Just say no to Cain’s 999 plan, and why Ron Paul should advocate a 10-0-0 plan

Former Godfather’s Pizza CEO is now a top tier candidate according to the latest polls after he won the Florida straw poll a couple of weeks ago in a stunning upset over front-runners Rick Perry and Mitt Romney.

Cain has jumped in the polls for several reasons, one of which is the appeal to some voters of his 999 plan, a 9% flat tax on a corporation’s gross income less investment spending and dividends paid to shareholders, a 9% tax rate on personal income minus charitable deductions, and a 9% national sales tax.  Cain’s plan would abolish payroll taxes and the estate tax.  His plan would also create “empowerment zones,” where additional deductions would be allowed.

Although Cain has said his plan would be “revenue neutral,” the federal government would collect the same amount of revenue as it does now, his plan, he asserts, would eliminate all the “deadweight” compliance-collection costs on the economy.   Reducing compliance costs is a worthwhile objective, but a more important goal should be to downsize the federal government.  In addition, Cain does not present any evidence that the IRS would be abolished if a federal sales tax were enacted.  Tax agents would have to monitor sales throughout the country unless he intends to force the states to collect a federal sales tax.

Cain wants the federal government to maintain a welfare-warfare state with his 999 plan.  Although he pays lip service to cutting government spending, Cain does not offer any specific spending cuts other than saying, “Everything is on the table.”  Thus, federal budget deficits of $1 trillion would continue under Cain’s 999 unless spending is reduced markedly.

Critiques of Cain’s plan are surfacing in the mainstream media for the wrong reasons.  Most of the objections cite the drop in federal revenue that would occur if his 999 plan were enacted.  Less revenue for the federal government is always a good thing, but substantial spending cuts are necessary to balance the budget at a fraction of what the government spends today.  So-called tax reform without deep spending cuts is meaningless, unless you want to maintain the welfare-warfare state.  Moreover, adding a national sales tax on top of state and local sales taxes while continuing an income tax would lower the living standards of tens of millions of Americans.

Can we have a balanced budget at a fraction of what the federal government spends today?  Yes indeed.  The federal government should only spend the American people’s money on activities authorized by the U.S. Constitution.  That would require a peaceful cultural, economic and social revolution never before seen in the history of the world.  In short, if the the American people want to create a free society, they  must embrace Horace Greeley’s observation, “The darkest hour of any man’s life is when he sits down to plan how to get money without earning it.”

Abolishing “legal plunder” would be the first step in an American social and economic renaissance.  This also means ending crony capitalism.  Thus, there would not be a need to protest against Wall Street “greed.”   In short, there would be no more bailouts.  Period.

Greeley’s assertion should be the basis for America’s renewal in the 21st century.  It would mean phasing out the welfare-warfare state, which would create a robust economy with social services delivered by charitable institutions at the local level.   Without any direct federal taxes, finally the IRS would be abolished.

Nearly 20 years ago, Peter Drucker wrote, “Government has proved incompetent at solving social problems.”  Yet, we are told by the welfare state is must not be abolished but only “tweaked” to make it more efficient.  However, the evidence is all around us that the welfare state creates permanent financial dependency for tens of millions of Americans.  We need to end the false notion that the redistributing income is just and helps people get back on their feet.

Because most Americans apparently embrace the collectivist, redistributionist philosophy, the transition to a free market economy requires a strong voice in the GOP presidential race.  If Ron Paul would advocate a 10-0-0 plan, that is, in 10 years, the federal income tax would be zero and payroll taxes would be zero, he would get the traction to become the GOP front-runner.   Such a plan would maintain Social Security and Medicare for seniors using income from government asset sales, indirect taxes and other revenue streams to payoff existing beneficiaries and soon to be beneficiaries while younger Americans would have to begin saving for their retirement needs.

Ron Paul has been a proponent of free markets and a noninterventionist foreign policy since he was first elected to Congress in 1976.  If the American people want a political leader who has been consistently advocating liberty, peace and free markets for decades, then Ron Paul would win the presidential election in a landslide.  Before Rep. Paul can win the presidency, GOP primary voters should wake up and reject any of the smooth talking defenders of the status quo and pseudo limited government advocates.   They must select the only defender of the Constitution and advocate of liberty, Ron Paul.

 

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