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Reaction to Cain’s 9-9-9 and a Different Way Forward

Like many conservatives, I am not very thrilled with the crop of candidates I have to choose from this time around.  They all have their problems.  These problems run the gamut from simple electability to deep concerns about their policies.   I can divide the candidates into two categories:  ones I could stomach voting for and ones I couldn’t. (Some would be easier to stomach than others, obviously.)  To put that more directly, there are a handful of candidates who, if nominated, could conceivably keep from voting in the 2012 election for president at all.  You certainly wouldn’t hear me advocate for them.  Are they better than Obama?  That’s the problem:  are they?

Herman Cain is in the category belonging to “I can stomach voting for him” and the subset of that category, “I can even speak a kind word about him and am comfortable advocating for him- and will.”

His 9-9-9 proposal has a simple and important premise:  the elimination of the Federal tax code and starting over.  Amen, brother.  Preach it.

However, the notion of a national sales tax is abhorrent to me.   I do not feel reassured by assurances that the 9% tax will not in later years be increased.  If we know anything about how the US governments work (and the plural is intentional; I am counting local and state governments as well), a tax will always go up.  It never goes down and it never goes away.   This is the real world, not fairytown.  We know what is going to happen.  We know it. 

Likewise, we know that the corporate taxes will be passed through to consumers.  They always are.  The 9% corporate tax is effectively still a tax on the individuals.   It is indirect, and takes a minute or two of thinking through, but it is still the fact of the matter.  So, Cain’s plan is presented as removing hidden and buried taxes, and indeed does in many ways, but still has this whopper of one that means directly and indirectly we’re all going to be paying 18% plus state, county, and local taxes.

I understand that Cain’s 9-9-9 plan is just phase one in a more powerful overhaul, but I am leery about any plan that cannot be attained within a single term of the presidency.  Moreover, we cannot count on the legislators to get behind it, or sustain it once it gets going.

So that’s a pickle, right?  There pretty much isn’t a plan out there that can be rolled out within a single term with the assurance that the legislative branch will implement it as proposed (and not load it with 2,000 pages of caveats).

So what to do?

Suck it up and vote for Herman Cain.

And consider a different plan that actually tackles these issues head on and effectively ensures that the plan comes to fruition.

The plan is simply this:  deny the Federal government the right to collect individual and corporate taxes, period.  Instead, the Federal government would collect funds from the states.  The states in turn would be in charge of collecting the taxes that would then be sent along to the Federal government.  How the states collect that revenue would be entirely up to each individual state.  Each state would be assigned an ‘amount due’ based on some kind of objective and reasonable criteria, like for example, on a per capita basis and a calculation of that state’s particular burden on the Federal budget.

We may surmise that the average tax load on each individual would be about $8,000 if we look at this chart posted at Wikipedia.  For a person making $45,000 a year, that is right back to the 18% which is the likely effective taxation provided by the 9-9-9 plan.  There would still be some of the other problems that seem to be implicit in Cain’s plan, but there are some distinct advantages.  Most importantly, it harnesses the natural behavior and attitude of humans as they really are, which will have the inevitable effect of reducing the size of the Federal budget (and consequently the burden on the states) and its extensive and never-ending over-reaching.

Let’s talk about why this would be the case.

First of all, by putting the states in place as the ones interfacing between the Federal government and the individual, a huge check and balance is introduced.  No one of us have any kind of clout with any Washington politician.  Even if you managed to convince your local house Representative to see things your way, that is a long way from a 200+ vote majority.  In other words, you basically have to persuade some 200,000,000 of your countryman to see things your way (and then cross your fingers).    If the individual US state is your advocate, you have to persuade a much smaller number, in most cases perhaps 1-3 million people, although strictly speaking this is still down through representation- ie, your local district state assemblyman only answers to about 30,000.  Now we’re getting somewhere!

And the sole leverage of your Federal representative is his vote.  On this view, the state not only is the intermediary and advocate, but it has the leverage to back it up:  it controls the purse strings.    If the Federal government is going to go amok (going?  lol) the states have the ability to starve the beast, or challenge it, or otherwise play hardball.  This is the sort of thing that none of us can do.  We’d just get thrown in prison.

On a fair per capita basis and a reasonable assessment of a state’s burden on the Federal budget, there will, of course, be an incentive for the states to minimize its footprint on the Federal budget, because, after all, it is the state that has to round up the money to send along to the Feds.  There will also be less inclination to accept Federal government funding for things (ie, high speed rail!) because instead of money seemingly appearing out of thin air and descending on a state from who knows where, it will be crystal clear where the cash is coming from.  If you accept $500,000 from the Feds for a project, that is a $500,000 burden more that state has on the Federal budget, which that particular state will now have to generate tax revenue to pay for to send it along to the Federal budget.

Clearly, at some point in that process, some genius will observe that it is stupid and foolish to send money to the Feds that’s just going to be sent right back.   But this is exactly the kind of thing that is happening all over the country, with the individuals in the states sending money to the Feds, only to have the Feds send it back to the states for various projects.  That money comes from the states own citizens and the citizens of other states, but the relationship between any particular dollar with any particular project is hopelessly obscured.  Which they want.

