MR. HERMAN CAIN:  Nine, nine, nine.  Jobs, jobs, jobs.

How many toothpicks do you see, Herman?


And FTFTranscript:
MR. CAIN:  First, they're missing one very critical point about the sales tax.  It wasn't even mentioned in that analysis that you read.  On the price of goods, there are invisible taxes that are built into everything we buy. We'll simply--those invisible taxes are going to go away.  And we're replacing them with a 9 percent visible tax.  For example, take a loaf of bread.  The farmer pays taxes on his profits.  The company that makes the flour, the baker, the delivery man.  By the time that loaf of bread gets to the grocery store, there are a series of invisible taxes, which are also called embedded taxes.  So, in reality, those taxes go away and so the price of goods don't go up.

I thought one of those "9's" was an income tax. It goes away? Really?


And to address the headline's point:
MR. CAIN:  Let's try this one more time.  State taxes are there today.  The current tax code is a 10 million word mess.  You have probably 100--you have thousands of loopholes and tricks and what I call "sneak attaxes" in the current code.  State taxes today, whatever they are, zero or some number, has nothing to do with replacing the tax code.  Nothing.

In Connecticut, the tax you pay on a loaf of bread goes from 0% to 9%. The tax you pay on a refrigerator goes from 6.35% to 15.35%. Means now my $300 purchase costs me $346, instead of $319. Means that $10,000 car im buying costs me $11,535 instead of $10,635. And this is all in addition to a higher tax on income for the poor.

Yes, the State taxes have been there all along, Mr. Cain, but your critics aren't wrong to point out that you're piling on.

ib_thinkin: In Connecticut, the tax you pay on a loaf of bread goes from 0% to 9%. The tax you pay on a refrigerator goes from 6.35% to 15.35%. Means now my $300 purchase costs me $346, instead of $319. Means that $10,000 car im buying costs me $11,535 instead of $10,635. And this is all in addition to a higher tax on income for the poor.

And people biatched about Malloy raising it that fraction of a percent.

The argument that when all the "invisible" taxes go away, prices will drop? Yeah, I doubt that.

Aarontology: And people biatched about Malloy raising it that fraction of a percent.

His plan pretty well farks him in NH. I grew up 9(-9-9) miles from the NH border, and you could hear the smug pride re: "no sales tax" from my swingset.

I can tolerate bumper-sticker language as an argument for a certain policy. I don't like it, but I tolerate it. But using bumper-sticker language as policy is just plain retahded.

No YOU'RE a Towel: The argument that when all the "invisible" taxes go away, prices will drop? Yeah, I doubt that.

I thought this was a logical outcome of an action like this for a long time. This is one of the key components of the Fair Tax. The though is when the embedded taxes aren't there any more, businesses will drop their prices accordingly - not out of a sense of fairness, but because some will do it to increase sales. This would theoretically lead others to do it, too, else they get undercut on price.

I no longer believe this would happen with the Fair Tax or the 9-9-9 plan Cain espouses. The reason is this: Businesses just got a huge cut in operating costs with the reduction in debit fees, yet none I've seen have passed this savings along to the consumer. This wasn't some complicated, difficult-to-calculate embedded tax, that would take time to analyze. It was a simple reduction in fees on the most popular method of payment available today.

ib_thinkin: But using bumper-sticker language as policy is just plain retahded.

Hey now, my boy is WICKED SMAHT!

I'm not a defender of Gregory, and I was entirely ready to pile on him, but after reading the mess of the transcript:

FTA:

MR. GREGORY: The other defect in the plan comes from fellow conservatives who say, "You've got some problems here." This is what The Wall Street Journal said about it this past week. "The real political defect," the Journal writes, "of the Cain plan is that it imposes a new national sales tax while maintaining the income tax. Mr. Cain's rates are seductively low, but the current income tax was introduced in 1913 with a top rate of 7 percent amid promises that it would never exceed 10 percent. By 1918 the top rate was 77 percent. The politics of a national sales tax is bad enough on its own. A 9 percent rate when combined with state and local levies would mean a tax on goods of 17 percent or more in many places. The cries for exemptions would be great."

MR. CAIN: Don't combine it with state taxes. This doesn't address state taxes. If you add them together, yes, you'll get that number. This is a replacement structure. These are replacement taxes. They're not on top of anything.

