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Liking the man, the plan…not so much

Point? I don’t need no steenking point. Seriously, I saw the one picture, and the other popped into my head. ‘Sall.

About this here 9-9-9 plan Cain’s got: I don’t like it. It stands for 9% flat tax on individuals, a 9% flat tax on businesses, and a 9% national retail sales tax.

Apparently, the numbers work, but it’s that last one I don’t trust. The mechanism required to collect any national sales tax is exactly what’s needed to impose a VAT. And a VAT, ladies and gentlemen, is bad. (Read that article I just linked).

I’ve lived under Britain’s (20%) VAT for years now without really understanding how it works. Wikipedia has a good but brain-hurty explanation. Weasel version: everything here is really, really expensive.

Check out this helpful graph (from the Wikipedia article). This is what happened to Denmark’s VAT after it was introduced in 1962. See, the problem is, VAT is pretty much invisible to you, the consumer. You know shit is really expensive, but you don’t see the tax.

You think our pols could resist this upward-creeping fustercluck? It won’t be Tea Party guys yanking the levers of government forever, you know. Sadly, two party system, Barney Frank’s going to get a turn at the controls again.

I’m still leaning Cain, though. I don’t like his plan, but at least he put a solid, plausible one out there for us to kick around.




Comment from zooomzooom
Time: October 13, 2011, 10:38 pm

I lived in Germany for 11 years……….

Sloaty’s right VAT means things are very pricy. Over the years I watched it go up to 19%…….

This is not something we want or need in the US.

For the tards that want a VAT, move where it is and live THERE for 10-15 years first.

Comment from S. Weasel
Time: October 13, 2011, 10:43 pm

Uncle B informs me the vat is actually 17.5% here my bad.

On the upside, you can tot up your groceries in your head before you reach the till: no taxes are imposed at checkout.

On the downside — you know all those weird state rules about what is and isn’t taxed? Like prepared food as opposed to ingredients? The kid in the grocery store across the way was trying to explain what is and isn’t VAT taxed. He had to program the cash register. It just made no dang sense at all.

Comment from MarkInLondon (Mark T)
Time: October 13, 2011, 11:05 pm

Analogy. Think of one of those Facebook World/UK Link Maps. Posit: Every single one of those links between Friends has a 20/18.5/9% V.A.T. attached to it. Every back and forth–every purchase from a supplier, its delivery, the phone call or BT Broadband second, every stamp and High Street purchase is/will be charged. This will go on FOREVER. It will NEVER be repealed. I haven’t read Herman’s 9-9-9 thing because I’m just . . . checked out now for awhile. They/We’ve got to stop this. He’ll get a clue, though, loud and clear. Will he back down or change his thought?

Comment from Nina from GCP
Time: October 13, 2011, 11:08 pm

It’s 25% in Norway, too. My son tells me that when Norwegians visit, for example, California, with its sales tax added to the sales price, they complain that the marked price isn’t really the price you have to pay. My son tells them that you are paying twice plus what (most, some counties are more) Californians pay, you just don’t notice it because it’s “included” in the price. Since they don’t see it they can fool themselves into thinking it isn’t actually there, I guess.

Comment from Scott Jacobs
Time: October 13, 2011, 11:40 pm

See, I prefer the VAT (go fuck yourself, zoomzoom), because, at the bare minimum, I would no longer have to share intimate detains about my lifestyle with the federal government. Not only would I (and everyone else) not have to worry about getting something in the 3.7 million word tax code (and thus maybe ending up in prison), but I would no longer have to tell the government who I work for, how much they pay me, what savings I have, what I invest in, and who I give money to.

It would also remove the temptation (some might call it a pathological need) to target certain groups (like the rich) with punitive increases. Sure, they could just levy added VAT on stuff they don’t like, but they do that already (alcohol, cigarettes, gas, etc).

The VAT is quicker, leaves fewer opportunities for the government to not only demand private details but also their ability to abuse that information.

It would also make it so EVERYONE had skin in the game, instead of letting about half of the country get away with paying nothing while that same half demands the other side pay for shit they want.

Comment from Uncle Badger
Time: October 14, 2011, 12:00 am

No, no… Scott… you pay VAT in addition to all the other taxes. The governments in VATland make you pay income tax as well, so they have as much data on you as they want (and don’t assume they don’t get access to the major retailers’ database of individual customer spends cross-referenced to credit card details anyway).

You pay all the taxes you already pay in the States (except local sales tax) plus VAT – a nationally applied sales tax at whatever rate the government decrees, plus special ‘extras’ if there is anything they particularly don’t like. Which includes cars, tobacco, alcohol etc

VAT is the most evil tax I know of and is one of many reasons why the EU (which invented it) needs its HQ decorating with the corpses of the bastards responsible.

I will provide the piano wire. Gladly.

Comment from S. Weasel
Time: October 14, 2011, 12:03 am

I’m all for the flat tax for the reasons you mention, Scott. Let’s rounding up to cover everything.

But VAT is an evil fucker that squats on top of everything else, draining the lifeblood out of commerce. Plus, everyone up and down the supply chain has to hire people to work out what they do and don’t owe, because it is literally a tax on the “value added” at every stage of the game.

