Legally unencumbered.  Arguably constitutional.  Functional.  Hard as hell to game or make part of the brave new redistributionist world.

So the right, being so into redistribution and Social Justice!, should reject them.  Uh ... WHAT?!

91

Posted by: Oldsailor's poet at October 13, 2011 09:18 AM (ZDUD4)

but what keeps it from becoming 20-20-20, again we cannot deny the way leftists will use this

92 Then get behind Perry, Drew.
Posted by: AllenG (Dedicated Tenther) is tired beyond tired of the trolls at October 13, 2011 09:08 AM (8y9MW)

I'd be happy to but it's incumbent upon him to get out front first. I don't mean in the polls, I mean as a viable candidate.

He needs to show some command of the issues.

I get he hates Social Security. Ok,, what is going to do about it? "Have a conversation" is an answer I expect from Hillary!, not a guy talking about upending one of the biggest programs out there.

Maybe I should get behind his economic plan. Oh wait...he doesn't have one. Not a crazy one like Mitt's but I'd like some idea what he's thinking about. What if his ideas are as bad as Cain's? Right now, I don't know.

I get he is a good governor for Texas but how's the translate to the Presidency? It's up to him to tell me, not for me to guess.

He talks about tort reform a lot. Ok, great in Texas, what's he going to do with that in DC? My guess...nothing. Most suits are based on state law. Is he going to try and usurp that or stick by his X Amendment principles?

I'd also like some comfort level that he has some passing familiarity with foreign affair issues. His 3am phone call answer was less than comforting last time.

And yeah, I'd like to know he can think on his feet, build a coherent and convincing argument while arguing for what he believes in and then defend it.

Maybe that's asking too much (especially this cycle) but unless and until he can do those things, no, I won't get behind him.

(notice what's not on my list...Texas DREAM Act and Tardasil).

93 Gabe,

 

Cut your losses on this one.  YouÂ’re wrong.

Nope. You are.

94 HERMAN CAIN IS NOT PROPOSING A FUCKING VAT!
IF YOU DID NOT HEAR HERMAN CAIN SAY IT, IT'S NOT TRUE.
i HAVE BEEN A HERMAN CAIN FAN FOR MANY YEARS, AND HE HATES THE IDEA OF A VAT.

I'VE HEARD HIM SPEAK AGAINST IT MANY TIMES WHEN HE WAS ON RADIO HERE IN ATLANTA.

Several organizations and political opponents, including Michelle Bachmann, are MISREPRESENTING ON PURPOSE what the 999 plan really is.

For fuck's sake people, this is AoS. GET YOUR FACTS RIGHT BEFORE YOU SPOUT OFF.

95 VAT is different from a sales tax. The more finished a good is the higher the tax. The reason the Fourth Reich went to the VAT is so they could renege on every trade deal they ever signed. They don't even tell you the rate. It is a protectionist tariff against goods coming from the free world.

96 Isn't Gabe the law guy?

97 I don't get the Cain love on any level, particularly from folks who find Romney unacceptable.  I used to find him somewhat engaging on a personal level, but now I don't even trust him. 

I assume that in the next couple of months it will become clear that there's not much depth to the guy or his ideas.   

98

If this passes, that HJ you get under the bridge will go from $10.00 a pop to $10.90.

 

99

If this passes, that HJ you get under the bridge will go from $10.00 a pop to $10.90.

 

100 92, Agreed, that's my problem with it too. I would like to see a national referendum. Basically a vote that coincides with the presidential elections. You want to raise your taxes, vote.

101  Oldsailor's poet, you're right about the features of a VAT. Why you then jump to the conclusion that Cain's 9% corporate tax isn't one is beyond me. To use your example:

Imagine building a car. Imagine how many times you make that item more valuble during the manufacturing process. The [Cain 9% tax on gross income less purchases] hits every freaking time. It will come out to way more than a 9% flat sales or corporate income tax. It will have way more impact on jobs and your wallet.

102

Posted by: FreedomFighter at October 13, 2011 09:20 AM (ov88L)

20-20-20

103 Consumption Taxes are fundamentaly regressive.   question answered.

Posted by: Douglas at October 13, 2011 09:13 AM (YKOnu)

Ah yes, so we need to ensure that we bias the system so that it is fair (where I get to decide what is fair)?

Consumption taxes are based on what you spend.  And yes, there is some minimum amount of purchases almost everyone has to make (food, clothing, medicine), but, in theory, with a consumption tax everyone pays something (at least until the compassionate conservatives with hearts decide to issue consumption tax credits to 52% of the population).

Consumption taxes could also be considered progressive in that those that spend more will pay more in that total consumption tax (9% of a million is a lot more than 9% of ten thousand).

104 Imagine building a car. Imagine how many times you make that item more valuble during the manufacturing process. The tax hits every freaking time. It will come out to way more than a 9% flat sales or corporate income tax.

Nope, a VAT doesn't compound.

105 I'm a single-issue conservative. My one issue is purifying the party of RINOs like Romney, Perry, McCain, Bush, Reagan, er, not Reagan, Oh, and deporting all the illegals because they insist on speaking Mexican or something. I don't understand the difference between a sales tax and VAT. Hell, I don't even know what VAT stands for or how it works. I'm just a simple man retired on a government pension. By the way, I want less government. All I know is that I'm voting against the RINO next year. I'd rather have Obama in office 10 more years than support a RINO.

106 Gabe is this guy? Welcome Back.

107 shit, why did I get a double post?

108 We need to have some foresight here.

This is my primary argument for a flat-tax:
Until and unless we have enough "oomphf" to push through a constitutional amendment, a Sales Tax is a liberal's wet-dream-come-true.  The reason for this should be immediately recognized by conservatives: they'd have a sales tax and an income tax.  As people are pointing out with Cain's numbers: they'd be taking 9% off the top + 9% of consumption + 9% of corporate income (which would also come out of consumption, for the record).  That's just Cain's numbers.  As soon as liberals were in charge again (and it will happen) it would go up to 12, 12, 12, or (as someone already suggested) 20, 20, 20.

A flat-tax can be done simply with control of House & Senate (and Presidency, too, for preference, but with strong enough control of House and Senate, the Presidency becomes irrelevant to legislation).  Yes, they can change it back when they're back in control, but they can't raise a double tax on us. (Or, rather, it becomes much more difficult for them to do)

Now, if we could get a Constitutional Amendment that changes drastically- but that's a very, very, tough row to hoe.

109  The saddest part is that because Cain has proposed a national retail sales tax (the third '9' in '9-9-9') in addition to his VAT (the second '9' in '9-9-9') you folks keep saying: "but I heard it was a sales tax not a VAT."

Well, yeah. It's a sales tax in addition to a VAT.

110 Cain's 9-9-9 plan is loopy as shit--and by loopy I mean full of loopholes and stupid.
Go back and look at how vague and evasive he was when asked details about it--from who wrote it to how he plans to pass it, he had nothing better than the SCOAMF line.

I mean, even Mitt Romney looked honest and forthright at that point; especially when Cain was asked exactly how it makes sense to hit low-income people with an additional sales tax in the middle of this economy. "[stutter, stutter, mumble, mumble] 9-9-9!! It's got the vitamins America wants!"

111 Gabriel Malor at October 13, 2011 09:21 AM Corporations pay 35% tax now, at least those that havn't cut a deal with pols and have gotten exemptions for whatever reason. Are you saying that 35% is a Vat? Unless I am missing something, all Cain wants to do is make that 35%, 9%. That's all, not a vat.

112 a Sales Tax is a liberal's wet-dream-come-true.

But we're told it's regressive.

113

Posted by: Totally Irrational Political Malcontent at October 13, 2011 09:23 AM (rJVPU)

heh, +1

114 62

Posted by: Minuteman at October 13, 2011 09:09 AM (CGxxU)

does it have a plan to stop it from becoming 20-20-20?

Posted by: Team Mitt's AuthorLMendez (Ban k1rwm) at October 13, 2011 09:10 AM (yAor6)

Ultimately it would be the same thing that keeps Democrats and RINOs from taking 100% of everything from us now - elections.