MR. GREGORY: Mm-hmm.

Yeah, that's BS. Sounds like Mr. Cain thinks that his federal taxes are going to replace federal taxes. Sounds like Mr. Cain is the one that doesn't know the difference between federal, state, and local taxes.

Cain's tax structure absolutely has to account for situational state and local taxes. Otherwise, he's not proposing a real plan, he's proposing a fantasy.

SphericalTime: Yeah, that's BS. Sounds like Mr. Cain thinks that his federal taxes are going to replace federal state and local taxes. Sounds like Mr. Cain is the one that doesn't know the difference between federal, state, and local taxes.

Fixed that for me.

Not the elderly. That's two different groups. Let's talk about the elderly. You don't pay taxes on your Social Security income. It replaces the tax--the capital gains tax. Many of the elderly make money off of their investments. They won't pay that. Tax on dividends and tax on income generated from investments, you only pay once. So, in that sense, it helps the elderly.

Except that you're adding a 9% sales tax to everything everyone buys, so you're still raising taxes on everyone, including the elderly you dishonest fark.

I wouldn't call that a "schooling". It looks like Gregory simply gave up and moved on.

CanisNoir: ib_thinkin: But using bumper-sticker language as policy is just plain retahded.

Hey now, my boy is WICKED SMAHT!

Hope....Change....the bumper sticker that shaped our last 3 years of policy.

make me some tea: I wouldn't call that a "schooling". It looks like Gregory simply gave up and moved on.

He does that a lot.

cmunic8r99: No YOU'RE a Towel: The argument that when all the "invisible" taxes go away, prices will drop? Yeah, I doubt that.

I thought this was a logical outcome of an action like this for a long time. This is one of the key components of the Fair Tax. The though is when the embedded taxes aren't there any more, businesses will drop their prices accordingly - not out of a sense of fairness, but because some will do it to increase sales. This would theoretically lead others to do it, too, else they get undercut on price.

I no longer believe this would happen with the Fair Tax or the 9-9-9 plan Cain espouses. The reason is this: Businesses just got a huge cut in operating costs with the reduction in debit fees, yet none I've seen have passed this savings along to the consumer. This wasn't some complicated, difficult-to-calculate embedded tax, that would take time to analyze. It was a simple reduction in fees on the most popular method of payment available today.

The best part is conservatives (including ones who pushed for the "fair tax"), crowing about how businesses will never pass along those savings in order to yell at the administration, while ignoring the fact that belief is a tenet of their tax strategy!

gilgigamesh: make me some tea: I wouldn't call that a "schooling". It looks like Gregory simply gave up and moved on.

He does that a lot.

Well, time is a factor.

No YOU'RE a Towel: The argument that when all the "invisible" taxes go away, prices will drop? Yeah, I doubt that.

The main passalong of a tax on business is to the business' own employees, but also to its investors, shareholders and customers.

The part of what you pay for goods and services that's the businesses' tax passalong is, as you might figure, tough to calculate with accuracy - but it is NOT an insignificant number. The number caculated by Fair Tax and 9-9-9ers puts it at somewhere around 25%. Let's assume for argument's that they're high-balling that figure, and the real passalong is somewhere around 5%.

That's still a 5% hidden sales tax on damn near everything. If you're a family squeezing by spending 30 grand a year on goods and services, that's $1500 in hidden tax.

And knocking the marginal rate for corporations down to 9% doesn't do much if the whole corrupt apparatus of tax breaks and subsidies is still there. I'd be a lot more interested in what Cain had to say if he ditched business taxes and subsidies entirely, making up whatever difference there might be with tweaks to the tax code for individuals.

Closing loopholes does nothing - there are others opening all the time. The only way to stop gaming of the system is for there to be less system to game.

GAT_00: Not the elderly. That's two different groups. Let's talk about the elderly. You don't pay taxes on your Social Security income. It replaces the tax--the capital gains tax. Many of the elderly make money off of their investments. They won't pay that. Tax on dividends and tax on income generated from investments, you only pay once. So, in that sense, it helps the elderly.

Except that you're adding a 9% sales tax to everything everyone buys, so you're still raising taxes on everyone, including the elderly you dishonest fark.