Comment from Rich Rostrom
Time: October 14, 2011, 12:18 am

There’s a fairly easy way to limit increases in VAT – don’t let them hide it. The VAT has to be a line item at the bottom of the receipt, separate from the item prices.

That’s how they do sales tax. Mind you, it hasn’t stopped Illinois from running the sales tax up to 9.75%.

The only thing the tax is in the price is motor fuel. The price on the sign is the price on the pump. The total on the receipt is that price X the gallons bought – so the sales tax was included in the advertised price.

On the upside, you can tot up your groceries in your head before you reach the till: no taxes are imposed at checkout.

Back in the day, Illinois had a uniform 5% sales tax. I would load up a full cart of groceries. While waiting in the checkout line I would add up the prices in my head, add 5%, and write out a check for the exact amount. I would hold it ostentatiously in one hand while the checker rang up the items. The moment the checker finished, I would hand over the check. It was worth it for the astonished look I often got.

On the downside — you know all those weird state rules about what is and isn’t taxed? Like ? The kid in the grocery store across the way was trying to explain what is and isn’t VAT taxed. He had to program the cash register.


For the VAT to be invisible, it has to be included in the shelf/package/advertised price. So where does the cash register come into it? Different categories with different VAT levels would apply when the shelf prices are set. You did write “no taxes are imposed at the till.”

Or is it that the register must track how much is sold in each category, so that the merchant pays the appropriate VAT?

“prepared food as opposed to ingredients”??

That’s not exactly a bright line. Orange juice? Bread? Canned peas? Here, if it’s eaten or drunk, it gets the food rate, whether it’s flour or Cheetos (except booze).

Comment from Patrick
Time: October 14, 2011, 2:14 am

My sense from Cainville is that the 999 is just a hook to begin conversation on the subject. I think the idea of this 999 without repealing the 16th Amendment is a big ol’ invitation for trouble. However, Paul Ryan likes it so there must be something I’m missing.

Comment from Rich Rostrom
Time: October 14, 2011, 2:21 am

One other point.

UK revenue breaks down about like this:

Personal inc tax 35%
Corporate inc tax 10%
Excises & misc 15%
VAT 20%
Payroll taxes 20%

US revenue breaks down

Personal inc tax 31%
Corporate inc tax 5%
Excises & misc 7%
VAT 0%
Payroll taxes 57%

So the VAT replaces a huge part of what would be payroll taxes in the US. Of course things aren’t truly comparable, because the UK is a unitary state that also does what state governments do in the U.S.

I’m not entirely happy with Cain’s plan. I would tax income at 20%, with a large base exemption and no other deductions, eliminate corporate taxes (but require all income to be paid as dividends), and end tax-exempt employment benefits.

But a 9% or 10% sales tax looks about right, and getting the enormous burden of payroll taxes off employers would be glorious. (Plus it visibly decouples the old-age pension from tax payments, thus ending the farce of “earned benefits” and “trust funds”.)

I know, this is all very wonkish, but wonking is my avocation.

Comment from Oh Hell
Time: October 14, 2011, 2:36 am

I have a novel idea – why don’t they just quit spending so damn much and then they wouldn’t have to hurt their tiny little brains thinking up different ways to screw us out of the money we earned….

Comment from Sven in Colorado
Time: October 14, 2011, 2:38 am

Y’all can kiss my skinny, calloused, quarter-horse saddled arse.

– Herman Cain is ready to join Robert Duvall and Kevin Costner in Open Range !!!!

– Barry Hussien Sorttero/Obama (or whaddever the fook he calls himself) would fit better with his arse in the air in Brokeback Mountain ….

When are y’all gonna get a clue? *WE* are responsible for what happens in our lives, not the gummint.

Give me a straight off tax, dump the shitheads sucking on my tax teat. Let *THEM* look for work for three fookin’ years, w/o gummint compensation!

Suck a frikken lemon, y’all!… not my hard earned quid.

Comment from Pablo
Time: October 14, 2011, 2:58 am

There’s a fairly easy way to limit increases in VAT – don’t let them hide it. The VAT has to be a line item at the bottom of the receipt, separate from the item prices.

Right, and that’s what this does. It isn’t built into the cost of goods, it’s a sales tax and you know exactly how much tax you’re paying because it’s 9%.

Also, per Cain’s plan, 9-9-9 is Phase one while they set the table to implement Phase 2, the Fair Tax.

The best part is that 70K pages of expensive, wasteful, indecipherable lunacy (Corporate Welfare, anyone? Those nasty loopholes?) goes into the dustbin of history, along with 80% of the IRS. I find that difficult not to like.

Comment from Mysterion
Time: October 14, 2011, 3:09 am

I think Patrick is right, 9-9-9 is a conversation starter for Cain. Yeah, I think it is a bad idea too but it won’t ever get passed and it gives the media something to talk about. Romney always gets the Obamacare questions, Perry is always asked questions about undocumented border crossers, Ron Paul is always asked questions about his sanity, and Cain gets asked questions about taxes (rather than being forced to talk about racial relations or whatever).

