I’m Just Fine with 9 9 9+9+9

Republican Presidential candidate Herman Cain proposes to replace the federal income tax, payroll taxes, estate taxes, and the capital gains tax with a new “9 9 9” tax system. Cain’s plan consists of a 9 percent national sales tax, a 9 percent tax on business income, and a 9 percent tax on personal income.

That’s a good start, but there are a few modifications I’d like you to consider. Cain’s individual income tax would eliminate all deductions except charitable contributions. A married person with five dependents and a mortgage would pay the same tax on $50,000 income as a single renter. There’d be no  deductions for IRAs, state taxes, private school tuition, blindness or anything else. That’s fine. But then why make an exception for charitable contributions? It’s a better plan if all deductions are eliminated—no exceptions.

Cain says that people living or working in “empowerment zones” would qualify for tax breaks. All that does is encourage people to live or work in areas where they otherwise wouldn’t. This type of government intervention is exactly the type of thing that leads to economic inefficiencies. Figuring out what qualifies as an empowerment zone and who’s really living and working there creates more headaches than it’s worth. Again, 9 9 9 is better with no exceptions.

9 9 9 eliminates the capital gains tax. Why is income from a capital gain treated differently than other types of income? If I buy stock for $10 and sell it for $20, I’ve received income of $10. Under Cain’s plan, a person who derived all their income from capital gains would pay no income tax. All income should be treated the same. Keep it simple and fair.

9 9 9 doesn’t address federal excise taxes, but it should. Cigarette smokers and  gas guzzlers shouldn’t have to pay more tax on what they purchase than someone who spends the same amount on lawn furniture. If the sales tax is 9 percent, it should be 9 percent on everything—baby food, blue jeans, Marlboros, and regular unleaded. No exceptions.

Assuming that these glitches can be worked out, I’m OK with 9 9 9. However, the revenue it produces leaves no cushion for emergency expenditures or for reducing the national debt. Therefore, I propose an additional 9 percent individual income tax on all income over $250,000 per year. This would pay for the wars (i.e. Vietnam, Iraq, Poverty, Drugs), natural disasters and bank bailouts we’ll surely face again in the future. These are budget busters and we need to plan ahead for them.

Then I propose another 9 percent individual income tax on all income over $2 million per year. This money would be used to pay down the national debt. That’s fair because it’s much easier for a person to increase their income from $250,000 to $260,000 or $2,000,000 to $2,010,000 than it is to increase it from $10,000 to $20,000.  Also, the more money you have, the more you’ll financially benefit from a shrinking national debt.

There’s the plan: 9 9 9+9+9. If you’re not with me, you’re against me. Now what do you have to say about that?