The 9-9-9 tax plan is not an insignificant part of Herman Cain’s appeal among Republicans–everyone knows the tax code is maddeningly complex and telling people they’re three little digits away from having their problems solved is bewitching. The main knock on the plan is that it would redistribute the tax burden so that it falls more heavily on lower earners. While that’s general election poison, it might not be so toxic in a Tea-fueled primary. But Cain’s preferred method of taxation is a very different story.
9-9-9 essentially prescribes two parallel 9% consumption taxes–one on the production of goods and one on sales–in addition to a 9% tax on personal wages. Via Ezra Klein, here’s an instructive description:
…the latter two 9’s are effectively THE SAME TAX (a few details aside). Only ignorance and naive folk notions of incidence could make them look like two different taxes that are pointed at different players. Again, the “business tax” is a [Value Added Tax], which is basically just another way of collecting sales tax. Most experts would say that you can have either a VAT or an RST (retail sales tax), and that the choice should depend on enforceability and administrability issues, but that it’s nuts to have both.
Not only are these two versions of the same tax, they’re versions of a tax that conservatives absolutely despise. How much do they hate it? Here’s Heritage Foundation anti-VAT cheerleader J.D. Foster in April of last year, commenting on a symbolic “sense of the Senate” measure proposed by John McCain:
Enacting a VAT would be the crowning achievement as Obama and his congressional allies seek to recast the nation into a full state of dependency on Washington. Nothing less is at stake. If Americans have other ideas for the country’s future, then they need to challenge anyone running for office, anywhere in the country, to take a stand on the VAT just as John McCain’s colleagues did in the United State Senate. As they do it will become apparent to all that the United States is not VAT country.
Hyperbole, sure, but not because most conservatives don’t feel strongly about this. They do. (McCain’s measure passed 85 to 13.) It was over-the-top only because no one in the Obama administration ever actually suggested a European-style consumption tax. Herman Cain is proposing two of them.