It didn’t take long for the establishment GOP to figure out how to dump on Herman Cain – if you can’t attack the man, attack the plan.
For the record, I don’t like Mr. Cain’s 9-9-9 either; I would much prefer 3-3-3. Because the problem is not just how we tax; as Milton Friedman said, the real rate of taxation is the rate of spending, and we spend about 12-12-12. We can thank both of the establishment parties for that.
And spending is what candidates should be focused on; yet to date only Ron Paul has told us specifically what he would cut - $1 trillion worth in year one. That puts him $1 trillion into the lead in my book. The rest talk in platitudes about economic growth and spending restraint, not unlike then-candidate Obama in 2008 who promised the moon and stars while conveniently leaving out the part about how much the spaceship would cost us in cash and lost liberty.
Here’s my plan to cut down to my ideal weight: I will only add three pounds per year instead of the five I was planning on for the next decade, and I promise to grow to 7’6” in year 10. Economists would score that as a winner; the CBO would issue a glowing report; Joe Biden would start counting millions of pounds not gained and threatening to rape me if I quit wrapping my donuts in bacon before I deep fry them. Or something.
I know exactly what Herman Cain is thinking with 9-9-9, because business people like us understand that human behavior changes in response to incentives. Prices will come down when costs are lowered because competition will demand it. Leveling the playing field will allow capital to flow to the best investments, not tax-gimmicks like Solyndra, and the jobs will come roaring back. People will buy things based on their intrinsic value, not overpay just to get a deduction.
Markets will begin to function again and the good times will roll; it is a plan of economic liberation based upon an understanding of human action - the kind of thing a business guy would come up with and a politician would stare at dumbfounded for days on end. The attacks on the 9-9-9 tax plan ignore human action, relying on static analysis and arithmetic comparisons to current pay rates to try and discredit it.
But economics is not arithmetic; it is the study of how people get what they want. When the rules change, so does behavior; and in predictable ways, even if the current administration’s economic team doesn’t understand how to predict them. Business people – the main street kind – develop a pretty good sense of human nature, as we are dependent upon the voluntary decisions of our customers to succeed. It does not surprise me that Cain would be the one to solve a problem; or that the establishment in both political parties would hate him for it.
They like the status quo just fine, and they have orchestrated misleading attacks to thwart any effort to simplify and flatten the tax system. When Governor Perry unveils his flat tax plan, you can count on them ripping it to shreds also. They are betting that all of us have by now been hooked with one rock of tax-crack deduction or another that we cannot imagine living without. Most of us who will howl about losing our home mortgage deduction will never put two and two together and realize that our loophole is one of the causes of the housing bubble and economic crisis it brought about. We all like bad things to be someone else’s fault; we just disagree about who else to hang it on.
Fair is when everyone is treated the same. 9-9-9 does that, as would 3-3-3 or 29-29-29; the most ridiculous standard to hold up a tax reform plan against is what some people pay now under the current code. If the deal-breaker is anyone paying a penny more than they did this year, then let’s just leave the most corrupted and corrupting tax scheme in the history of mankind in place and wait for the collapse to come. Just quit making fun of people who are investing in ammo and gold; you will soon be begging them to share their MRE’s with you and they won’t need your vote.
Zero is not a fair share, whether it is a migrant worker or GE who is the free rider. When Buffet, Gates, Trump, Wynn, and Carlos Slim go to lunch together, somebody is in the bottom quintile – are they entitled to free lobster bisque and a pity party? Taxing income is itself an idea so dumb they had to change the Constitution to allow it; taking at differential rates is an even worse idea that had to be stolen from the communists.
Here is the tax comparison that matters. The federal government spends about 24% of GDP; if everyone paid our fair share we would each pay 24% of our income in federal taxes. Do you? Not if you are poor, and not if you are rich, not if you have deductions and exemptions, and not even if they put us all together do we pay that much.
