Saturday, October 15, 2011

The New Cain's-eyenism: 9-9-9 = No, No, No

I suspect that all you Cain-eyaks are in for a lot of disappointment in the coming months because plain taking and simple to understand is going to be easily attacked by both sides for lacking in experience and too simplistic to provide a real fix for the issues we are facing.

9% Corporate Tax, depending on how it's actually written will either unfairly reward companies with very few employees or provide further incentive to off-shore jobs. And perhaps a corporate flat tax will not in and of itself cause downward pressure but it will fail to fix the real issues of regulatory burdens and the ever-increasing cost on employers to fund their portion of entitlement programs (Obamacare). GE is paying Zero Corporate Tax this year, is off-shoring its workforce in the tens of thousands and the per share price is 1/3 of where it was less than 5 years ago. At least Rick Santorum's proposal to zero out manufacturer's tax addresses one of the issues behind joblessness and trade deficits directly by taking on a specific symptom head-on. I also like it because it is small and specific.
Cain may not realize that his 9-9-9 proposal is still big government, runs the risk of many unintended consequences and just peanut butter spreads the pain. In the end be mindful of the fact that you, the consumer will be paying this 9%. Corporations don't pay tax. They incorporate taxes into the cost of goods sold, passing that cost on to you and/or look for ways to save in the other line items of their business, ultimately spending less on tangible assets, quality materials and labor. This is why 9-9-9 really adds up to 24-27% Federal Tax (not including Social Security and Medicare) on middle-class, middle aged income earners who are spending the majority of their paychecks to make ends meet right now and who are the fuel in the engine of economic growth. That's a tax that is still too high and the economic tide will not rise if this downward pressure remains that high.

9% Income Tax is a non-starter. It raises tax on a bunch of people who currently pay little or nothing of "their fair share" while simultaneously lowering the taxes on "millionaires and billionaires" which is to say it will lower it on the many "thousandaires" who are really the ones in the crosshairs of this despicable liberal rhetoric. So short of a super-majority and probably even with a super-majority, this will never pass. Democrats will never vote to raise taxes on their core constituency: the Dependency Class. Republicans are too cowardly to face the likely attacks of cronyism and racism for lowering taxes on their core constituency of wealth earners and job creators while simultaneously increasing the burden on so-called minorities. So although I would personally benefit by seeing my Federal income tax go down, it is the least likely of the three to get any traction in tax reform legislation. But even before Cain get's that far let's review the fate of the last Republican who favored tax increases ("Read my lips"). Obama will demonize Cain into unelectability.

9% Federal Sales Tax is the worst of the three. Let me count the ways. 1) The last thing we want to do in the current climate is give the Federal government more control over our lives and add an entirely new method of raising taxes. This is the camels nose under the tent. 9% becomes 9.5 or 9.9% very quickly when the Federal government finds itself in a bind to pay for something that was under-budgeted and overspent. And just because the Pizza Tycoon is in the White House don't think that all too common problem goes away. It's in the DNA of government to do such things. Bad fiscal practice is not a recessive gene in the Federal government. Until that species of politician and bureaucrat is extinct, that very real risk remains. 2) I feel that there is even greater risk that the tax will not merely go up but that the structure will change to a European style VAT. Argue for VAT as you may I personally want to emulate Europe less not more and VAT equals big government on steroids. If I ran a business the first thing I'd do to keep my VAT burden in check would be to buy less and build less. Over time this equals a lack of surplus in all things and I can't think of anything more anti-Capitalist except maybe Obama himself. 3) Regardless of whether you give credence to #1 and 2. the rule that still applies is: If you want less of something, have government tax it. I already pay a 9% State Sales tax which is only acceptable because I (just like every other Texan) pay Zero State Income Tax. At the point where I am having to pay roughly 20 cents on top of every dollar spent . . . let's just say that my family will be getting even more creative in our ways to exist and have fun without unholstering the wallet.

As much as the Tax Code needs reform, the proposals in the Primary and General Election seasons need much more thoughtful branding. The Tea Party wants to hear how you are going to starve the beast of Big Government, not how you are going to change it's diet yet keep on feeding it a rich source of our tax dollars.

So it starts striking me as a little naive that Pizza Man and Head of the National Restaurant Association would propose a tax structure that would certainly lead to a whole lot fewer of us eating out. Just think what happens to that $6 burger when it shrinks by anywhere from 9-27% due to all these taxes. You and I will surely be saying, "where's the beef?"

Sunday, October 2, 2011

MSM Trash the GOP Candidates Bingo

This article (good quick read)

reminded me not only that John Holdren is Obama's (psuedo)-science Czar (read more here)* but also reminded me of the likelihood that the Main Stream Media will predictably use this attack-line. You are bound to see this one once the primary race tightens up a bit and these shills for Obama start launching a whole array of "new" editorial memes.

Feel free to add this one to your Bingo Board:

science czar Director of the Office of Science and Technology Policy Holdren, John[126] 2009–present President nominated, Senate confirmed Barack Obama