Speaking of taxes, the dead pool link in the sidebar needs to be updated.

Comment from Uncle Badger
Time: October 14, 2011, 9:25 am

Rich Rostrum – agreed about displaying the amount of tax but it will never happen because the only people who could enact the legislation required are the very people who would least like it to happen.

One thing that has often been muttered about this side of the pond is corporations growing spines and doing it voluntarily. Given that Shell, BP, Exxon etc are going to be kicked from dawn to dusk in any case, it’s hard to see what they would really have to loose by prominently displaying the real price of petrol on their pumps – with the taxes in bold.

One other aspect to VAT is the staggering imposition it places on small businesses. It’s not just that every company becomes an unpaid tax collector for the gummint, it’s that the paperwork is a Byzantine nightmare.

Comment from S. Weasel
Time: October 14, 2011, 9:51 am

Yeah, you’re right, Rich. The kid wouldn’t have been programming VAT into the register. But he was walking around pointing out what items were and weren’t subject to VAT and, while I don’t remember specifics, the differences were baffling.

I’m lazy, Mysterion, and my sidebar is a bitch. I don’t update that link until the Dead Pool falls off the bottom of the current page. Half the time, somebody dies before that happens and we start again.

Comment from Alice
Time: October 14, 2011, 11:36 am

I’m with you, Oh Hell – it’s the spending that is the key.

I grew up with the mantra “if you can’t save when you get a $1.00 a week, you won’t save when you get $1,000 a week”. Annual US Federal revenue is $2.228 trillion, which is $1.48 trillion LESS than annual spending. Certainly the tax code needs simplification and there are all sorts of devil-in-the-details ways to go about doing that, but NONE OF IT MATTERS if the spending itself is not reined in.

Comment from Stark Dickflüssig
Time: October 14, 2011, 5:52 pm

I don’t agree with perhaps the details of Cain’s particular plan, however I definitely agree with the principle: God demands 10%. The government isn’t God. Therefore the government should make do with less than 10%.

Comment from Goober
Time: October 14, 2011, 6:15 pm

But the 9% sales tax isn’t a VAT tax, and all we have to do is fight to prevent it from becoming one. Cain’s plan has nothing to do with a VAT tax and it is teh awesome if you ask me.

Comment from mojo
Time: October 14, 2011, 7:18 pm

But Obie has the cattle. He calls them “his base”…

Comment from me
Time: October 14, 2011, 11:23 pm

What bothers me about a VAT is that it’s a hidden tax. Those Norwegians in Nina’s comment make my point. It numbs the consumer. With a sales tax you pay for the product and then the tax is applied. Thus, you plainly see the tax. That’s if I understand this VAT business…

I would rather we found a way to limit spending and the governments’ ability to raise taxes without our consent.

Comment from David Gillies
Time: October 14, 2011, 11:33 pm

VAT IS NOT A SALES TAX. I repeat: VAT IS NOT A SALES TAX. It is a transaction tax which is levied at every stage of business, from the primary producer through the wholesaler through the retailer right down to the customer. Of course, in theory, all but the first and the last are netted out of the process, but as anyone who has had to deal with VAT will tell you, there are compliance costs, and not insignificant ones, either. VAT is a terrible tax. Its deadweight costs are huge. Armies of pinhead bureaucrats are employed to administer it. It is a significant burden on the accountancy department of any firm. If you are a sole trader, it will be the bane of your existence. And governments love it, because it is so stealthy. It looks and smells like a sales tax, but it ain’t. I’m pretty sure it reduces the velocity of money, so it’s anti-expansionary (which is just fantastic if you’re trying to do a bit of oiscal reflation to alleviate a recession – nice going, dickheads.) And at the level it’s set in Europe, it effectively confiscates a fifth of your net income, i.e. the income that’s left after central taxation has taken a third of it already. Riddle me this, fraction fans: what is 1 – 1/3 – 1/5? Yep, 7/15. 47%. That’s what you have left after the two big boys have been in your wallet, if you’re lucky. Then there’s council tax, excise duty, vehicle tax, insurance tax, air transport levy, etc. etc. etc. ad fucking infinitum. Marginal tax in the UK is about 65%. You get to keep perhaps a third of your nominal income. Save some, though, or it’ll be a chilly retirement. Watch for your savings, mind, because there’s nothing Chancellors like more than inflating their way out of debt. Whoops, you’re ill, and the NHS (envy of the world, remember?) hasn’t got room for you till next March. Oh, you died? Hmm, how awful. Now give us two fifths of all your stuff.

Yes, dear reader, I got the hell out.

Comment from S. Weasel
Time: October 15, 2011, 12:08 am

Nicely put, David Gillies.

The reason we’re conflating VAT and sales tax, though, is that up to now, the US doesn’t have any mechanism in place for a national tax. All our sales taxes are local. So once the dreadful machinery is in place for a national sales tax, we’re just a flip of the switch away from a VAT.

Too big a risk, if you ask me.

Comment from Carl
Time: October 15, 2011, 12:10 pm

Wease, you were right about the UK VAT rate. It went up to 20% in January 2011.

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