We collectively pay about 16% of GDP in taxes; those other 8 percentage points we borrow each year is why the national debt is skyrocketing and we are speeding towards our big fat Greek collapse. That is the destination of the status quo; the goal line that is being defended at all costs against any attempt to simplify and flatten the tax system, be it flat tax, FairTax, 9-9-9, or Ron Paul’s excise tax ideas. Insanity.
Those who read this blog regularly know that I am a proponent of the FairTax for pragmatic reasons. In an ideal libertarian world, I would finance a Constitutionally limited government (about 20% of our current one) with a land tax and head tax – trip on that, Michelle Bachman, former IRS attorney, mother of 6, foster mother of 23, and starter of a business who has made a payroll. Even Romney’s one illegal gardener would have to pay $500 to live here – consider it a cover charge for the greatest rave party on the planet. Can’t scrape up $500? How did that tattoo get there?
But we must live in the world that is until we can create the world that should be. The two principles behind sound practical tax reform are simple: as broad a base as possible at the lowest possible single rate. Whether we tax income or consumption or both is not as important as that we stop using the tax code to reward and punish, to pick winners and losers, to advance political agendas, and to provoke class divisions. Thank you Herman Cain for taking the heat to get the ball rolling.
And for exposing politics as usual in Tuesday night’s ambush. Do you really think that all those other smart candidates for President of the United States do not understand the difference between state taxes and federal taxes? Do you believe they don’t know that people pay both state and federal taxes now? Do you think they honestly do not know the difference between a VAT and corporate income tax?
Or do you think a powerful lobby of special interests 100% vested in keeping the current system of preferences, loopholes, subsidies, guarantees, and pork in place might have put them up to it? Like perhaps the same folks who are making Ron Paul invisible, and turning this whole election cycle into a made for TV Romney/Perry WWE main event.
They think we are stupid. They are wrong.
“Moment Of Clarity” is a weekly commentary by Libertarian writer and speaker Tim Nerenz, Ph.D. Visit Tim’s website www.timnerenz.com to find your moment.
For the record, I don’t like Mr. Cain’s 9-9-9 either; I would much prefer 3-3-3. Because the problem is not just how we tax; as Milton Friedman said, the real rate of taxation is the rate of spending, and we spend about 12-12-12. We can thank both of the establishment parties for that.
And spending is what candidates should be focused on; yet to date only Ron Paul has told us specifically what he would cut - $1 trillion worth in year one. That puts him $1 trillion into the lead in my book. The rest talk in platitudes about economic growth and spending restraint, not unlike then-candidate Obama in 2008 who promised the moon and stars while conveniently leaving out the part about how much the spaceship would cost us in cash and lost liberty.
Here’s my plan to cut down to my ideal weight: I will only add three pounds per year instead of the five I was planning on for the next decade, and I promise to grow to 7’6” in year 10. Economists would score that as a winner; the CBO would issue a glowing report; Joe Biden would start counting millions of pounds not gained and threatening to rape me if I quit wrapping my donuts in bacon before I deep fry them. Or something.
I know exactly what Herman Cain is thinking with 9-9-9, because business people like us understand that human behavior changes in response to incentives. Prices will come down when costs are lowered because competition will demand it. Leveling the playing field will allow capital to flow to the best investments, not tax-gimmicks like Solyndra, and the jobs will come roaring back. People will buy things based on their intrinsic value, not overpay just to get a deduction.
Markets will begin to function again and the good times will roll; it is a plan of economic liberation based upon an understanding of human action - the kind of thing a business guy would come up with and a politician would stare at dumbfounded for days on end. The attacks on the 9-9-9 tax plan ignore human action, relying on static analysis and arithmetic comparisons to current pay rates to try and discredit it.
