Saturday, October 15, 2011

Why Does Herman Cain Hate America - Cain’s Sales Tax Would Hurt Consumer Spending ’For Some Years’

Cain’s Sales Tax Would Hurt Consumer Spending ’For Some Years’

Republican presidential candidate Herman Cain’s plan to create a national sales tax would hurt retailers, threaten economic growth and shift the tax burden onto the middle class and poor, tax experts and business groups said.

Cain’s so-called 9-9-9 plan, which would replace the current tax code with a system of three separate taxes of 9 percent each, has boosted his popularity among voters. The former chief executive officer of Godfather’s Pizza has surged in polls in recent weeks, and a Wall Street Journal/NBC News poll released this week put him in the lead.

Tax experts and business groups interviewed yesterday don’t like his tax plan as much as voters. They said it would shift the burden to middle-income and poor families and would hurt sales across the economy, at least in the short term.

“There will be a noticeable decline in consumer spending for some years,” said Rachelle Bernstein, vice president of the National Retail Federation, based in Washington, in an interview. “We know that that has an impact on consumer spending and GDP.”

Consumer spending accounts for about 70 percent of the U.S. gross domestic product.

Cain has proposed a 9 percent sales tax on all goods and services, another 9 percent on personal income and the third on corporate gross income. During the debate in New Hampshire sponsored by Bloomberg News and the Washington Post on Oct. 11, Cain said the proposal is his top policy goal.

Expanding Tax Base

“It expands the base,” he said during the debate. “When you expand the base, we can arrive at the lowest possible rate, which is 9-9-9.”

That expansion means that long-standing tax breaks, such as the mortgage interest deduction and the exclusion from income of employer-sponsored health insurance, probably would vanish.

Although Cain hasn’t released extensive details of his plan, it also would probably add a sales tax on many products and services, such as new homes, financial transactions and even doctor visits. Several business and trade groups contacted by Bloomberg News declined to comment on the plan because they didn’t want to take a position on the presidential race.

Impact on States

Michael Bird, federal affairs counsel for the National Conference of State Legislatures in Washington, said the sales tax, on top of what state and local governments already levy, could make it difficult for them to adjust their tax rates.

“Would the 9 cents create a ceiling, or would states say, now we have to lower our costs because the cost of goods and services are higher than a lot of people are comfortable with?” Bird asked. “It’s hard to say.”

Robert Dietz, an economist at the National Association of Home Builders, said new homes sales would see a double tax increase. The house itself would be subject to the 9 percent retail sales tax, and then buyers would have to pay tax on the interest on their mortgage, as opposed to now when they can deduct that interest from their income.

“Layering a new tax on top of the sale of a newly constructed home would certainly be bad for the housing market,” he said. Each new home creates the equivalent of three full-time jobs for a year, he said.

Trucking Hit Hard

Small trucking firms and drivers may be hit hard by a sales tax on fuel piled upon already-high excise taxes, such as the 24.4 cent-per-gallon levy on diesel fuel and a surcharge already applied to new heavy-duty vehicles, said Todd Spencer, executive vice president of the Owner-Operator Independent Drivers Association, which represents truckers under contract with larger U.S. companies such as Landstar Systems Inc.

Further taxing fuel “may be a hard sell for Mr. Cain at a time when diesel is headed back towards a $4 per gallon average,” Spencer said. “Adding a 9 percent sales tax and a 9 percent VAT (value-added tax) onto the 12 percent federal excise tax truckers already pay on new trucks and trailers would certainly cause them to think twice about buying new equipment.”

“There’s a lot in this plan that’s just kookie,” said Steve Wamhoff, legislative director at Citizens for Tax Justice, pointing out that it doesn’t tax dividends or inheritance at all, but does tax wages. “It makes the tax system much, much, much more regressive than it is today.”

The proposal would hit middle- and low-income people with a larger tax burden because they spend more of their money on food, clothing and household goods and have less left over to save and invest, which wouldn’t be taxed.
Herman and Anti-American right-wing zealot Rupert Murdoch's Fox News "likes" Herman's plan so end of story. Just disregard the facts. If conservatives started likling fact based economics we might actually pull out of this recession, but they don't want that because it doesn't benefit the cult of conservatism.

The 53 Percent Take on the 99 Percent - see photo at top of Anti-American proto-facist Erick Erickson.

But Think Progress takes their analysis a step further, looking into the claims of hardship made by Erickson:

The three jobs Erickson wants you to believe he scrapes by on include occasional paid opinion blogging at, a lucrative television contract with CNN, and a radio gig that paid the previous host $165,183 a year…The house Erickson can’t sell? Bibb County, Georgia records reveal that Erickson just bought a new $374,900 house in February of this year, and owns another that, according to an estimate by the website Zillow, might be worth slightly less than the amount he paid for it in 2001. And it’s likely that Erickson’s CNN job alone provides him with a personal driver and covered travel expenses when he needs to appear on the show.

Interestingly, many of the claims made in the We Are the 53% blog echo those made in the We Are the 99 Percent blog: “got laid off”, “slept in my car because I couldn’t afford housing”, “after a mildly successful career, I lost everything in 2009”.

It’s not that the 53 percent people haven’t suffered, these pictures seem to say. It’s that having clawed their way out of crisis, they now see virtue in their suffering. One commenter on Think Progress site summarized the mindset:

Look at me. I ran through a field of bear traps and only had to gnaw off one limb. Builds character. 

Anti-American conservative like Erickson want America and its families to have a race to the bottom to see who can live without a living wage, food and medical care. The prize seems to be you get the title of the toughest wage slave idiot on the planet. You get to be the kind of worker they used to call serfs.