Also, I'm pretty sure that the vast majority of seniors aren't paying for their retirements based on capital gains.

This guy's plan is completely dumb. About 9.99% away from being as dumb as Ron Paul's stripping the tax code to just about nothing plan.

GAT_00: Except that you're adding a 9% sales tax to everything everyone buys, so you're still raising taxes on everyone, including the elderly you dishonest fark.

It would theoretically work if all the other federal taxes were disposed of. No income, but add sales. But the problem, well among the host of problems, is that Congress likes to add on stuff (see our current tax code), and the 9% number is completely random and may be too high or too low to support the fed's spending...and as has been said...a graduated income tax (even one as one sided as the one we have for federal income taxes) has more merit than a flat sales tax for the lesser incomed.

I_C_Weener: Hope....Change....the bumper sticker that shaped our last 3 years of policy.

which is better than the phrase "YEEEEHAAAAAWWW" which shaped the 8 years before that.

I_C_Weener: It would theoretically work if all the other federal taxes were disposed of. No income, but add sales.

My grandparents live in Delaware. No income tax, no sales tax. Cain would unequivocally raise their taxes. Herman Cain is a dishonest fark who has no idea what his plan actually would do.

I_C_Weener: GAT_00: Except that you're adding a 9% sales tax to everything everyone buys, so you're still raising taxes on everyone, including the elderly you dishonest fark.

It would theoretically work if all the other federal taxes were disposed of. No income, but add sales. But the problem, well among the host of problems, is that Congress likes to add on stuff (see our current tax code), and the 9% number is completely random and may be too high or too low to support the fed's spending...and as has been said...a graduated income tax (even one as one sided as the one we have for federal income taxes) has more merit than a flat sales tax for the lesser incomed.

I think that's the main gut-feeling-red-flag for me, the number 9 is more marketing than it is sound mathematics. And I'm sure Cain is a brilliant marketer and all, but I don't see this as being realistic otherwise.

GAT_00: I_C_Weener: It would theoretically work if all the other federal taxes were disposed of. No income, but add sales.

My grandparents live in Delaware. No income tax, no sales tax. Cain would unequivocally raise their taxes. Herman Cain is a dishonest fark who has no idea what his plan actually would do.

But he used sophisticated computer models!

SilentStrider: I_C_Weener: Hope....Change....the bumper sticker that shaped our last 3 years of policy.

which is better than the phrase "YEEEEHAAAAAWWW" which shaped the 8 years before that.

Maybe, but I'm just waiting for the condemnation for that bumper sticker policy by the original poster of this point.

GAT_00: I_C_Weener: It would theoretically work if all the other federal taxes were disposed of. No income, but add sales.

My grandparents live in Delaware. No income tax, no sales tax. Cain would unequivocally raise their taxes. Herman Cain is a dishonest fark who has no idea what his plan actually would do.

No he wouldn't. Not if it eliminated income taxes. Now, I don't know if it does. But right now, presumably they pay something to the Fed. Instead of that form of payment (income, etc...) replace it with 9% sales. I'm not saying it would with them specifically (if their income is less than 9% now), but in theory, it is to replace the income tax.

However, as has been correctly pointed out the 9 number is a problem with would likely force many to pay more, while letter the rich pay less. If the number were perfect (which I don't see being possible without tweaking every year...and can you image our Congress agreeing on a number?), it would work. It can't be perfect, and is likely to hurt some, and help others...but not the ones who need it.

cmunic8r99: Businesses just got a huge cut in operating costs with the reduction in debit fees,

Debit fees dropped by 25 cents per transaction. That's on an average transaction value of what, $50?

That's half a percent, well below noise level.

Diogenes: GAT_00: I_C_Weener: It would theoretically work if all the other federal taxes were disposed of. No income, but add sales.

My grandparents live in Delaware. No income tax, no sales tax. Cain would unequivocally raise their taxes. Herman Cain is a dishonest fark who has no idea what his plan actually would do.

But he used sophisticated computer models!

Sim City is pretty sophisticated.

I_C_Weener: But right now, presumably they pay something to the Fed.