The smoke and mirrors of the current tax code gives control to the Government on how we live our lives.  So I would pay more than 9% to make decisions based on my economic interests instead of the Tax implications.   

With a straightforward system the tax code would be more about raising the revenue necessary for running the government instead of setting up sticks and carrots to run our lives.

 

115 You gotta give Gabe one thing - he can sure compress the manure - you'll never see a higher BS to words ratio.

I don't even know of an admitted D'ohbama disciple who explicitly argues for inefficiency in tax collection.  So, the goverment takes away your hard-earned money, and the more of your labor that's wasted on harassing the peasants to get the mullah, the better! 

116 Posted by: Gabriel Malor at October 13, 2011 09:21 AM (XVaFd)

I've been trying to figure out why Cain's corporate income tax is a modified VAT. Let me see if I understand....

The difference is mainly in the computation and collection.

A traditional VAT taxes each transaction (sort of like a traditional sales tax) where as Cain's plan taxes the same activity just in the aggregate (a company's full year of business activity vice each transaction separately).

Is that the general concept?

117 From Wiki: "A VAT is like a sales tax in that ultimately only the end consumer is taxed."

118

For fuck's sake people, this is AoS. GET YOUR FACTS RIGHT BEFORE YOU SPOUT OFF.

Okay, you must be new.  Knowing what you're talking about before spouting off is right behind reading the actual blog in Things That Morons Just Don't Do.

 

119 Art Laffer has come out saying that Cain's plan is a vast improvement over the current system.

120 The rate on a VAT is variable. Only the end goods are taxed I believe.

121

Cain's 999 plan is great in it's simplicity, and probably a big reason why he's doing so well. The man has a plan anyone can understand, the problem is the simplicity is too cute by half, and the national sales tax to supplement the income tax is essentially a non-starter.

Comrade Mitt took the extreme opposie by proposing a 5482 point plan in textbook tome form that no one will ever bother to look at, but at least it's a plan.

There's a great opening for Perry to just throw something out there that's both simple to understand without adding new taxation. Pick a few numbers and simplify the whole tax process without going 999 gimicky. Doesn't matter if it's a proposal that has no chance of getting through Congress, Romney's and Cain's don't stand a chance either, just put something out there and defend it, that's what the people want to see

122

that is not clearly understood but somewhat interpretable to accountants and Tax Lawyers.

There's a reason that the various tax bills are known as The Full Lawyer Employment Act of _____. Don't for a second think that accountants and tax lawyers know what the language means either. Ask five lawyers what any random portion of the tax code means and you'll get seven different opinions. Hell, I believe the IRS still says that following the advice given by the IRS does not protect you if the IRS changes its mind.

As far as the Gabe haters, yaaaaaaaaaawwwwwnnnnnn. Boring whiners are boring. 

Posted by: alexthechick at October 13, 2011 09:13 AM (VtjlW)

 

Spot on, Miss ATC.  That's why I said "Interpretable" and not "Known" "Comprehended" or "Understood". 

123 Gross income minus the cost of purchases and minus the cost of investments is a VAT. Cain modifies it slightly because he also allows dividends to be subtracted from the gross income taxed.

Posted by: Gabriel Malor at October 13, 2011 09:17 AM (XVaFd)

If you use that twisted logic all taxes are VATs including personal income and payroll taxes. They are all directly or indirectly paid by the employer.

124 They need to Constitutionally do away with the income tax first.

125

Posted by: GnuBreed at October 13, 2011 09:30 AM (ENKCw)

hmmmm

126 Consumption Taxes are fundamentally flat.  That is: Fair.

No, Consumption Taxes are fundamentally regressive.  Ten dollars to me is not the same as 10 dollars to my brother (who makes considerably less than I do), nor to my boss (who makes considerably more).

Now, the truth is, no taxation can be "fair."  So let's get that word out of our vocabularies.  The question, then, becomes which one is least likely to be "social engineering."  A Progressive income tax is, well, progressive.  It punishes success by costing you more- relatively- for being successful.  A sales tax (even a relatively benign one, but also a VAT) is regressive.  It "punishes" (for lack of a better term) lack of success.  That is, it takes a relatively larger chunk from those who are not as successful.  A Flat tax takes, relatively, the same amount from everybody.

So, IMO, that makes a flat-tax the most "fair," for whatever that word is worth.  It does not make it harder to advance (by taking a relatively larger portion of your income from you if you're in a lower bracket), while also not dis-incentivizing that same advancement (by taking a relatively larger portion of your income from you when you're in a higher bracket).

127 i'm hopeless .

isn't vat already here? don't we already pay a tax on the wood /nails/cement. electrical we buy to build a house that we pay taxes on +the worker compensation, and roll it all up onto the price of building the home> arent the taxes already baked in?

128 125, Agreed.

129 Dicking around with the tax code before addressing the size and scope of the federal government is foolish, imho.  I hope to goodness Perry -- or any of the candidates -- states that reducing the size of the federal government is his/her number one priority.  Perry certainly suggested that in his announcement speech, but he needs to hammer that out and give us some specifics. 

I still think that "making Washington DC as inconsequential in your lives as possible" is the winning platform this cycle. 

130 we pay taxes on +the worker

 sorry with-hold.

131 Unless I am missing something, all Cain wants to do is make that 35%, 9%.

Nope. That's why you have to look at the details. The current corporate tax is between 15 and 35% tax on taxable income.  Cain's variation is to make it 9% on gross income (aka sales) less the corporations purchases, investments and dividends. Under Cain's scheme---tax the sales less the cost of inputs---Cain wants a 9% tax on whatever the corporation added to the product or service sold. You could almost call it a "value-added" tax...or something.

132 Consumption tax is not regressive at all, actually it's progressive.  The thing is that it may be slightly regressive with respect to our current tax system (currently one of the most, if not the most, progressive in the free world) in which the poor have no federal tax liabilities whatsoever, and while this is thought of as a good thing by progressives, it's a horrible moral hazard with half of the citizens paying taxes and half not.

133 Gabe, I will tell you what you have done. You have raised my hackles. this has given me new found energy. I think I will go install a new front door today.

134 I had heard Cain's - [9%] was a National SALES Tax.

I missed the part where it morphed into a VAT. Those are two different critters

Oh, and BTW, screw the 'Fair Tax'...

FLAT TAX or nuthin!

Repeal the 16th!

Snatch the Left's biggest 'club' from their hands!

Posted by: CPT. Charles at October 13, 2011 09:06 AM (1GunI)

 

Though I am a fan of the Fair Tax I would prefer the Flat Tax over what we have now.  I would not make the perfect the enemy of the good.

 

 

135 Amazing that I "think" I am learning something here today.
The VAT subtlety that I apparently misunderstood is that at intermediate points in production, the intermediate entity gets to claim his "purchasing" VAT as an expense offsetting his "sales" VAT.  The ultimate consumer doesn't resell, thus cannot offset his purchasing VAT.  Thus, to the consumer it feels like a national sales tax, but because the VAT is embedded, you can't tell how badly you are being screwed (sort of like income tax withholding).
Gee, somehow, this sounds like this it will still be good for tax lawyers.

136 If thine eye offends thee, pluck it out. A dude in Italy did that during Mass, recently. Gouged both of his own eyes out in front of the congregation. So, like... film that shit of you do it, because you're as hard as woodpecker lips and I want to see that. Incedentally, I used to be a regular at QandO until I was carried off during a raid by a pillaging band of Morons.

137 oldsailor, come to my home after and fix the garage door?

138 You don't get sent to jail for failing to have income that can be taxed under the income tax.

What of the IRS enforcing ObamaCare via taxes?

139 Dicking around with the tax code before addressing the size and scope of the federal government is foolish, imho.
Posted by: Y-not at October 13, 2011 09:35 AM (5H6zj)

Hold all calls, we have our winner.

140 Gee, somehow, this sounds like this it will still be good for tax lawyers. Ding Ding Ding!!!!!!!!!!

141 willow, The sales tax added onto purchases at the register now is a state administered sales tax. A VAT/federal sales tax would be added on top of that. In Ontario, for example, it's 8% in provincial tax + 5% to the feds.