Why not just keep that money to begin with and handle the project ‘in house’? By making this relationship transparent, a particular state can decide for itself the merits and value of some of these projects.  And if they want the project to go forward, then by all means, they can get input from their citizens directly and pay for it out of their own resources.  As in most cases it should be.

The effect of the above proposals would be an eventual and inevitable limiting of Federal overreach and give the American citizens a more robust check and balance on that overreach than they currently have.  This in turn will reduce what the Federal government needs for its citizens on a per capita basis and states will more cautiously consider its imprint on the Federal budget, and will tend to back only those types of programs that truly can only be best done at the Federal level, eg, defense of the nation as a whole.

But there is more.  If a state does not advocate for its citizens, or erects all kinds of oppressive taxes, its citizens have a few more options available to them.  In the first place, the whole notion of “Vote the bums out!” has a whole lot more teeth.  Here again we see the practical benefits of having to only persuade a million or so people, and the 30,000 of your own neighbors, rather than the whole country.  In the second place, if a particular group of citizens continues to urge the state to back certain Federal programs that you don’t support- and you can’t persuade your neighbors- you can go to another state that does.

I am here assuming that the good citizens of California and New York will continue to want to nurse at the Federal nipple and I say more power to them, if they are essentially financing it.  And if you live in one of those selfish states like Texas that fights the Feds tooth and nail over the funds it is demanding, and wished you lived in a more compassionate state, then the aforementioned states will be ready to welcome you.  The point is that you have options, whereby you can more easily vote with your feet whereas at this point the Feds are going to get you for what they’re going to get you for based on how much you make, save, and invest, wherever you are.

It’s all about checks and balances, and the ones we’ve got have been severely undermined.  There is a need to introduce some more, and fast.

Speaking of that:  in order to really give the states some ‘check and balance’ teeth, we then repeal the 17th amendment to once again have the states appoint their Federal senators , once again ensuring that the interests of the states themselves are represented in our Federal legislature.

Clearly, none of this can be done without amending the Constitution.  Precisely.  Amending the Constitution is something that can be driven along at the state level rather than only at the Federal level.  The states can force the issue, ensuring that action is taken.  If you have a president ready to push such self-limiting (Cain’s phase two already proposes elimination of the 16th amendment… so what’s one or two more amendments?) we can have a reform that will transcend the terms of the elected representatives and stand up to the changing winds of the political parties.

I believe this is a killer of an idea.  Now it just needs something cute and clever for a name.  🙂

 

 

 

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    • Don Hank on October 21, 2011 at 10:13 pm

    It probably doesn’t matter who collects the taxes. As long as they are oppressive and used to support abortions, a useless Homeland Security agency that harasses old ladies in airports, endless wars, etc, who cares?
    What I want to see — and it could get traction if the right people got behind it — is a plan to hold a referendum on all non-essential spending.
    Anyone who wished to see spending and hence taxation go up, would have the right to vote on that proposal.
    BUT only tax payers would be allowed to vote on such a spending bill.
    We would see the budget balanced in short order.

    • Alex on October 22, 2011 at 6:28 am

    Who among us pays neither income, nor payroll, nor sales taxes? The only people you’re excluding would be people who refrain from any participation in the economy at all; in which case, wouldn’t it be simpler and cheaper just to say that everyone would have the right to vote on it, rather than intrusively spending money to try to determine who participates and who doesn’t?

    • Anthony on October 22, 2011 at 7:47 am
      Author

    heh who among us, indeed.

    Don-

    My proposal would have the states do more than just collect taxes. They would be assigned a share of the Federal budget that they would have to come up with based on some common sense formula, eg, per capita and actual burden on the Federal budget. How the state met that share would be up to the state. But that is not the whole of it.

    A state is large enough that it has the kind of clout necessary to ensure that its citizens are represented in a meaningful way. Unfortunately, the current system reduces our influence to basically shaking our fists at the air, because no 1 person can change the minds of 150,000,000+ of their countrymen, which is what is necessary in order to see one’s ideas get implemented. However, 1 person persuading 50 persons is much more practical; 1 state amongst 50.

    Also, that state has leverage. If a state deems the abuse too extreme, it can force the issue by refusing to release the funds, and if other states go along, then, well, the feds are in a real pickle. People can easily be thrown in jail as tax protestors. States, not so easily.

    In the meantime, we as citizens have much more leverage in persuading our local representatives to reflect certain perspectives at the state level.

    In a nutshell, I think this is the classic Tea Party throw down: “No taxation without representation!” But there is a kind of representation that is effectively no representation at all, and that is the kind we have today. My proposal would change that.

    • Alex (Patron Saint of the Confused) on October 23, 2011 at 11:27 am

    Hey, I’ve been taxed being able to vote for nearly thirteen years now. It’s not as unusual as you might think! 🙂

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