I cannot be certain of their finances. But I really doubt that this plan would not raise their taxes, as Cain promises. The states without income taxes, such as mine, and states without sales taxes, such as theirs, would be hurt worse by this plan.

GAT_00: I_C_Weener: But right now, presumably they pay something to the Fed.

I cannot be certain of their finances. But I really doubt that this plan would not raise their taxes, as Cain promises. The states without income taxes, such as mine, and states without sales taxes, such as theirs, would be hurt worse by this plan.

I guess I don't understand how the 9-9-9 plan affects the state taxes. I don't know that much about it. does it replace a state's income source, or just the Fed's?

I_C_Weener: GAT_00: I_C_Weener: But right now, presumably they pay something to the Fed.

I cannot be certain of their finances. But I really doubt that this plan would not raise their taxes, as Cain promises. The states without income taxes, such as mine, and states without sales taxes, such as theirs, would be hurt worse by this plan.

I guess I don't understand how the 9-9-9 plan affects the state taxes. I don't know that much about it. does it replace a state's income source, or just the Fed's?

Just the Fed's, by Cain's own words in the transcript. State taxes (or lack thereof) remain up to the States.

I_C_Weener: I guess I don't understand how the 9-9-9 plan affects the state taxes. I don't know that much about it. does it replace a state's income source, or just the Fed's?

If he's proposing that states cut their own sales taxes, especially in some way forcing them to do so, then the plan is even more ridiculous than I thought.

I_C_Weener: GAT_00: I_C_Weener: It would theoretically work if all the other federal taxes were disposed of. No income, but add sales.

My grandparents live in Delaware. No income tax, no sales tax. Cain would unequivocally raise their taxes. Herman Cain is a dishonest fark who has no idea what his plan actually would do.

No he wouldn't. Not if it eliminated income taxes. Now, I don't know if it does. But right now, presumably they pay something to the Fed. Instead of that form of payment (income, etc...) replace it with 9% sales. I'm not saying it would with them specifically (if their income is less than 9% now), but in theory, it is to replace the income tax.

However, as has been correctly pointed out the 9 number is a problem with would likely force many to pay more, while letter the rich pay less. If the number were perfect (which I don't see being possible without tweaking every year...and can you image our Congress agreeing on a number?), it would work. It can't be perfect, and is likely to hurt some, and help others...but not the ones who need it.

This is where the dissonance is for me. If I currently live in Vermont and make $30,000 a year, can someone explain to me how exactly this would lower my combined state and federal taxes?

Currently: In the state I would pay no income or sales taxes, and I would only pay marginal taxes above $22,000 (or whatever the current federal line is) on my income in federal taxes.

Cain wants to raise a basic 18% rate across all of my money currently (9% sales, 9% income) plus whatever corporations feel they can raise while still blaming it on the government.

I really don't see how in this situation (or for anyone making less money) this isn't a massive tax increase.

hillbillypharmacist: If he's proposing that states cut their own sales taxes, especially in some way forcing them to do so, then the plan is even more ridiculous than I thought.

He's not. In fact he accurately points out that including state taxes in the discussion muddies the water - several times. Plus, the president has no power over or input into state income tax rates.

make me some tea: Just the Fed's, by Cain's own words in the transcript. State taxes (or lack thereof) remain up to the States.

Then how would his plan affect state income at all? I think it is a silly plan, but claiming it will eliminate income for states seems a bad criticism of it.

Babwa Wawa: hillbillypharmacist: If he's proposing that states cut their own sales taxes, especially in some way forcing them to do so, then the plan is even more ridiculous than I thought.

He's not. In fact he accurately points out that including state taxes in the discussion muddies the water - several times. Plus, the president has no power over or input into state income tax rates.

Why is it muddying the waters, especially when examining the overall tax burdens for the wealthiest and the poorest?

I_C_Weener: make me some tea: Just the Fed's, by Cain's own words in the transcript. State taxes (or lack thereof) remain up to the States.

Then how would his plan affect state income at all? I think it is a silly plan, but claiming it will eliminate income for states seems a bad criticism of it.

That was part of the claim that Cain seems to have made, without really explaining how it would happen.

I_C_Weener: make me some tea: Just the Fed's, by Cain's own words in the transcript. State taxes (or lack thereof) remain up to the States.

