Flat Taxes

[Sensei]

I think that every Republican candidate has supported repeal of the Patient Protection and Affordable Care Act as their first priority if elected. In addition, all of them (with the possible exception of Huntsman and Romney) have voiced their support for some form of the Fair Tax or consumption tax as the primary means to generate revenue. The question remains as to which candidates are willing to make tax reform their major priority after healthcare. Only Cain has made it a focal point of his campaign with the 9-9-9 Plan being a roadmap to the Fair Tax.

My point is that the healthcare debate is likely to turn nasty with close to 35% of the country wanting a single payor system and 46% favoring ObamaCare. I would not be surprised if some republican legislators from liberal states loose their seats as a result of the battle which would threaten the majorities needed to address other issues. Meaningful tax reform will likely require at least 1 constitutional amendment (balanced budget +/- some clarification of the 16th Amendment) which is nearly impossible with an evenly divided and polarized country. Perhaps the best changes of getting tax reform is if SCOTUS spares the republicans a lot of bloodshed by striking down the law without a legislative battle. This would provide the conservatives a lot more political capitol to be used on taxes and entitlements.

Thus, the next president will need to move quickly and not get stuck in the mud like Obama did after the healthcare debate. I have to give kudos to Cain for showing the balls to get in front of the issue with an actual plan before the other candidates. Sure, 9-9-9 has some warts, but it is unrealistic to think that we are going to someday wake-up with a Fair Tax without taking some risk and political causalities.

[hatt]

Just FYI for those who dont know, you are already paying an imbedded tax on everything you buy to the tune of about 22%. This is over and above the known sales tax. It comes from the taxes being paid by all of the companies that it took to bring the product to you. Taxes are a cost to them so they increase the price accordingly. So think about that every time you buy something

Just another product of the .gov education system. Everyone can comprehend that if a company writes a check, to another company, for a railcar full of raw material the consumer is going to ultimately pay for it. Now, magically, if the company writes the check to the IRS or some other government entity, the company bears that cost.

The FairTax is the way. Another benefit of it is that it taxes drug dealers, crooked politicians, etc that get their money under the table. You spend, you pay. And if you're not going to spend, there's no reason to be selling drugs or taking bribes. So they're going to spend.

[Sensei]

I guess it is time to resuscitate this thread since Rick Perry came out with his tax reform package which includes an optional flat income and corporate tax of 20%. People would have the option of filing under the current system which I see as a major weakness since the IRS would be left intact. Capitol gains and estate taxes go to zero.

Unlike Cain's 9-9-9 plan, the Perry Flat Tax is NOT designed to be revenue neutral. It is coupled with cuts in the budget down to 18% of GDP. This is another weakness since it is unlikely that such a severe cut in spending (about 20% spending cut given that we are at 24% GDP now) is not likely to get passed in the first term. In addition, should we really be cutting revenue at a time when we have a $14T national debt? Don't get me wrong, I normally believe that the federal government should collect only the amount of revenue necessary to perform constitutional duties plus a small buffer. However, cutting revenue now seems analogous to quitting your evening job when you have $500,000 in credit card debt. I much favor a gradual cut in spending (i.e. Mac Penny Plan) with a Balanced Budget Amendment, followed by a tax reform package that performs near the peak of the Laffer Curve until our debt is less than 20% of GDP.

Personally, I don't buy the criticism that Perry's fair tax is repressive on the poor. Unlike Ron Paul and Rick Santorum (both critized Cain's 9% sales tax as disproportionally harming the poor), I think the poor should be paying taxes so that they have some skin in the game. That's right - the free ride is over!