142 I wish Mallamutt was on this thread.  IIRC he's been actually plugging in numbers to show that Cain's plan raises taxes on moderate income folks. 

143 I disagree with your (Gabe) argument that you would never know how much you paid in taxes unless you keep every receipt. It's simple: income minus savings/investments equals money taxed. The only dark side I see to replacing the income tax with a VAT is it would tend to reduce consumption. And maybe that's a good thing.

144 ok, Thank You Heartless.

145 138, I would if I could. I love fixing stuff. I'm the neighborhood maintenance whore.

146 The only dark side I see to replacing the income tax with a VAT is it would tend to reduce consumption. And maybe that's a good thing.

It's not a good thing.  There's nothing wrong with consumption -- that's a European idea.  The only thing that is wrong with consumption is if you can't afford the things you're buying. 

147 It would certainly raise taxes on lower incomes up through at least $50,000 or so.

148 Y-not at October 13, 2011 09:39 AM 49% of people don't pay any income tax. Then they get credits and money back they never paid in. Yeah, moderate and lower income folks need to get some skin in the game.

149 consumption, keeps people working

150 Posted by: Y-not at October 13, 2011 09:35 AM (5H6zj)

I agree.

What's worse is that 9-9-9 would actually FUND the size and scope of today's federal bureaucracy and programs, fiscally securing over-reach of power.

Top that with the inevitable inflating tax rates because we deserve so much more and it's always for our own good.

151 Posted by: AllenG (Dedicated Tenther) is tired beyond tired of the trolls at October 13, 2011 09:33 AM (8y9MW)

The biggest selling point of Fair Tax is that you can control how much in taxes you spend by moderating your spending habits.  And thus, the people of the US would have much more control over how much revenue the government gets.

152 The VAT subtlety that I apparently misunderstood is that at intermediate points in production, the intermediate entity gets to claim his "purchasing" VAT as an expense offsetting his "sales" VAT.

And this is why I don't get how Cain's plan, whatever it is, can be called a VAT.

Thus, to the consumer it feels like a national sales tax, but because the VAT is embedded, you can't tell how badly you are being screwed (sort of like income tax withholding).

It still ends up being exactly "tax rate" percentage of the final price the consumer pays. Whether that gets tacked on top of the sales price, or hidden in the price the store displays like they tend to do in Europe, is a question of how it's implemented.

153 Herman Cain's 999 Plan - a couple of points:

First: Business Flat Tax – 9%
- Gross income less all investments, all purchases from other businesses and all dividends paid to shareholders.
- Empowerment Zones will offer additional deductions for payroll employed in the zone. (emphasis added)

You have to love a "flat tax" that begins rebuilding social engineering through the tax code at its inception.

Second: Phase 1 - 9-9-9: Phase 2 – The Fair Tax

Have you ever worked at a company that had a shitty piece of custom software and tried to move to the promised land of a brand new, shiny replacement via an interim solution? If you have then you know what it's like to be stuck with an "interim" solution forever.

If Cain wants to move to the Fair Tax, he should move to the fucking Fair Tax and not go through this bastardized approach he's taking.

154 Consumption Junction what's your function?

155 Posted by: Oldsailor's poet at October 13, 2011 09:42 AM (ZDUD4)

"moderate" income earners are the heavily taxed "lower" middle class who would be most heavily affected by 9-9-9 raising their contribution of skin in the game. /Forbes

156

If anyone skipped to the bottom without reading, IT ISN'T A VAT.  It is a national sales tax.  It will be intuitively obvious to the most casual observer how much you're paying in sales tax because it will be written on your receipt.  Sales taxes paid futher back in the production process won't be reflected, but neither are business taxes under the current tax scheme.

157 The best thing about the Cain plan is that it eliminates the leftist social engineering in the current tax system and would likely lead to explosive growth. It's a fiscon's wet dream.

158 And we, as conservatives, have argued for years that corporations don't pay taxes, they just pass them on to consumers. So: The 9-9-9 plan is a MINIMUM 27% tax rate for every man and woman in America. And I say minimum because with every corporation being taxed on everything they produce, the whole manufacturing chain just got a lot more expensive.

Wow, great idea! Nearly all of us get a tax increase 'cause it's so simple!

Who wrote it again? "I cain't tell you. But I promise you it was Top Men, Top Men," says Cain.

159 >> What's worse is that 9-9-9 would actually FUND the size and scope of today's federal bureaucracy and programs, fiscally securing over-reach of power.

THIS!

Why are we talking about a different funding mechanism for the gargantuan welfare state at all?

I'd rather be arguing about which agencies were completely eliminated instead of just cut by 90%.

160 18 I am against both a sales tax and an income tax at the same time.

Me too.  The only fair tax is a consumption tax, i.e., a sole VAT.  It's also the only tax suitable to get the individual off the hook at the IRS and to tie taxation strictly to the economy and thus tie government revenue to the fruits of its infernal meddling.

All other taxes must end.

Why the right loves itself the cursed personal income tax is mystifying.  And why it sees tax-free corporations as a good thing doubly so.     A VAT isn't a consumption tax.  A sales tax is a consumption tax.  A VAT is a tax on manufacturing.

161

Bah, has anyone else noticed that formatting is crap when posting with IE8?

 

162 The biggest selling point of Fair Tax is that you can control how much in taxes you spend by moderating your spending habits.  And thus, the people of the US would have much more control over how much revenue the government gets.

Posted by: Bevel Lemelisk at October 13, 2011 09:44 AM (FkKjr)

This is the theory.  In practice, I think the rates could be adjusted to be just as confiscatory as before, and the compassionate conservatives and bleeding heart liberals would conspire to rebate funds to the 47% that currently get free stuff so that they stay on the gummint teat.

But at least, you can choose to subsidize the establishment bastards to some minimum level by refusing to spend except for necessities.

163 Consumption Junction what's your function?

pettycoat junction

Nightmare on Pennsylvania Avenue
Obama proposes 9-9-9, gets it and wins re-election

164 If anyone skipped to the bottom without reading, IT ISN'T A VAT.  It is a national sales tax.

Goddammit! The VAT component of 9-9-9 is the "business flat tax" (first 9) not the "national sales tax" (third 9).

Please try to keep up.

165 49% of people don't pay any income tax. Then they get credits and money back they never paid in. Yeah, moderate and lower income folks need to get some skin in the game

Sure, but that's not the primary problem we have.  The problem we have is that the federal government is too big.  Fooling around with the tax code - which has a lot of unintended consequences (such as the negative impact on private charities [shoulder much of the load of taking care of the poor and sick] by removing the charitable deduction) - before we show some resolve and reduce the size of government is a pointless exercise.   

If someone - Perry or any of them - would campaign on making substantial fundamental cuts to federal agencies like the Dept of Education, DoE, etc, and campaign on returning power to the states, they would pick up conservatives, libertarians, and even some "moderates" who just want to be left alone.  The beauty of that approach is it even helps unite us on social issues in the sense that folks in California or NY do not have to agree with folks in Utah or Texas on social issues (or the environment or education for that matter).  They'd have the comfort of knowing that their governor and legislature could run their state the way they wanted it to. 

If you show people that you have an economic approach that promotes job growth and puts (or keeps) more money in peoples' pockets AND you tell them you're going to leave them alone on most of the other issues, you'll win.

166 Gabriel Malor 2: The Condescendening. Every bit as pleasant and engaging as he was during the debt ceiling showdown. And every bit as wrong.

167 Why are we talking about a different funding mechanism for the gargantuan welfare state at all?

I'd rather be arguing about which agencies were completely eliminated instead of just cut by 90%.

^This.

168 >>>A VAT isn't a consumption tax. A sales tax is a consumption tax. A VAT is a tax on manufacturing. Wrong. From Wiki: "A VAT is like a sales tax in that ultimately only the end consumer is taxed."

169
I am against both a [federal] sales tax and an income tax at the same time.

Sales taxes already abound.

Flat tax Republican proponents traditionally require one or the other, but not both federal sales and income taxes at once.

170

This is the theory.  In practice, I think the rates could be adjusted to be just as confiscatory as before, and the compassionate conservatives and bleeding heart liberals would conspire to rebate funds to the 47% that currently get free stuff so that they stay on the gummint teat.

