Who Knew Conservatives Loved the IRS?
If there's one thing that the ongoing national debate over Herman Cain's 9-9-9 plan has exposed, it's how much some conservatives love our current tax code and its enforcement arm. Who knew?
Okay, that may be an exaggeration -- but it is not an overstatement to say that much of the criticism of Cain's plan coming from the right is based in a stunning comfort with and knee-jerk reliance on our current system. It's as if there is an undercurrent of belief that our IRS system is very, very good and can be replaced only by perfection. At the very least, much of the negative analysis is based on picking one aspect of the Cain plan and applying it to our current reality as if the 9-9-9 plan was ever designed to be applied piecemeal. This notion can come from only an intellectual vacuum where tax realities do not change human behavior.
Whether the 9-9-9 plan is all that Cain (and Art Laffer, Paul Ryan, Steve Forbes, and The Club for Growth) say it is not the point here. The point is that it is hypocritical and shallow and misguided for any conservative to trash it. By our nature, conservatives want less government intrusion into our lives, and we want more liberty, and we believe in economic growth and opportunity and self-determination. We want, as Rick Perry says, for Washington DC to be "inconsequential in our lives."
By that crucial measure -- which is key to what supposedly unites all of us on the right -- 9-9-9 is one heck of a starting point. Whatever you may think of the details, 9-9-9 is quintessential Tea Party in nature (as are the Fair Tax and the Flat Tax, for that matter).
Besides, a 9-9-9 plan is incredibly transparent and uncomplicated, and complication and murkiness are the atomic weaponry of bureaucrats. More on this later.
For now, there are a lot of ways that Washington dominates our lives and attempts to dictate our behavior. The tax code and the IRS are, without a doubt, the big sticks in Washington's arsenal for doing so, however. There can be no single measure as key to regaining our liberty than any that drives a stake through the heart of our current tax code and collection system. Anything else is merely nibbling around the edges. Cain's 9-9-9 plan drives this stake, as would the Fair or Flat Tax proposals.
As such, any and all of these plans should be given meritorious and serious consideration. And by serious, I mean that we have to understand how the freedom from a complicated and punitive code would dynamically change everything about pricing and behavior as we know it for the better. This is the limited government pro liberty issue.
Two of the most pervasive objections to Cain's plan revolve around the sales tax piece. These are the same objections most folks have with the Fair Tax plan as well.
The first is that a 9% sales tax automatically raises the price of everything by 9 percent, and therefore is punitive and regressive. Well, if we did nothing else but add a 9 percent VAT (value-added tax), then that would be the case. But 9-9-9 -- and the Fair Tax -- do no such thing.
To put it simply, huge and complicated taxes are priced into everything we buy today. Today's car that costs twenty-five thousand does so because at every level, the parts manufacturers and the shippers and the dealers and, of course, the auto-makers all are engulfed in our oppressive tax code as it exists. Some in-depth studies have estimated that this "imbedded" cost is something like 22% or 23% on average. You don't "see" that tax on a line item, but you are already paying it.
But it goes deeper than that. Our incomes are part of that massive tax structure, too. Whoever pays our salaries -- be it we ourselves or some other corporation -- has to pay us while maneuvering that awful tax code as well. In other words, the simple application of a 9% sales tax would cause net incomes to go up. Indeed, every other cost component in that twenty-five-thousand-dollar car would go down.
Next, there's the idea that a sales tax gives future congresses another avenue by which to raise our taxes. To be frank, this risk is inherent in any tax plan ever devised. No legislation ever crafted in our history is 100% bulletproof against future congressional action.
But actually, this is 9-9-9's biggest advantage. Sure, there are three avenues of taxation in 9-9-9, as opposed to only one avenue now. However, the one we have now has seventy thousand pages of compliance. It is manipulated every day by Congress and we never even know about it until the taxes are due. How can Michele Bachmann worry about the "devil in the details" of 9-9-9 with a straight face in light of this? You can bet that right this minute, some lobbyist or liberal congress person is using that code to dig into your wallet in a way you'll never hear about.
Contrast that with the stunning simplicity and transparency of 9-9-9. If anyone wants to change it to 12-12-12 or 9-15-9 or whatever, we all instantly understand that person's intentions. In other words, the supposed weakness of Cain's plan is really its strength. The key is having a simple plan we can all understand -- and to keep electing conservatives to keep it that way. All of this can only be good for those of us who cherish liberty.
As such, I am all in favor of any bold candidate and his or her ideas on radical tax reform, and I am all in favor of legitimate debate on the merits. And when the dust settles, I am fully confident that 9-9-9 will at least pass muster on the cause of liberty and reduced government influence in our lives, if not on all the details.
The author has done some writing for Herman Cain and is working with Mr. Cain on his next book.