9-9-Nein! The Herman Cain Mutiny
By EDWARD MORRISSEY, The Fiscal Times
October 13 2011
9-9-9 is also
transitional tax reform, not the end goal. On Cain?s website, he describes 9-9-9 as merely Phase 1 of tax reform. The final stage of Cain?s tax vision is the Fair Tax proposal pushed by Mike Huckabee in the 2008 election cycle, which is a consumption tax modeled on the European value-added tax (VAT). Cain developed the 9-9-9 plan to "unite the ?Flat Taxers? with the ?Fair Taxers.?"
The Fair Taxers conceded during the run-up to the 2008 presidential election that we might need to get to a flat tax as a transitional stage to a consumption tax, simply to stop the damage done from the overly complicated and politically skewed personal and corporate tax systems. However, that concession still retained the firewall against creating a new form of federal taxation while keeping the old one.
The Fair Tax proposal in 2008 envisioned a trigger that could not get pulled until after the repeal of the 16th Amendment, the legal foundation for the federal income tax. Instead of retaining that firewall, 9-9-9 asks voters to trust that we can overlap a federal sales tax and an income tax while Congress eliminates the latter in Phase II of Cain?s plan.
Needless to say, even Herman Cain might not have the sales skills to sell: "I?m from the government, and I?m here to help." Conservatives have opposed a federal VAT for many years and became especially sensitive to it in 2009 when then-Speaker Nancy Pelosi began suggesting that it be implemented as a means to pay for the
health-care reform bill popularly known as ObamaCare. That is why the repeal of the 16th Amendment as a trigger for the Fair Tax was so essential to keeping a federal sales tax from becoming an additional income stream for Washington.
It isn?t too difficult to imagine what could go wrong in Cain?s scenario. Congress could pass Phase I of Cain?s plan and never bother to move to Phase II. In fact, that seems more likely than not, since repealing the 16th Amendment would require ratification by two-thirds of each chamber of Congress and three-quarters of the states ? a process that could take more years than Cain would be President. Could we find a two-thirds majority willing to dump the progressive tax system ? which allows politicians to conduct social engineering as well as build in benefits for campaign donors ? in even the most reform-minded Congress?
If Cain could get Phase I passed, which would be no easy feat, Congress would then have the ability to raise rates in both streams, and still later revert to a progressive income-tax system with the middle "nine." That would mean we would return to the same problems we have now, except with a new sales tax that would arguably be regressive in its impact. Cain argues that the elimination of taxes on estates, payroll, capital gains, and repatriated profits would negate that impact, but most of those taxes don?t have a direct effect on working-class families the way a sales tax undoubtedly would.
Finally, without a specific constitutional amendment authorizing it, a federal sales tax on general purchases would get challenged by small-government federalists on principle. Unless the sale crosses state lines, it is difficult to see federal jurisdiction at the cash register for most transactions.
Accepting that Congress can impose a sales tax on transactions at the local grocery store without a Constitutional amendment granting such authority would require conservatives to embrace a Wickard v Filburn philosophy of interstate commerce. Since a rejection of that philosophy is at the heart of conservative opposition to ObamaCare and its mandate, don?t expect conservatives to leap for joy at the thought of a new definition of interstate commerce that fits the final "nine" in Cain?s plan.
Excerpts from:
http://www.thefiscaltimes.com/Columns/2011/10/13/9-9-Nein-The-Herman-Cain-Mutiny.aspx#page1
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