Understanding 9-9-9

Let's talk about 9-9-9 as I understand it. The biggest hit against the plan from Herman Cain is that the 9% sales tax is 1. Regressive, 2. Lead to double taxation and 3. Give a "new tax" to congress. The second major complaint is that the 9% Corporate tax will amount to a VAT tax or "Value Added Tax" similar to the one they have in Europe. First to the idea that a "Sales tax" is the same as a VAT ...tax is a mis-conception. We have a distinction with a difference in the definition of the two: (from wikipedia.com): 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.( Please pay attention to this line:)

"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."

This is a subtle yet huge difference between a VAT and a Sales tax! If you listen to what Herman Cain is saying, He is making the point that the sales tax is not the same as the VAT. He has said on several occasions that the sales tax will only be applied once: at the point of sale to the consumer. It will not be applied throughout the entire production chain. Many of the detractors know this and yet they continue to act like they do not. Either they are being disingenuous or they are ignorant of the differences. Either way they are wrong.

The complaint that the sales tax is double taxation is another attack. Let's consider the facts. If there were no national sales tax would there be state sales tax? Answer: Yes. If there were a Flat tax would there be state sales taxes in states that impose them? Answer: Yes. Is there currently taxes on goods and services under the current tax code that are imposed on states that do not have sales taxes? Answer: Yes. This is what Cain means by people are mixing "apples and oranges." In fact the Federal government currently imposes taxes that amount to on average 35% on all the goods and services produced in the United States is a fact. One of the reasons that Chinese goods are cheaper than those produced in the US is the fact that the imports taxes are lower than the taxes imposed by those produced here. Add to that the fact that in addition to the cost of corporate taxes at on average 35% and the fact that the payroll taxes are also factored into the goods we purchase and it is very easy to see that the current tax system is far more regressive than it appears. The problem is the current taxes that are paid on goods and services produced here are hidden in the cost of the goods themselves. On average the tax built into the cost of goods averages about 22% according to reliable sources. Removing these hidden taxes of about 22% and replacing them with a transparent 9% tax would actually make the cost of the goods less expensive. Couple this with the removal of the 15.3% payroll tax and the average American family is going to pay less in over-all tax burden no matter what their current tax rate is. Now will some people be paying taxes who do not pay taxes now? Yes. But shouldn't everyone who benefits from the services supplied by the Federal government pay something. Currently 53% of Americans pay all the taxes. Moving this from 53% to over 70% will lessen the tax burden on everyone and make taxes fair, flatter and more transparent. In addition it will simplify the tax code and reduce the need for a large bloated and out of control IRS.

Will this help create jobs in the US? Without a doubt. By radically changing the way government is funded, taking out the influence that is exercised by lobbyist and special interest groups, it will free up capital in the economic system and allow for more investment in innovative production.

So why all the fuss and why all the attacks on Herman Cain? Well lets follow the money. Both the left and the right use the current tax code system to reward or punish those who benefit them or who they don't like. It only makes sense that if you are attacking their golden "fleece", they are going to fight you tooth and nail to prevent you from changing this. They have a vested interest in keeping things just like they are. The Republicans like it this way and the Democrats like it this way because they both get to play the game and make us think they care about us. The reality is they only care about themselves and doing whatever it takes to hold onto their power and money base.

Folks it is time for REAL CHANGE! Not the phony hope and change that was promised by President Obama. Let's stand with Herman Cain and fight for real change in 2012. Change that makes a difference for US Americans!