Herman Cain has proved to be a powerful conservative Presidential candidate with many good ideas. There is much to like about him—although I am on record as a supporter of Michele Bachmann, it doesn’t stop me from seeing the merits of other candidates, even those with whom I disagree about some important issues.
Rather like Dr. Walter Williams, about whom I’ve written before, Cain is a black man who grew up in relative material poverty, but became prosperous thanks to his hard work, initiative, and the great opportunities provided in this country. He earned a BA degree in mathematics and a Masters degree in computer science, and has worked on ballistics for the US Navy. Then he showed his business acumen at Burger King, where he turned his region from least profitable to most profitable. After that, he became CEO of Godfather’s Pizza, which was at that stage a dying company. But he turned it right around to become profitable.
All this is a huge contrast to the Community Organizer in Chief, who has never run so much as a lemonade stand. It is also a refreshing contrast to many leftist victicratic race baiters like Je$$e Jack$on, Al $harpton, Harry Belafonte and Cornel We$t. Cain urges blacks to divorce the Democratic Party, aka the Party of slavery, KKK, Jim Crow, wrecking black families with welfare, and aborting mainly black babies, and says, “I left the Democrat plantation a long time ago.” (Compare my early Patriot column Conservatives and blacks.)
Also, Cain has been married to his wife Gloria for 43 years (I dissent from some who think that Bill Clinton’s infidelities are irrelevant to his Presidency: no, if someone can break the promise of fidelity to one’s spouse, then why trust him to honor his promises to his country?). And he is an associate minister at Antioch Bible Church in Atlanta and is a talented gospel singer.
Cain’s economic heart is also in the right place. He points out, “spending is out of control in Washington, D.C.” and supports personal retirement accounts to replace the Social Security Ponzi scheme, just like the hugely successful programs of Chile and Australia. Cain also deserves special commendation for being a leader in the fight to defeat HilaryCare, the failed precursor to Obamacare, even out-debating President Clinton.
And Cain sees the crushing tax burden that discourages job creation, as he explains in a January interview:
“First of all, make the tax rates permanent, because extending them for two years just extends the uncertainty hanging over this economy for two more years. Secondly, I would ask the Congress to lower the top corporate-tax rate from 35 percent to 25 percent. Why? Because we are the only developed nation in the world that has not lowered its top corporate-tax rate in the last 15 years. The other thing I would do is lower the capital-gains-tax rate, because we punish risk too much in this country. We’re never really going to stimulate the economy in a big way until we do that.
Here’s one piece of low-hanging fruit that just amazes me that Washington doesn’t do it — it’s kind of like a no-brainer. Profits that have been generated overseas by multinational corporations — if they bring those profits back to the United States in the form of repatriated profits, then, in many cases, companies are going to have to pay double taxation. So they leave the money offshore. The last time we had a tax holiday for repatriated profits, back in 2003 under President Bush, nearly $350 billion came back into the country. It’s been estimated that we now have over $800 billion that could come back into our economy.
Michele Bachmann likewise agrees with this priority, listing it as her #1 point in her Eleven Points of “American Jobs, Right Now” Blueprint:
REPATRIATION. More than 1.2 trillion United States dollars could be brought back to America in days as an immediate “stimulus” if the government would zero out the tax rate on that money until December 31, and then permanently keep it here in the U.S. if taxed at a rate of 5 percent. Foreign earning totaling over $1.2 trillion is more than the President’s failed stimulus and it won’t come out of taxpayer wallets. It would increase the value of the dollar, provide valuable capital for the job creators in this country and pump tremendous amounts of money into our economy.
Compare also my Patriot column Debt ceiling: Obama’s demagoguery vs economic reality. It should be common sense that money confiscated by the government is money that can’t be paid to employees. But liberals are motivated not by common sense but by envy-mongering.
Cain’s 9,9,9 tax plan
Many commentators have pointed out that not only are the rates too high, but also the huge compliance costs which detract from productive activity. In my Patriot column Taxing the “rich”? No, ruining America!, I documented how Americans waste 7 billion hours, or “the equivalent of 3.7 million employees working 40-hour weeks year-round without any vacation.” And this costs individual taxpayers $103 billion for individual taxpayers, not counting state, local or corporate taxes.
Seen in this light, it is no wonder that Cain proposes a system that not only has lower rates, but is also far simpler. His 9,9,9 plan would replace the current federal tax system with 9 percent personal income tax, a 9 percent corporate tax, and a 9 percent national sales tax. He chose 9 percent, he says, because if the 10 percent tithe was good enough for God, 9 percent should be good enough for government.
This sounds very good on the surface. As it stands, it would be a great improvement over the current system. But as many economists have pointed out, there is great potential for harm if the government has a third way to confiscate our wealth: the national sales tax.
After all, Cain can be president for only eight years at the most; he has no control over what his successors might allow for future spendthrift Congresses. That is, there are now three types of taxes that Congress can raise, possibly a little at a time, and then we see a greater tax burden.
This is no idle speculation. Cain’s proposal is rather like Europe’s VAT (value-added tax), which has these problems that Dean Clancy explains (and check out the graph in this link):
“A VAT is a form of national sales tax that is collected at every stage of the process from the initial sale of raw materials to a manufacturer to the final sale of a finished product to an end-consumer. It’s the most insidious of all taxes, because it is built into the price of everything and consumers can’t see how much of the price is due to the tax. When taxes rise, prices rise, but consumers mistakenly assume that’s just market forces at work. Politicians love a VAT: it lets them take a lot more money out of our wallets. And VATs usually exist side by side with income taxes, not in lieu of them. Taxpayers should hate VATs for the same reasons politicians love them.
“European countries have VATs; we do not. European countries collect a lot more in taxes than we do. These two facts are related.”
In fact, Europe gouges twice as much from its people as the US. This explains the bloated big governments and moribund economies of Western Europe.
Then think of other taxes which also started small. Our Income Tax started in 1913, but at least the tax gougers then had the decency to amend the Constitution by proper means (16th Amendment) instead of ignoring it as they do now. Furthermore, it was only 1 percent on incomes up to $20,000 (in today’s dollar equivalent). Its highest rate was only 7 percent, and this kicked in for incomes over $11,332,304 (also in today’s dollars). It didn’t take long for Congress and the Democrat President Woodrow Wilson to use the excuse of war to hike up the top rate to 73 percent. This of course crippled the economy, and this wasn’t reversed until Harding and Coolidge slashed the tax rate, with an economic boom resulting. But even they couldn’t get back to the original low rates. And to put this into perspective, our Founding Fathers revolted against King George III over only a 2.5 percent tax!
To get back to the Social Security Ponzi scheme: this has been a lie from the very beginning. The 1936 government pamphlet on Social Security stated:
After the first 3 years — that is to say, beginning in 1940 — you will pay, and your employer will pay, 1.5 cents for each dollar you earn, up to $3,000 a year. … Beginning in 1943, you will pay 2 cents, and so will your employer, for every dollar you earn for the next 3 years. … And finally, beginning in 1949, twelve years from now, you and your employer will each pay 3 cents on each dollar you earn, up to $3,000 a year. That is the most you will ever pay.
How has that worked out? Similarly, sales taxes have usually morphed into VATs and increased both rates and overall taxation.
The 9,9,9 plan is a well-meaning plan by a decent man with great ability, and a plan that’s pretty good on the surface. The problem is what politicians are almost certain to do with it in the future, as is amply shown/demonstrated by history. Cain has forgotten the words of the 18th century conservative British statesman and philosopher Edmund Burke (a supporter of American independence):
“There is no safety for honest men but by believing all possible evil of evil men.”