Then how would his plan affect state income at all? I think it is a silly plan, but claiming it will eliminate income for states seems a bad criticism of it.

I think that was more a brief misunderstanding on Gregory's part. I don't really know though.

Babwa Wawa: cmunic8r99: Businesses just got a huge cut in operating costs with the reduction in debit fees,

Debit fees dropped by 25 cents per transaction. That's on an average transaction value of what, $50?

That's half a percent, well below noise level.

On a single transaction, yes, it may be below the noise level. (On a $10 transaction, it's 2.5%, though).

But in aggregate, it's definitely not below the noise level; otherwise, why would the banks feel the need to recoup the lost revenue related to the fee change by alienating their customers charging their customers debit card fees?

cmunic8r99: Babwa Wawa: cmunic8r99: Businesses just got a huge cut in operating costs with the reduction in debit fees,

Debit fees dropped by 25 cents per transaction. That's on an average transaction value of what, $50?

That's half a percent, well below noise level.

On a single transaction, yes, it may be below the noise level. (On a $10 transaction, it's 2.5%, though).

But in aggregate, it's definitely not below the noise level; otherwise, why would the banks feel the need to recoup the lost revenue related to the fee change by alienating their customers charging their customers debit card fees?

because something that is minimal for a customer (the retailers) can be quite significant for the supplier (the banks), and since the banks are operating in a two-sided market, they can recoup losses from one side by passing those costs to the other side. that doesn't mean the costs still weren't minimal for the retailers though.

SphericalTime: Why is it muddying the waters, especially when examining the overall tax burdens for the wealthiest and the poorest?

Because state taxes are out of the federal government's control.

What should be examined is the increase in the tax burden, as opposed to the aggregate tax burden. That's the universally applicable data point.

The increase in the tax burden is significant by itself and should be thoroughly debated. There's no need to screw around and try to make the picture look worse by adding on unrelated taxes.

cmunic8r99: On a single transaction, yes, it may be below the noise level. (On a $10 transaction, it's 2.5%, though).

But in aggregate, it's definitely not below the noise level; otherwise, why would the banks feel the need to recoup the lost revenue related to the fee change by alienating their customers charging their customers debit card fees?

You've got me in the unenviable and alien position of defending retailers. But I'm not sure what you would have them do.

Yes, in aggregate, this reduces a multi-billion-dollar revenue stream from retailers to banks by 47%. But it's still a fraction of a percent. Maybe your grocery store did plow the savings back into price reductions after all. But that means a $4.00 gallon of milk now costs $3.98. Few people would notice, and it would be impossible to attribute 20 cents of savings on a $50 grocery trip to anything in particular. And from a macroeconomic standpoint, it's unmeasurable against all the other factors to be included (commodity pricing, inflation, etc, etc.)

Babwa Wawa: cmunic8r99: Yes, in aggregate, this reduces a multi-billion-dollar revenue stream from retailers to banks by 47%. But it's still a fraction of a percent of overall revenue.

FTFM.

Babwa Wawa: cmunic8r99: On a single transaction, yes, it may be below the noise level. (On a $10 transaction, it's 2.5%, though).

But in aggregate, it's definitely not below the noise level; otherwise, why would the banks feel the need to recoup the lost revenue related to the fee change by alienating their customers charging their customers debit card fees?

You've got me in the unenviable and alien position of defending retailers. But I'm not sure what you would have them do.

Yes, in aggregate, this reduces a multi-billion-dollar revenue stream from retailers to banks by 47%. But it's still a fraction of a percent. Maybe your grocery store did plow the savings back into price reductions after all. But that means a $4.00 gallon of milk now costs $3.98. Few people would notice, and it would be impossible to attribute 20 cents of savings on a $50 grocery trip to anything in particular. And from a macroeconomic standpoint, it's unmeasurable against all the other factors to be included (commodity pricing, inflation, etc, etc.)

So, where is the line that has to be crossed before it gets passed to the consumer?

elchip: I actually like gutting the tax code in principle, but here's the problem.* For the income tax portion: In 2007, total Adjusted Gross Income on all income tax returns was $8.7 trillion. Since Cain's plan would exempt investment income, but would have no other deductions, that brings taxable income down to $7.4 trillion. A flat 9 percent tax would therefore have yielded about $665 billion in income tax revenue.

