Monte Kuligowski
Dear Herman Cain: Either move to a flat tax or push for repeal of the 16th Amendment
By Monte Kuligowski
October 21, 2011

Intrigue over the 9-9-9 plan has lifted Herman Cain to the top position (or number-two spot, depending on the poll) among GOP presidential candidates. Of course, Cain's dynamic personality and clear articulation of conservatism are also factors. Nevertheless, without the earthshaking proposal of abolishing the current tax system, Cain would still be a candidate struggling for name recognition from the second tier.

With that said, now is the time to ditch the bifurcated plan involving both a flat-rate income tax and a national sales tax. Now is the time for Cain to announce that after consideration of all issues a simple flat tax on income without loopholes for the rich is the better way forward. Scrap the current tax code and replace it with a nondiscriminatory flat tax through which every wage-earner pays his fair share.

The more you earn, the more you will pay. But everyone will be protected equally under law by paying the same flat percentage rate.

In the alternative, Cain might consider pushing for repeal of the 16th Amendment to pave the way for the Fair Tax — forget about implementing a bifurcated system of a flat income tax and a national sales tax as a precursor to the Fair Tax.

There are two good reasons for Mr. Cain to act now. Once conservatives fully think through the implications of implementing a bifurcated system, they will begin to look for a better plan. Additionally, Cain's 9-9-9 plan provides an easy target for the left.

Regarding conservatives and Cain's proposal (9% flat rate corporate tax, 9% flat rate individual income tax, and a 9% national sales tax): I don't believe it will take long for most conservatives to recognize the potential disaster of implementing a flat-rate income tax system and a national sales tax.

Just as Obama wants to eventually get to a single-payer healthcare system via Obamacare, Cain wants to get solely to the Fair Tax (phase 3 of his plan), which is a 23 percent national sales tax with spending exemptions for the poor. The difference is that if Obamacare is not repealed or overturned, Obama will achieve his goal. Cain, on the other hand, is unlikely to ever reach the final phase of his plan.

Attorney and radio talk show host Mark Levin gets to the core of the conservative concern: "Repeal the 16th Amendment, and then we'll talk about a national sales tax." (So long as taxation of income is legal, hell will freeze over before Congress relinquishes the tax.)

In other words, one or the other would work just fine; just don't try to implement a flat tax and a national sales tax. And don't even try a national sales tax unless the 16th is first repealed. It would be foolhardy to implement both tax systems with the idea of phasing out the flat rate income tax.

During the Washington Post/Bloomberg Republican presidential debate, some of the candidates raised concerns about Herman Cain's 9-9-9 plan. Rick Santorum asked, "How many people believe that we'll keep the income tax at 9 percent? Anybody? And what about the corporate and federal sales tax rates?"

Beyond that, how many people believe that a future Congress will eventually phase out the income tax and transform the national sales tax into the Fair Tax? And how many believe that on the contrary, a future Congress will one day revert back to a progressive income tax while keeping the national sales tax in place?

Regardless of the language of Cain's bill, if Cain's 9-9-9 plan goes into effect, it's likely that future taxpayers will pay much more than anticipated. Future Congresses will have an additional taxation tool. If taxpayers ever again have to endure an episode of far-left control of the federal government equal to the two-year reign of Obama, Reid, and Pelosi, they will be in real danger.

Nothing will stop such a Congress and president from reverting back to the progressive income tax system — which has elevated rates for the "rich" — while keeping and increasing the national sales tax rate. The evil rich (and middle class) will get a double-whammy. With trillions of dollars of debt and bankruptcy on the horizon, liberal politicians will use every means possible to sock it to the job-creating class.

The second reason Cain should switch over to a simple flat tax plan is that his current plan is wide open to fatal attack from the left.

A recent piece in the New York Times by Bruce Bartlett (an apostate conservative, as one writer puts it) provides the firepower to make Cain's plan easy pickings for the left. Add a little Obama-style class warfare demagoguery from the press, and Cain will be Palinized almost effortlessly.

Even though the 9-9-9 plan hadn't been released, Bartlett put together an analysis from the information gleaned from Cain's website. To get a little flavor of Bartlett's critique, here's how he ends the piece:

    "At a minimum, the Cain plan is a distributional monstrosity. The poor would pay more while the rich would have their taxes cut, with no guarantee that economic growth will increase and good reason to believe that the budget deficit will increase.

    Even allowing for the poorly thought through promises routinely made on the campaign trail, Mr. Cain's tax plan stands out as exceptionally ill conceived."

Writing for the Daily Beast, Michael Tomasky mocks Cain with some bigoted dialect: "The Cain plan is entirely about wealth management. And GOP primary voters love them some wealth management." Tomasky continues:

    "But what's really startling about Bartlett's report ... is that the 9-9-9 plan is not his goal. No — it's merely Phase 2 in the melting away of the state! Phase 1 would reduce business and personal income taxes to a high rate of 25 percent. That sounds nice. But you have to know about concepts like marginalization to realize that 96 percent of all taxpayers don't even make enough to pay a single dollar in income taxes at rates above 25 percent. So in other words, Cain cuts taxes — for the top 4 percent. And for the top 1 percent — especially the top 0.2 percent (millionaires) — he cuts them radically."

Whether based in fact or hyperbole, it won't be difficult for the New Democrats and a willing establishment news media to portray Cain as wanting to protect the greedy while beating down a disenfranchised majority.

Also, Cain's plan might be viewed as being a little disingenuous, considering that Cain is focusing on phase 2 of his plan without much mention of phases 1 and 3. "Phase 1 would reduce individual and business taxes to a maximum of 25 percent, which [Bartlett assumes] means reducing the top statutory tax rate to 25 percent from 35 percent."

The one voice media may be holding back on its attack of Cain's 9-9-9 plan for now. But should Herman Cain hold on to his plan and somehow surface as the GOP presidential candidate — watch out.

© Monte Kuligowski


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Monte Kuligowski

Monte Kuligowski is an attorney and writer whose legal scholarship, including "Does the Declaration of Independence Pass the Lemon Test?" (Duke Journal of Constitutional Law & Public Policy), has been published in several law journals... (more)

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