Posted by: Hrothgar at October 13, 2011 09:49 AM (i3+c5)

The government can overreach with any system.  Fair tax is certainly much more controllable by the people than an income-based system.  The only way to pay less in an income based system is to make less income, which is stupid.

171 F*ckin' Romney. Thanks, GOP!!!!! And f*ck you!

172 The only dark side I see to replacing the income tax with a VAT is it would tend to reduce consumption.

How?

Look, taxation is a zero sum game: The feds get what the Feds get and not a dollar more or less unless some other scheme or legislation is undertaken.  Only a VAT on top of other taxation would reduce consumption.

Solution: One consumption tax to replace all other taxes.

173 "If Cain wants to move to the Fair Tax, he should move to the fucking Fair Tax and not go through this bastardized approach he's taking."

Correct!  His 9-9-9 plan has no chance, and the thought of a sales tax and other taxes at the same time scares me.  Might as well go for the whole enchilada since that is his end goal anyway.

On the plus side, Cain has people talking about taxes.

174 A "sales tax" is not the same thing as a "value added tax". You should be embarrassed by this post.

175 _{^{michele bachmann is a tax attorney}}

Don't tell anyone.

176 First convert the IRS into condos.

177 Consumption Taxes are fundamentally regressive.  Ten dollars to me is not the same as 10 dollars to my brother (who makes considerably less than I do), nor to my boss (who makes considerably more).

Oh for crying out loud.  Consumption taxes are fundamentally progressive in that they are levied exactly per purchase, with large purchases paying more dollars in tax than small purchases. 

Guess who makes larger purchases?

This is because ten dollars to you is not the same as 10 dollars to your brother (who makes considerably less than you do), nor to you boss (who makes considerably more) we're told.

178 How about instead of rewriting the tax code, we rewrite the spending code?

179 You should be embarrassed by this post.

You should be embarrassed by that comment.

180 So now, Gross Revenue - Expenses - Dividends Paid = VAT? Someone was absent the day they taught accounting in Accounting Class.

181 Another diiference between a Vat and a Sales tax is that the Vat is more crap for a company to manage. More workers dealing with Gov. crap equals higher widget prices.

182 Hey Gabe, How about marshaling some evidence for your contention that VAT and sales tax are different.

183 It's not all expenses, EoJ. For example, salaries and wages aren't deductible under Cain's plan.

So, yeah, that makes it look a lot more like a VAT than an income tax.

184 A federal sales tax would hurt anyone who has been saving their money and now wants to spend some of it. That money has already been taxed at high rates and then will be taxed again.

185 If VAT and Sales Taxes are the same thing why do they have separate names?

186 Consumption Taxes are fundamentally regressive.

More simply refuted: Taxes are collected and paid in dollars, not percentage points.  Therefore consumption taxes are naturally and fundamentally progressive.

187 VAT is what the Eutrotards call their specific sales tax. That is all.

188 If VAT and Sales Taxes are the same thing why do they have separate names?

You should be embarrassed by that comment.

189 A federal sales tax would hurt anyone who has been saving their money and now wants to spend some of it. That money has already been taxed at high rates and then will be taxed again. Posted by: rtw at October 13, 2011 10:03 AM That's the thing about change. Someones getting fucked. I'd rather it be me than my children.

190 >> A federal sales tax would hurt anyone who has been saving their money and now wants to spend some of it. That money has already been taxed at high rates and then will be taxed again.

Don't worry, they'll put some massively complicated and unworkable transition rules in place.

191 A federal sales tax would hurt anyone who has been saving their money and now wants to spend some of it. That money has already been taxed at high rates and then will be taxed again.

That settles it then.  Tax my time spent earning food, clothing, and shelter and call it a conservative principle.

Done!

192 But you absolutely will be fined or sent to jail if you're caught avoiding the VAT by participating in a black market, just as you will if you attempt to avoid the income tax by falsifying your reported income.

You mean like garage sales and flea markets?

193 It's not all expenses, EoJ. For example, salaries and wages aren't deductible under Cain's plan. So, yeah, that makes it look a lot more like a VAT than an income tax. A fundamental principle of a VAT is that it is collected or credited per transaction, at each point in the supply chain, save for the purchase made by the end user. I have not seen that in Cain's plan, because nobody has pointed it out and because I'm too lazy to look because I don't give a fuck about Cain, but mostly because I'm too lazy to look. Show me the collection regime for this "VAT" component of Cain's plan and then you'll have something. But first, you will blow me.

194 Giving Congress a new tax is insane on it's face. How much analysis needs to be done? Herman is naive to believe otherwise.

1.  And only on its face.
2.  Thought and analysis aren't the same thing.  Apparently.
3.  Naive like a fox.

195 It's not all expenses, EoJ. For example, salaries and wages aren't deductible under Cain's plan.

Posted by: Andy at October 13, 2011 10:03 AM (5Rurq)

Is that explicitly stated?

196 I like the free money fair tax better.

197 I'm not a Cain supporter but there is little doubt that his tax plan is the most red meat conservative dish at this scrawny buffet.

198 Sales taxes are paid by the end consumer, VATs are paid by producers in each step of the production process before final sale at Walmart or 7-11 or car dealership. Sales taxes show up as a line item of the end consumer's invoice or receipt; VATs do not appear on the end consumer's receipt, but merely make up one of the costs of production that went into the item, like labor cost or utilities cost, none of which are separately itemized for the end consumer.

Thus VATs are hidden from the end consumer, sales taxes are not.

Your lack of embarrassment at maligning a man with falsehoods is shaming for you whether you admit it or not. I am embarrassed for you.

199 In summary, somehow I find I'm simply unable to confuse Gabe's posts with Monty's.

200 Every bit as pleasant and engaging as he was during the debt ceiling showdown. And every bit as wrong.

It's not even wrong-wrong (Cain's plan sucks for approximately the reason described, and for other reasons) but the message is so fucking douchebaggy and transparently douchebaggery-motivated that it's indigestible.

The reason there's a tiny "You tell 'em!" RINO circle-jerk and everyone else is angrily bored whenever Gabe posts is because Gabe never does anything here but revel in conservative non-representation. Whatever the ostensible subject, the message is always "No one loves you. HA!"

"Reagan was a RINO! Cain's a VAT guy! Perry hearts Mexicans! Palin did this non-fag-hating thing one time! You have nobody! Whereas I of course am totally with-it over here in the Serious Business with the People Who Count, like you don't."

Dude's just a bitch.

But at least he's not alone. As he will endlessly remind you. Incidentally. While reminding himself. Again.

201

Ignore Gabriel.  Anytime Gabe's beloved Mitt Romney falls behind in a post it is Gabe's job to lie and attack whoever is threatening him.

 

If that means acting like Franklin Roosevelt and promoting a progressive income tax system, Gabe will.  If it means twisting a national sales tax into a Vat tax, Gabe will.

 

Get over it Gabe, ROMNEY'S PLAN:  More of the same.

CAIN'S PLAN:  Let's actually change something.

ROMNEY'S PLAN:  I ain't telling you because if I did then you all will attack it in detail.  Pass it, I mean Vote for me then you can see what my plan is.

 

202 Is that explicitly stated?

Yes. From my comment 154 (copied and pasted from Cain's website):

Gross income less all investments, all purchases from other businesses and all dividends paid to shareholders.

203 let's face it.  if we're reforming the tax code, we need a constitutional amendment to do it so it ensures that congress can't further politicize the tax system ie. turn the tax code into a welfare/redistributionist mechanism like it is today.  oh, and in that amendment somewhere should be some sort of language about federal fees need to be passed by a supermajority of congress or something.  while we're at it, keeping the income tax should at least also include the elimination of withholding and requiring all citizens, not just the tax paying ones, to file quarterly tax statement of some kind.  everyone writes a check, every quarter for taxes owed.  the pain of paying taxes should be acute, yet uncomplicated.

204 @202
Is Gabe a Romney guy?  I kind of had the impression he wasn't. 

205 BTW, Cain's website makes it clear that the corporate tax is on gross income, which is sales revenue less cost of goods sold. It is not a tax on sales revenue. It is also not a VAT.