But economics is not arithmetic; it is the study of how people get what they want. When the rules change, so does behavior; and in predictable ways, even if the current administration’s economic team doesn’t understand how to predict them. Business people – the main street kind – develop a pretty good sense of human nature, as we are dependent upon the voluntary decisions of our customers to succeed. It does not surprise me that Cain would be the one to solve a problem; or that the establishment in both political parties would hate him for it.
They like the status quo just fine, and they have orchestrated misleading attacks to thwart any effort to simplify and flatten the tax system. When Governor Perry unveils his flat tax plan, you can count on them ripping it to shreds also. They are betting that all of us have by now been hooked with one rock of tax-crack deduction or another that we cannot imagine living without. Most of us who will howl about losing our home mortgage deduction will never put two and two together and realize that our loophole is one of the causes of the housing bubble and economic crisis it brought about. We all like bad things to be someone else’s fault; we just disagree about who else to hang it on.
Fair is when everyone is treated the same. 9-9-9 does that, as would 3-3-3 or 29-29-29; the most ridiculous standard to hold up a tax reform plan against is what some people pay now under the current code. If the deal-breaker is anyone paying a penny more than they did this year, then let’s just leave the most corrupted and corrupting tax scheme in the history of mankind in place and wait for the collapse to come. Just quit making fun of people who are investing in ammo and gold; you will soon be begging them to share their MRE’s with you and they won’t need your vote.
Zero is not a fair share, whether it is a migrant worker or GE who is the free rider. When Buffet, Gates, Trump, Wynn, and Carlos Slim go to lunch together, somebody is in the bottom quintile – are they entitled to free lobster bisque and a pity party? Taxing income is itself an idea so dumb they had to change the Constitution to allow it; taking at differential rates is an even worse idea that had to be stolen from the communists.
Here is the tax comparison that matters. The federal government spends about 24% of GDP; if everyone paid our fair share we would each pay 24% of our income in federal taxes. Do you? Not if you are poor, and not if you are rich, not if you have deductions and exemptions, and not even if they put us all together do we pay that much.
We collectively pay about 16% of GDP in taxes; those other 8 percentage points we borrow each year is why the national debt is skyrocketing and we are speeding towards our big fat Greek collapse. That is the destination of the status quo; the goal line that is being defended at all costs against any attempt to simplify and flatten the tax system, be it flat tax, FairTax, 9-9-9, or Ron Paul’s excise tax ideas. Insanity.
Those who read this blog regularly know that I am a proponent of the FairTax for pragmatic reasons. In an ideal libertarian world, I would finance a Constitutionally limited government (about 20% of our current one) with a land tax and head tax – trip on that, Michelle Bachman, former IRS attorney, mother of 6, foster mother of 23, and starter of a business who has made a payroll. Even Romney’s one illegal gardener would have to pay $500 to live here – consider it a cover charge for the greatest rave party on the planet. Can’t scrape up $500? How did that tattoo get there?
But we must live in the world that is until we can create the world that should be. The two principles behind sound practical tax reform are simple: as broad a base as possible at the lowest possible single rate. Whether we tax income or consumption or both is not as important as that we stop using the tax code to reward and punish, to pick winners and losers, to advance political agendas, and to provoke class divisions. Thank you Herman Cain for taking the heat to get the ball rolling.
And for exposing politics as usual in Tuesday night’s ambush. Do you really think that all those other smart candidates for President of the United States do not understand the difference between state taxes and federal taxes? Do you believe they don’t know that people pay both state and federal taxes now? Do you think they honestly do not know the difference between a VAT and corporate income tax?
Or do you think a powerful lobby of special interests 100% vested in keeping the current system of preferences, loopholes, subsidies, guarantees, and pork in place might have put them up to it? Like perhaps the same folks who are making Ron Paul invisible, and turning this whole election cycle into a made for TV Romney/Perry WWE main event.
They think we are stupid. They are wrong.
“Moment Of Clarity” is a weekly commentary by Libertarian writer and speaker Tim Nerenz, Ph.D. Visit Tim’s website www.timnerenz.com to find your moment.
