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Gary Johnson calls 9-9-9 plan an “apologetic, timid step”

October 21, 2011Posted in Blog, FairTax, Gov. Gary Johnson, Issue

October 21, 2011, Santa Fe, NM — In an opinion piece published Friday on the Daily Caller website, former New Mexico governor Gary Johnson has called Herman Cain’s 9-9-9 tax plan an “apologetic, timid step” toward the FAIR Tax Johnson has long advocated.

Calling Cain’s plan a “rest stop” on the way to real reform, Johnson wrote:  “Give credit to Herman Cain for throwing out an idea that has actually caused some debate in the presidential campaign about a real issue: Taxes.  Unfortunately, though, the criticism of his 9-9-9 plan is coming from the wrong direction.  The complaints are coming from candidates and others who, at the end of the day, are secretly defending the status quo. They are saying we need to reform taxes, but don’t go overboard.  No surprise there; the existing tax code is the politician’s best friend.

“The real problem with Herman Cain’s 9-9-9 plan is that it is an apologetic, timid step toward what America really needs in order to ignite our economic engine – replacing ALL federal taxes with one simple consumption tax,  commonly known as the FAIR Tax.

“Ironically, it has been widely reported that even Herman Cain views 9-9-9 as some kind of transitional step toward the FAIR Tax.  As the only candidate for president who is an unapologetic advocate of the FAIR Tax, I have to ask: Why does it make sense to settle for a ‘hybrid’ notion like 9-9-9, if the real objective is something else?

“Nearly everyone agrees that our current tax system is a major obstacle to job creation and real economic growth.   It is a confusing mess that not only stifles growth, but has become Washington’s favorite weapon when it comes to managing our corporate and personal behavior.

“In contrast, eliminating taxes on income and instead taxing dollars when they are spent, as with a FAIR Tax, does all the right things for the economy.   Federal taxes are eliminated from individual paychecks and business earnings, allowing both to make their own decisions about where their money goes.  If it is spent, it is taxed at 23%; if it is saved or invested, no taxes.  And for that money spent on necessities, regardless of income, the consumption tax is “prebated” to insure that lower income families are protected.

Mr. Cain’s plan, however, simply adds an additional tax.  The result is that a good idea becomes a bad idea.  Rather than eliminating federal taxes on dollars until they are spent, 9-9-9 taxes each dollar three times:  When it is earned by a business, when it is paid to an employee, and again when it is spent.  The whole idea of the FAIR Tax, which Mr. Cain claims to support, is to only tax that dollar once – and do so in such as way that rewards productivity, savings and investment.

“Also, Mr. Cain says 9-9-9 will throw out the existing tax system.  Actually, it doesn’t.  Somebody will still have to collect the 9% business tax and the 9% personal income tax – and that somebody will require reporting about who’s working and how much they are making. It might be a bit simpler, but still looks and sounds like an IRS to me.  The FAIR Tax, on the other hand, does allow eliminating the IRS.  In fact, the states could collect the tax and be compensated for doing so.  The Feds will have no reason to require reporting about employees or how much they are paid.

“The 9-9-9 plan is a perfect example of the kind of policy timidity that makes the status quo so difficult to dislodge.  For years, Herman Cain advocated the FAIR Tax. But once he entered the arena, he took a good idea and ‘moderated’ it into a hybrid something that proposes a little bit of new thinking, but hangs on to the old thinking that has gotten us into the mess we are in today.  I’m not sure what he’s afraid of.

“If throwing out the tax system and replacing it with a FAIR Tax makes sense, why do we need a 9-9-9 rest stop along the way?”

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