206 let's face it.  if we're reforming the tax code, we need a constitutional amendment to do it

Correct. Which is also why Cain's comment about a 2/3 vote being required to change 9-9-9 is laughable.

207 At the cookie factory they had huge sales full of cookie dough.

208 Y-Not

Gabe is an "electability" guy.

209 Romney is electable just like Juan McCain and Bob  Dole were.

210 I think I saw a post yesterday from Gabe that said he was a Perry guy.

211 Repealing the payroll tax does not make this a VAT, Andy. I think that's what people are getting hung up on. That, and the desire to suck up to Josh Barro at the NRO. Who himself is merely copy-and-pasting what Bruce Bartlett wrote at the NYT. Further, FUCK Bruce Bartlett. This is who we're supposed to adopt our fiscal reasoning from?

212

I just read Cains website and it's not an income tax, it isn't value added either but it isn't income. It's more like our Washington State B & O tax, with some deductions.

Under Cains plan corporations could pay his tax even if they didn't make a profit.

Say you had a carpentry framing crew which is heavily labor intensive and where you buy very few supplies or make very few investments. You could do $10 Million in business, lose $1 Million and still be responsibe for $900,000 in taxes.

Sorry Herman, your plan sucks.

213 @211

That was my impression based on a thread the other day, but I never saw it confirmed by him.  But he didn't sound like a Romney guy to me. 

214

I'll give this a shot.

1. 9% personal income tax

2. 9% corporate income tax (what we're actually arguing about)

3. 9% national sales tax.

First off, we're only talking about #2.  Whether or not it's a VAT

There's two ways a VAT is calculated, invoice-based and accounts-based.  What EoJ just described was invoice-based, each seller in the supply chain assesses a tax, and each buyer gets to offset his subsequent tax by the value of the previous tax.

Accounts-based is just an aggregate formulation of "value", a calculation from basic components of the income statement, revenue, cost of goods sold, some of the other EBITs and shit.  Call it a way to define "corporate income".

 

215 Posted by: doug at October 13, 2011 10:18 AM (gUGI6)

Gabe is a Perry man right now.

216 That was my impression based on a thread the other day, but I never saw it confirmed by him.  But he didn't sound like a Romney guy to me. 

Posted by: Y-not at October 13, 2011 10:36 AM (5H6zj)

Actually, I found the post and it was a response to a question by you.

40 Gabe,
Are you a Perry guy? 

Posted by: Y-not at October 12, 2011 07:15 AM (5H6zj)

Gabe,
Are you a Perry guy? 

Yup.

Posted by: Gabriel Malor at October 12, 2011 08:07 AM (IkTb7)

217 Posted by: Dave in Texas at October 13, 2011 10:40 AM (WvXvd) You're comparing methods of accounting (accrual v. cash based)to taxable events. Not the same thing. Otherwise, you can stretch that logic to call our current corporate tax regime a VAT. Further, you're a Longhorns fan. Pfffffft.

218 YOU GUYS DON'T HAVE VAT !!!!?? Sorry, I'm a Brit and it just didn't occur to me that VAT wasn't universal. Now that I think of it... everything you say above happens in the UK.

219

#213,

 

If you are in a situation like that you don't form a corporation.  You run a sole proprietorship, hence you don't pay the 9% CORPORTATE tax.

220 220 Are you one of the Spice Girls?

221 I'm a Dapper Dan man myself. Can't use that other pomade.

222

57 This is pretty much the weakest argument against the VAT I have ever heard: people are too dumb to calculate how much they are consuming... are you serious?

The visibility issue is that an item is taxed at every point of production... the VAT is paid when a manufacturer buys the raw material, when it processes the material, when it assembles the material.  NONE of those taxes will show up on a sales receipt; all the consumer knows is that the cumulative cost of the product as a whole.  That makes it very, very easy for a government to raise the VAT raise by a seemingly small amount, and yet in fact increase the cost of the product considerably, because the same rate increase is applied to the final product mulitple times.  The consumer would have no idea why the price went up... was it because the product is in short supply, or because of a tax increase?

THAT is why the European bureaucrats so absolutely love the VAT.  And why it must not be allowed to come to America... well, that and the fact that it creates a horrible tax impediment to the whole manufature process.

223 Ok, I'm not excited about the last 9 in Cain's pllan. But someone's going to have to explain to me how the second nine is exponentially different from the current corporate income tax system aside from the rate itself being lower. Businesses ALREADY get to deduct losses, expenses, etc from their taxable income. So currently, business taxes are gross income minus losses and business related purchases (yes, that's simplified)= taxable income. And then the businesses bake their expected taxes into the cost of the cake for the final consumer. Cain's plan is different from that how? And if it's not substantially different and you insist his plan is a VAT, then how is what we currently have also considered a VAT.

224 So "Scary Perry" can attract coastal conservatives who are socially liberal/libertarian by promising to reduce the impact of the Washington on their live?  Who'd a thunk it?! 
 /sarc

225 52 a national sales tax will open the door to a VAT for those that want one.

A mandatory national income tax has already opened the door to far, far worse ... for those that specifically want it that way.

Posted by: Ten at October 13, 2011 09:06 AM (Dt0iB)

 

So why compound that with a brand new kind of tax that can also be missused?  While KEEPING the income tax??

226

How about a flat tax. then, remove all the taxes and give-backs that our control freak government use to leverage our behavior.

 

227 226 So "Scary Perry" can attract coastal conservatives who are socially liberal/libertarian by promising to reduce the impact of the Washington on their live?  Who'd a thunk it?! 
 /sarc

Posted by: Y-not at October 13, 2011 10:54 AM (5H6zj)

I DO SO WISH that Perry could stick with "Make Washington As Insignificant In Your Lives as Possible" during debates, instead of going off into the weeds about "have a heart."

228

>> You're comparing methods of accounting (accrual v. cash based)to taxable events. Not the same thing. Otherwise, you can stretch that logic to call our current corporate tax regime a VAT.

That's the Japanese formulation for calculating "value" in their consumption tax.  Europe (spit) uses that other method based on transactions.  I think we're just arguing about whether or not the Japan method should be called a VAT.

>> Further, you're a Longhorns fan.

And I suffer for it, that I do.

229 NONE of those taxes will show up on a sales receipt; all the consumer knows is that the cumulative cost of the product as a whole.

Again, that's just a question of implementation. Euros like hiding the VAT, but the VAT can also be explicitly added on to the sales price, like it is in Canada.

That makes it very, very easy for a government to raise the VAT raise by a seemingly small amount, and yet in fact increase the cost of the product considerably, because the same rate increase is applied to the final product mulitple times.

No, a VAT does not compound. There's a decent explanation of how it works on wikipedia.

230 I DO SO WISH that Perry could stick with "Make Washington As Insignificant In Your Lives as Possible" during debates, instead of going off into the weeds about "have a heart."

Yes.  I'm hopeful that it (the have a heart thing) was mostly a function of being caught off-guard (not that he should have been caught off-guard) about the push back on the (immensely popular in Texas) tuition thing. 

It seems as though most of the crap has been hurled at him (I'm starting to wonder if that Rev. thing was a bit of a set up - who runs the Family Research Council, btw?  whose camp are they in?) and he's weathered it.  Not perfectly, but well enough.  There's still no meat to the charges of crony capitalism that the Dems have been pushing for years now.  And even the ghey rumors have slowed down.  So maybe he is ready to re-take command of the messaging and start being more proactive and less reactive. 

231

225

 

Businesses are not necessarily corporations, in fact most businesses are sole proprietorships that will be taxed only the 9% income tax rate.

The 9% corporate tax rate is hugely different than the current tax system.  The 9% would be paid on GROSS INCOME which is basically sales minus cost of goods sold.  There will be economic empowerment zones where the corporation could subtract out labor expenses.  In essence the 9% would be paid on a much higher number than what is paid on now.  Basically far less deductions.

 

As it goes through congress that would be manipulated in many ways, because it basically is set for corporations that have significant COGS expenses.  That various for different sectors of the economy, so that calculation would undoubtedly be changed.

