I just returned from London where one of the topics du jour was Herman Cain. There is a great deal of fascination about a man about whom little is known on the international stage. However his 9-9-9- proposal is generating a great deal of debate as to whether it would be feasible. However, no one can forget that the UK in 1973, under a Conservative Government, added a Value Added Tax (in essence a national sales tax) as a new source of revenue to help offset the cost of the National Health Service and other expenditures.
The people were assured that it would never exceed 10%; as a matter of fact in 1974 the rate was pegged at 8%. As part of the package personal income tax rates were decreased.
However by 1979 (a mere five years later) and under a Labour Government, the rate was raised to 15%. The personal income tax rates were also increased.
Today the VAT is at 20%, the personal income tax rates are: 40% of taxable income above $55,650.00 and 50% of taxable income above $230,000.00. There is little wonder why the British economy is stagnating.
While I admire the simplicity of Mr. Cain's proposal, he must address the long term viability of a national sales tax still coupled with an income tax. There must be either one or the other or at a minimum require a 2/3 vote of Congress to raise either tax, something that would require a Constitutional Amendment. To leave both at the mercy of future Congresses and Presidents without a significant braking mechanism is a disaster waiting to happen.