Thursday, October 20, 2011

Stephen Moore:The easy fix for the 9-9-9 tax plan.

There has been something very interesting that has come out recently about GOP's Herman Cain's 9-9-9 tax plan.   We find out that this was no half baked scheme pulled out of thin air.   We see now that the two main developers of the plan are two big economic heavy weights on the scene. Art Laffer and Stephen Moore. 

Art Laffer, is a renowned economist who gained prominence as a member of president Ronald Reagan's economic advisory board. 

Stephen Moore is a well known economic analyst who has been president of the Club for Growth from 1999 to 2004. He is currently a member of the Wall Street Journal editorial board.  Moore is an advocate for free-market policies and supply-side economics.

From the Journal of American Enterprise web site we find that Stephen Moore has soured on the idea of a national sales tax because of so much opposition from people on all sides of the aisle and an almost impossible task of convincing the American people that it is viable. He said in an interview with Laurence Kudlow there is an "easy fix".

From Stephen Moore's interview with Lawrence Kudlow: "He’s going to have to replace that national sales tax with a 9 percent payroll tax. And if you do that it’s a total winner. … I’m surprised how hostile people are to the sales tax. When we designed this plan, I thought people would go along with the 9 percent sales tax. But the point is they won’t. And why not just do a payroll tax." [instead of the national sales tax]

Wow, what a very intriguing and interesting idea.   This will mollify those who are totally opposed to the introduction of a new revenue stream for the politicians in Washington to have, and  yet still add enough in revenue to make it revenue neutral.   Plus it would have the same advantages of tearing up the current tax code, making taxes simpler and flatter, and most importantly eliminate the capital gains tax and inheritance "death" tax.   The double taxation on ones wealth is ended and so will be the use of class warfare rhetoric that could be used by Democrats.   Also, if this actually passed, the idea of picking winners and losers by the politicians in Washington would be over.  

The original 9-9-9 plan I think is a non starter.  I just finished watching tonight's debate and  the idea of a new national sales tax  was attacked by every other Republican candidate, and I think effectively.

America should, though, give what could be a new and revised 9-9-9 plan, a close look. 


JoeBillScott said...

I read Moore's op-eds in the Wall Street Journal whenever he writes one. It's amazing to me how liberals (I see this with my own eyes weekly on Shabbat) view common sense from the WSJ as unreadable conservative propaganda. People don't even read anymore.

I just threw up a little . . .


Big Mike said...

So, true Rafi. Thanks for your comments.

AST said...

I'd be more open to this version, but I still think the system doesn't need another big shock right now. This will take years to pass if it ever does, and will have to have regulations drawn up to implement it. Washington can't turn on a dime. Neither can the economy.

Ron Paul wants to cut the budget by $1 trillion the first year he is hypothetically the president. Same problem. It just creates chaos.

First, work on repealing Obamacare and restoring a sense of predictability for businesses.

Assuming that gets done, the problem of rising health care costs will have to be addressed somehow. I liked Cain's suggestion that HR 3400 be used as a basis for reforms. It was submitted in 2009 in July as a GOP alternative to what was coming with Obamacare. I haven't read the whole thing, but I liked the summary.

I think it would be a good thing to take employers out of the loop on health care. As it is now, providers have to deal with insurers and a federal bureaucracy and the insurers serve the employers, not the patients. The employers put pressure on the insurers to cut costs and they in turn put pressure on the providers and the patients come last. One of the things that annoys me going to the doctor is that when I ask what the charges are, they just say it's taken care of, and I have no idea how much I'm spending. I'd like to get the federal bureaucracies and the employers out of the picture by giving people a tax credit for savings to be set aside for medical expenses. Employers could also offer donations to such accounts as a fringe benefit as before, but leave the choice of insurers up to the patients. If patients know what things cost, they will shop around for providers and do without unnecessary treatments, while providers will have an incentive to control costs.

I've heard lots of good ideas, but none of them can realistically implemented in a single year. Very few drastic changes can be without creating a lot of FUD (fear, uncertainty and doubt), which is why entitlement reform is so slow coming.

I know Art Laffer's reputation and I see Moore on Fox frequently since he works for the WSJ which is also owned by Newscorp. I think they're both sensible, conservative people, but this really is still a theoretical idea that has a long way to go before it can replace our current tax mess. I don't trust anything like this without a Constitutional Amendment, because the Democrats will come back into power eventually and I wouldn't want them to muck it up.

Big Mike said...

Very good points AST!