Most people are attacking Cain's plan because it is a plan and any plan can be attacked (See Obama's Jobs plan).  No plan ever makes it through congress intact because it is congress' job to improve on it.  Cain's plan is a great framework, and we should look at it as a framework and realize it is just one step in his plan towards a fair tax.

232 BTW, it was not widely reported, but the Stupid Reverend also knocked Catholics in his little spiel at that thing.  I suppose Chris Christie should put on his Hat of Indignation and demand Rick Perry apologize to Santorum, too. 

233 Dave, As a business owner, I already deducted "purchases from other business" from my revenue to get my taxable income. It was part of COGS (Cost Of Goods Sold). The difference I see stated here is that the payroll tax is eliminated, hence it is not considered part of COGS, NOT that "every purchase or sale from business to business will now be a taxable event." Again, current tax regime is Revenues - Expenses = Taxable Income. VAT is supposed to mean "Tax on the difference between what you paid for a raw material vs. What you marked up and sold to the next person in the supply chain who is not the end user." It's a tax on a transaction, vs. a tax on income. All I heard from Gabe was "It's a VAT, because shut up, and here's several paragraphs of me talking about why VAT is bad." If I wanted to watch someone dry-hump a strawman, there is probably a porn site that does it better.

234 Also, adding value to widgets are not the only sources of income for large corporations. There's income from investments, interest income from bonds, income from foreign exchange gains, etc. VAT does not apply to non-sales income. Does anyone still really think that is what Cain is proposing?* *Disclaimer: not a Cain guy. So don't start that shit.

235 >> Repealing the payroll tax does not make this a VAT, Andy.

Read it again, dude. Repealing the payroll tax has nothing to do with the argument.

999 eliminates the deduction for salaries and wages as a business expense. And it's straight off Cain's own fucking website.

Sheesh.

236

>> Also, adding value to widgets are not the only sources of income for large corporations.  There's income from investments, interest income from bonds, income from foreign exchange gains, etc.

 

Well that's where I think it falls apart anyway.  I don't believe for a minute the government will just give up tax revenue from these other sources of corp income in exchange for this new taxes based on transactions.

Cain has oversimplified/cutesied up his message in order to sell it.  I ain't buyin.

237

Under Cains plan corporations could pay his tax even if they didn't make a profit.

Say you had a carpentry framing crew which is heavily labor intensive and where you buy very few supplies or make very few investments. You could do $10 Million in business, lose $1 Million and still be responsibe for $900,000 in taxes.

Yes. robtr has both reading comprehension and math skillz.

238 By hiding the taxation from most people, the VAT will allow the left to blame "teh eeevil corporations" who "oppress the "99%" by making themselves eeevil plutocrats" for raising the price of goods to pay for the VAT. *FacePalm*

239 Deductions and exemptions are social engineering. Good riddance.

240

Dude.  You resemble a doctrinaire statist.

Not really.  He's much cuter than that. 

241 If I wanted to watch someone dry-hump a strawman, there is probably a porn site that does it better.

Posted by: Empire of Jeff at October 13, 2011 11:10 AM (vzFJV)

 

Dryhumpstrawman.com

242

VAT is supposed to mean "Tax on the difference between what you paid for a raw material vs. What you marked up and sold to the next person in the supply chain who is not the end user."

Right... that is what makes the VAT a process tax that is applied to essentially the same item multiple times as it goes thru the different steps of production.  If there are 5 people in that chain, the VAT is applied 5 times, once to each of the 5 increases in value.  (So, yes, strictly speaking it's not "compounding," as someone said). 

Can the VAT be made visible on a sales receipt?  I guess Canada does that... but I wonder what the administrative burden of all that is?

 

243

Under a VAT system, tax is calculated and paid at each step in the production process, so that the total tax is imbedded into the cost of the product when it is sold at retail to the end user.  This would work out fairly equal to a sales tax if everything was manufactured and sold entirely within the U.S., but things get a little trickier in a global economy.  A sales tax would capture a percentage on the full value of a product made in China and sold at WalMart.  A value added tax would only capture a percentage of the difference between WalMartÂ’s cost and the final price paid by the end user.

 

A corporate tax captures a percentage of the difference between costs and the sales price.  This is fine if the corporation that is responsible for the bulk of the value is located in the U.S., but not if itÂ’s offshore.

 

This is why we use different words for different things.  VATs are not the same as sales tax or corporate income taxes.

244

Simplicity.  Simplicity.  Cain's proposal is anything but that and opens a huge can of worms.  Only "libertarians" like it because they fantasize a return to the rich (their highly intelligent mostly entrepreneurial selves, yes, agreed) paying no more than 9%.  Ain't going to happen.  Ya'all gotta be more responsible than that.

The current system must be shorn first before we have a "national conversation" about radical change.  There is nothing radical in shearing "us" sheep (especially the statist establishment Republicans).  Balanced budget amendment.  Cap government spending, reverse all regulations put in force since Bush the (statist) Younger, return most public responsibilities to the states and local goverments, secure the border, unleash the fundamental Econ 101 element of a country's affluence -- natural energy resources, strong foreign policy according to national interests.  All those dollars for energy usage remain in house for public and private abundance.  Simple isn't it.  Who said those things -- if anyone was listening?

Y-not:  "If someone - Perry or any of them - would campaign on making substantial fundamental cuts to federal agencies like the Dept of Education, DoE, etc, and campaign on returning power to the states, they would pick up conservatives, libertarians, and even some "moderates" who just want to be left alone."

Beware of candidates with "plans".  Look at what they have done, even if you do not like some of it.  Look at their actions.  How many have done anything like defined above?

245 VAT = end of my affair with Cain. Call it irreconcilable differences.

246 So why compound that with a brand new kind of tax that can also be missused?

Right.  I'm demanding we, and I quote, compound income taxation with a brand new kind of tax that can also be missused.

Except for where I expressly didn't.  Amazingly, I even get the slippery slope thing on compounding taxation.

Point is that only a consumption tax abolishes the tax code, most of the IRS, and your and my legal hazard - which is highly arguably unconstitutional.  It reforms these criminals we call leaders, it ties revenues to activity and not so much a printing press (hi Gabe!), and it saves billions just in its simplicity.

So: Freer, richer, more efficient, happier.  Sounds constitutional and darnit, conservative to me.

It'll never fly, especially on the right.  Because: VAT!  REGRESSIVE!  COMPOUNDED!  CHANGE!  Just, NOT!   

247 Deductions and exemptions are social engineering.

Precisely.  Political meddling, the kind of which gave us half a country of tax freeloaders.

248 All I heard from Gabe was "It's a VAT, because shut up, and here's several paragraphs of me talking about why VAT is bad."
 
Bullshit. I explained in comments 68, 87, 132 why Cain's proposal is a VAT.

249 These "valued added" (VAT, as in the U.K.) or "goods & services" (GST, as in Canada) taxes always always always get introduced on the Trojan horse model, always always always turn out to be filled with accountants, & never never never can be got rid of - that last being the point Rick Santorum tried to make Tuesday night just as the candidates' round table debate went to a commercial break. In the U.K., it was introduced in the early 1970s as a bridge to equalize the U.K. tax base with the European Community tax base in preparation for the U.K. entering the euro. Of course, the U.K. never did go with the euro, so, logically, one would expect it to have been eliminated. But very quickly, U.K. governments got used to what a wonderful tool it is for raising government revenues without introducing what they call "exchequer" bills into Parliament raising income tax rates - & it certainly has proven to be that, routinely the THIRD biggest revenue grab for U.K. governments - so, it's now effectively permanent. In other words, it's a great way for the ruling party, of whatever stripe, to evade responsibility for raising taxes, while not just actually raising taxes, but also actually depressing demand for goods & services. The VAT had such a bad name, it got re-branded in Canada as GST. It was introduced in the early 1990s by a Liberal government during an attempt at deficit-busting, as a "temporary meaure" - tho actually a dodge around the usual Liberal approach of raising personal income tax rates. It's worked so well, not even successive Conservative governments have been able to get rid of it; but the effect is precisely the same as the VAT, because it IS exactly the same: actually raising taxes while actually depressing demand for goods & services. Lefty economists like Krugman keep saying the what our economy really needs now is increased demand, as opposed to busting deficits (Actually, when pressed, he claims to say that he's for increased demand NOW & busting deficits LATER ... as in, whenever.). So you can see where this is going: If a VAT or GST gets introduced under a Republican administration, that will be hung round the neck of the G.O.P. for the rest of eternity, EVEN THO the real abuses of it are very likely to occur under Democrat administrations. In other words: It's a trap! But I think we have to face up to the fact that it's also NOT some sort of naive trap by a performing clown. Because of how pleasant & convivial he is, it's easy to overlook that Herman Cain served on the Fed for a number of years. He KNOWS what this means, and while he's come up with a nifty gimmick for selling it, it's still a Trojan horse - it just LOOKS like a pizza (Worse: the Trojans gave it away, but Cain wants 9-9-9 for it.). But it's actually a sign that Cain has backers, from his Fed days. This whole Cain campaign is a big stealth fraud: it's designed to look all accidental, amateurish & casual, except what he does on his so-called book tour is spend the whole time campaigning for the nomination. This time, the Trojan horse comes in human form.