* For the corporate tax portion: In 2007, there was a total of $1.3 trillion in reported corporate income subject to tax. A flat 9 percent would have yielded $112 billion in revenue.

* For the sales tax portion: I used generally accepted estimates of the revenue generated from a value-added-tax (see here and here, for example). Those estimates suggest that a broad-based 5 percent tax on goods and services would generate about 2 percent of GDP in revenue. That implies that a 9 percent tax in 2007 would have generated about $500 billion.

* Together, then, the 9-9-9 plan would have generated a bit less than $1.3 trillion in total federal tax revenue. That may sound like a lot, but it's only 9.2 percent of GDP. In 2007, we actually collected 18.5 percent of GDP in tax revenue. In other words, the 9-9-9 plan would cut federal revenue in half!

$1.3 trillion would fund Social Security and Medicare. And that's it. No Department of Defense. No other departments or agencies. No interest on the debt. No Medicaid. No veterans' benefits. No Medicaid. Nothing else.

His plan literally needs to be 27-27-27 in order to work.

Wow, good link and info, that's an eye-opener.

cmunic8r99: So, where is the line that has to be crossed before it gets passed to the consumer?

It's not whether it got passed on, it's that nobody can tell whether it had an impact on prices. Anybody who claims that it either was or was not passed on has absolutely no hard evidence for their stance, because it's such a tiny fraction of overall retailer revenue and cost to the consumer, and it's dwarfed by other far more elastic pricing factors.

The more or less proven economic theory is that in free markets with low/no barriers to entry, the cost of goods and cost of sale always get passed on to the consumer. But the impact of the cost of sale decrease associated with debit fees is unmeasurable on a macro- or micro-economic basis.

Whoever set the expectation that this would be something the consumer would notice on his or her bottom line was being deceitful or idiotic.

elchip: His plan literally needs to be 27-27-27 in order to work.

What a coincidence. That's just how I like my women. Hell, with the hourglass, gimme a cylinder anyday.

/what?

elchip: His plan literally needs to be 27-27-27 in order to work

Which is obvious to anyone familiar with the numbers. Also why it's such bumper-sticker bullshat.

I_C_Weener: Hope....Change....the bumper sticker that shaped our last 3 years of policy.

How would a law saying "Hope & Change" be implemented? Bumper sticker slogans are dumb, but bumper sticker slogans as the beginning and end of policy are dumber.

elchip: The argument is, there's already a premium "baked in" to the prices of all goods because of the 7.65% payroll tax that employers pay, as well as the 15%-35% corporate income tax that employers pay.

Whether eliminating those will add up to reflect a 9% decrease in prices is debatable. Indeed, whether business will slash their prices due to paying lower taxes is debatable.

Oh, I get that. But in making these invisible taxes "visible," he's encoding into law higher rates on poor folks. You might argue that they're there, but we're not bound by them now in how we treat poor people.

You know the main reason that Cain's 999 thing will fall flat? I mean, other than the fact that it's unworkable, would explode the deficit, and transfers the tax burden overwhelmingly to the poor and middle class? Here's the thing: A whole lot of people think that because they get an overpayment refund each year, they're "getting money back" rather than "paying". It's a psychological thing. The 9% sales tax would be in everyone's face, every day. Unless exempted, gasoline would go up about 30 cents in price (at current prices). That's certainly noticeable. A 50 dollar restaurant bill would go up by $4.50 and unless you're one of the few people who tip on pretax price, your tip would go up by 9% too, unless you decide to screw with the waitstaff because YOUR taxes went up.

$25,000 car? Extra $2,250. In addition to your state tax (mine's 7%).

And if NOTHING is exempted except "used" goods, how will they class houses? If you buy a house that someone already owns, will they not tax it? If you buy a new house, will they levy a 9% tax? Do you have any idea what that would do to the new house industry?

Cain's entire excuse and explanation for why it "might not" hurt the poor and middle class is "used goods aren't taxed". So only the wealthy would buy new goods? That might be a boon to the flea market industry, but Cain's farking insane if he thinks that, for example, the clothing industry wouldn't take it right up the ass.

Idiotic, unworkable plan.