250 If you focus on changing the method of taxing, you are not going to focus on cutting the 50% increase in spending the democrats have implemented since January 2007...  better just to cut the corporate income tax rate down to something competitive and get the economy running again...

251 Gross income minus the cost of purchases and minus the cost of investments is a VAT. Cain modifies it slightly because he also allows dividends to be subtracted from the gross income taxed.

Posted by: Gabriel Malor at October 13, 2011 09:17 AM (XVaFd)

Then isn't the current corporate tax a VAT? I mean, it is 'slightly different' (your words) because they allow you to deduct labor costs, but, at the end of the day, any scheme that taxes a business on its profits is taxing it on 'value-added' (if they didn't add any value, then they wouldn't be able to charge more for the good). 

I'm not a fan of income taxes of any kind. They are too easily hidden (there is a reason the government requires taxes to be automatically withheld).

Sales taxes are a good way to put the tax paid in the consumers face, and the only fair way to tax - if I don't consume anything, I don't pay taxes.

252 Then isn't the current corporate tax a VAT? I mean, it is 'slightly different' (your words) because they allow you to deduct labor costs, but, at the end of the day, any scheme that taxes a business on its profits is taxing it on 'value-added' (if they didn't add any value, then they wouldn't be able to charge more for the good).

Nope. Current corporate tax is a tax on taxable income--that is, income less expenses (including payroll). Cain's proposal is to tax gross income less purchases, investments, and dividends. Notably, other expenses, like payroll, are not included.

The difference, as somebody else explained above, is that under the former you have no taxable income if your income is less than your total expenses. Under the later, you could still owe tax even if your total expenses are more than your gross income.

253

Here is the deal; Cain's 9 is a VAT tax.  Call it whatever you want, sales tax, ect. it is no different than what European nations are calling a VAT. If anyone things that it will not be subject to abuse, just take a look at how high VAT taxes have gone since implemented.

Another thing that people do not realize; states have sales tax which is their only source of revenue that remains in the state.  It is collected locally, and the state then manages that money, doling it out where they see fit.  Cain's federal sales tax would abolish state sales taxes on the premise that the states are going to collect the money locally, turn it over to the feds in the hopes of getting most of it back.  Ain't gonna happen.  It is a power the states are not going to relinquish, the ability to collect sales taxes that remain in the state.

So the states maintain their sale tax power to keep that revenue in-state, Cain manages to get Congress to pass a national sales tax, and bingo, your sales taxes have just gone up to almost 20%.  And who does that hit the hardest?  Seniors and low income people.  That demographic, which in many states currently pay NO sales tax on groceries and medication, the two biggest items in their budgets, just lost 9% buying power.  And please, don't tell me about the "prebate."  It's just another redistribution of wealth scam.

Cain also says that the 9% will be applied to only "new" products, like new cars.  So much for buying a new car.  People will start to buy used cars more frequently, the price of used cars will increase due to demand and again, you have hurt the people in the lowest income brackets and basically killed the new car market.  What about housing?  Would there be a 9% tax on new houses?  If so, and not on previously owned houses, say goodby to any new housing construction and watch the value of pre-exisiting home increase dramatically.  Again, those in the lowest income brackets will be affected the most.

Cain's plan, if he could get it shoved through Congress, would open a whole new can of worms for Democrats (who will again be the majority at sometime in the future) to increase taxes. 

254 To VAT or not to VAT,
that is the question,
Whether tis nobler
to suffer the confusion and political panderings
of a bloated incomprehensible tax code,
or to take arms against a sea of troubles
And by opposing end them. 
To put them into permanent sleep,
Perchance to dream: ay, there's the rub,
For in that sleep what dreams may come
When we have shuffled off these mortal flaws,
Must give us pause of prosperity possible,
thru a simpler, fairer burden that all shall carry...

But alas, not to be,
The undiscovered country, from whose bourn No traveller returns, puzzles the will, And makes us rather bear those ills we have Than fly to others that we know not of? Thus conscience does make cowards of us all,...

255

#255, blindside, you just hit the nail on the head.  If you don't consume anything, you don't pay taxes on what  you don't consume.  Now, assuming that everyone else is smart enough to realize that, what does that do to production of consumed products?  It decreases production because the consumption demand decreases.  You don't build widgets that no one is going to buy.

The idea is to get Americans back to work by producing items that are going to be sold.  If you, or I, have to pay an additional 9% on what we purchase, we are going to be more conservative, not less, with our spending habits.  Those luxury items (flat screen TVs, new cars, couple of pair of jeans) will be put off until the bitter end when we have no choice but to replace what we already own.

256
Nope. Current corporate tax is a tax on taxable income--that is, income less expenses (including payroll). Cain's proposal is to tax gross income less purchases, investments, and dividends. Notably, other expenses, like payroll, are not included.

The difference, as somebody else explained above, is that under the former you have no taxable income if your income is less than your total expenses. Under the later, you could still owe tax even if your total expenses are more than your gross income.

Posted by: Gabriel Malor at October 13, 2011 12:17 PM (XVaFd)

So the current assumption is that Cain is using accounting terms as they are generally understood, and not in some other context - ie, "purchases includes labor, since you purchase labor to value-add to the good." My question stems from my ignorance of accounting and it's terms.

That's valid, and if Cain really does mean to allow deduction of ALL expenses (which is only proper, you shouldn't pay taxes on money that is spent to employ someone), then he needs to state it unequivocally. 

However, I'm still 100% against income taxes (personal or Corporate) because they can be used in highly manipulative ways. I don't even like the Fair Tax because I know it includes credits and other crap like that (yet another way to manipulate people against one another). 

257

GabeÂ’s very presence on this blog gives him credibility, but I suspect heÂ’s here because of nepotism instead of merit.

 

HereÂ’s how I see it playing outÂ….

Ace runs past his mother through the screen door - 

 

“See ya later, Mom.  IÂ’m going blogging with the guys!”

 

“Ace of Spades, you get right back in here and take your little brother Gabe with you.”

 

“Ah, Mom!  Gabe messes everything up, he doesnÂ’t know anything about VAT and his head is shaped funny.  Why do I have to take him?”

 

“IÂ’ve got shopping to do and you know we donÂ’t leave Gabe alone.  Now donÂ’t give me any backtalk or IÂ’ll ground you again like last week.  I heard you telling your friends you were on “vacationÂ’.

 

“Oh, alright.”

258 As you sit at the gas pump, do you know how much of each dollar you're spending goes to Federal, State, local, even city taxes? Do you know exactly how much in fees, taxes, and surcharges is taken out of each dollar of your phone bill? In the checkout line at the supermarket, do you know exactly how much of each dollar is going to pay the taxes, government department fees, highway fees attached en route to every bite of food you just bought (even the 'untaxed' groceries are taxed at some point in their production). In the clothing store or appliance store, do you know exactly how much of each dollar you're spending goes to import taxes, farm taxes, highway and other transportation taxes, customs fees, recycling fees and other charges? In all of those cases do you know exactly how much of each dollar you spend goes to merchants' and manufacturers FICA, worker's comp, health plans, etc., witholdings? Of course you don't. No one but the most anal-retentive EVER tallies all that up. Better by far to have to keep closer track of fewer taxes than the flash-mob pocket-picketing that constitutes modern government. If the government announces an increase in a sales tax or VAT and the public doesn't like it, the public can announce a new government. Right now, we're literally stuck with a situation of "I don't know how ya done it, but ya done it.' If nothing else, Cain's plan does away with that.

259 Can the VAT be made visible on a sales receipt?  I guess Canada does that... but I wonder what the administrative burden of all that is?

They've now harmonized the GST with the PST (provincial sales tax) in most provinces.  It is less paperwork for businesses who remit this and then get it kicked back, but ends up costing the consumer more because previous products that were exempt from the one or the other now all get rolled.  Incidentally the GST was supposed to go into a separate lock box and be used to pay down the debt.  From the beginning it got lumped into general revenue as our debt climbed.  How unexpected!!

260 Paul Ryan came out in support of the 999 VAT tax plan.

261 You know who would love consumption tax? Michelle Obama and Mike Bloomberg.

262

Gabriel:

You are the one who is unfamiliar with Cain's plan:

http://tinyurl.com/42b4avt

9% flat income tax

9% flat business tax

9% sales tax.

No VAT anywhere.  Before you call someone a liar, make sure you have all your facts straight.

Plenty of stuff to argue about in the REAL plan.  Discuss that, not your prejudices.

263 "54 Chuckit, you beclown yourself as Cain's plan includes both a VAT (his "business tax") and a national sales tax.

You're also free to leave at any time.

Posted by: Andy at October 13, 2011 09:08 AM (PeERp"

You are missing something, Andy.   We already have corporate taxes, and they are already embedded into the cost of everything we buy.

They are 35%.

That is more than 9%.  Almost four times more.  Tell me how 9% is worse than what we have now.

264 "Which means a 9% tax on corporations and a 18%+ tax on individuals after the bullshit double taxtion occurs, at least the way I'm seeing it.  Or does Cain generously allow the lowly serf to deduct his sales tax?  I haven't studied the bullshit thing so put me some knowledge.

Posted by: Ten at October 13, 2011 09:09 AM (Dt0iB"

Exchange the current 35% tax on corporations for 9%.

Remove OASDI (payroll taxes) from your paycheck.

Remove OASDI from employer's expenditures.

Flat income tax of 9%.

My paycheck just got bigger and the price of goods and services went down.

Boy, that sounds just awful.

265  delayna, you should probably read through the comment thread fully before you comment. Cain's "9% flat business tax" is not a corporate tax as they are presently calculated. Thus it's not comparable to the 35% current corporate tax rate.

As has been explained numerous times in the comments here and on many, many other blogs and in other news outlets, it's a VAT, even if Cain (understandably) doesn't want to call it that.

266 I didn't say I opposed (or supported) 999, delayna, just that obviously the only fair (or "fair" for some) and not dysfunctional tax, plus one that leaves legal tax obligations and liabilities off the individual (yay, originalism!) is a consumption tax.

The consumption tax is the only tax harmonious to your rights and properties.

I said lots of other stuff therefore supporting nothing more than a consumption tax and only a consumption tax but you'd have to read it.

What sounds awful, since you raise the point, is anything but that kinda tax.  Anything - income, flat, corporate, personal, whatever.  What else sounds awful is the merely ostensible right promoting schemes and debating deck chairs on sinking tax code ships and failing to realize that the corporation should exist to shield the individual and not the other damn way around. 

This means you, Republicans.  Instead the right prefers to see the corporation as some sort of solely and uniquely pro-America thing whose tax costs will (GASP!) rain down on said individual such that the individual should face the brunt of the IRS all hisself.

Wrong.  Wrong because taxation is or should be zero-sum and wrong because one should not buy into the myth that corporations drive economies.  Corporations break economies (when they're indistinguiishable from Washington DC and when they have anything to do with banking, lobbying, mandatory federal programs like education, medicine, retirement, or "welfare", or GE, GM, and Solyndra.  Corporations muck around.  It's what they do. 

You get the idea.  Or you really should.  INDIVIDUALS drive economies.)

Fund the federal government in all its unconstitutional ways and means (if you must) with nothing more than a single consumption tax that hurts like hell at the register or pump but in the end costs not a dime more than the sum total of all the shit we pay for without knowing it today.  Because a tax dime saved in my wallet is a tax dime spent with my local merchants.

In other words what richard mcenroe said at 266:

If the government announces an increase in a sales tax or VAT and the public doesn't like it, the public can announce a new government. Right now, we're literally stuck with a situation of "I don't know how ya done it, but ya done it.'

267 Obama is a stuttering clusterf*ck of a miserable failure.

268 Clark Howard is OK with it, then so am I.
Of coarse I think he said it doesn't have any chance in succeeding because it takes a lot of power out of congress hands of doling out tax favors.

Our current corporate tax system with all the back-room loopholes is essentially a 3rd-world influence peddling abortion.  The hidden loopholes is criminal.  The 999 tis a reasonable attempt at transparency to the process.

269 This post is FABULOUS!

270 Meh. Is it a VAT? Lot's of people want to say it is, of course, because they want Cain to lose.

Bartlett says: "Little detail has been released by the Cain campaign, so itÂ’s impossible to do a thorough analysis. But using what is available on Mr. CainÂ’s Web site, IÂ’m taking a stab at estimating its effects."

So he doesn't know. And why would he write this? Maybe because he thinks it's true. Maybe because he's worked for Ron Paul. Who knows?

Let me know when we have enough details to know what we're talking about.

271 ^{That is useful information and its quite easy to come a croper if you are not vigilant.}

272 This web site is my breathing in, really fantastic pattern and perfect subject matter.

273 Thanks for sharing, please keep an update about this info. love to read it more. i like this site too much.

274

Moral of the story: if Herman Cain proposes changing tax structures, Gabe will call it a VAT.

Got it?

275 For those concerned that corporations could actually pay tax even if they lose money:  YES, under the current system they do.  In fact, they have to pay over 7% of their wages just in payroll taxes.  Those federal taxes would be eliminated under Cain's proposal.  Replaced with 9% on Gross Income.  In economic zones specified to improve those areas, that 9% could be on Gross Income less labor.

276 Here's how a VAT works in practice. A harvests resources and sells them to B and charges the VAT. B takes the resource, refines and sells them to C and charges the VAT, C takes the refined resources converts it to parts and sells it to D and charges the VAT, D takes the parts and makes the product and charges the VAT, D takes the product and sells it to E and charges the VAT, E distributes the product to F and charges the VAT, F sells the product to Joe Consumer and charges the VAT. The VAT is charged in every sale along the chain. Cain's NST is only charged on the first sale to the end user. Now in most countries with a VAT, the ABCDE get a credit for part of the VAT they charged, minus the VAT they paid. The consumer gets hit multiple times. As for Cain's gross income tax, it's 9 percent on the gross income minus the cost of purchases from other businesses, investments etc. That's not a VAT, it's basically the same as corp income today. It does eliminate alot of the tricks that businesses pay like spending money on "green initiatives" and calling that a cost of business. . . but that's a bullshit cost of business. Cain plan taxes you on the income of your business minus the legitimate business expenses. I can understand why people want to misrepresent the second 9 because they like the ability to "write off" they like the ability to hire their spouse who doesn't actually do any work but draws a check, they like being able to fund little leagues as "advertising" and they like being able to reduce their income on paper to ZERO to avoid taxation. Cain's plan eliminates that BS. There is no VAT in Cain's plan. Cain, Lowrie, Boortz, Linder, etc all despise VAT's. There is not VAT in 999. Additionally, 999 is a structure to move to a FairTAX, you can't simply say "Today we switch to FairTAX, bam!" It would be chaos, many businesses run on fiscal years, and need time to make the adjustments, they also need to renegotiate contracts and deal with inventories and bids and projects in the works. 999 is a route to get to a new tax structure and is temporary. Gabe Malors article is full of misrepresentations and willful distortions...

277 "income on paper to ZERO" should have read "profits on paper to ZERO", my apologies.

278

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