Two nines too many

By Dan Popp

All human situations have their inconveniences. We feel those of the present but neither see nor feel those of the future; and hence we often make troublesome changes without amendment, and frequently for the worse. — Benjamin Franklin

I wanted Herman Cain to run for President the first time I heard him on the radio. He knows that jobs are created by businesses as they seek profits — a simple truth far beyond the grasp of anyone in the current administration. But our conservative hero Mr. Cain has some decidedly non-conservative elements in his signature "9-9-9" tax plan.

The front nine

A 9% personal income tax is too high by exactly 9%. As the editors of the New York Times wrote in 1909 regarding the proposed 16th Amendment, "When men get in the habit of helping themselves to the property of others, they cannot easily be cured of it." I agree with former presidential candidate Alan Keyes: "The income tax is a twentieth-century socialist experiment that has failed. Before the income tax was imposed on us just 80 years ago, government had no claim to our income. Only sales, excise, and tariff taxes were allowed." The 16th Amendment must be repealed, or any "tax reform" is just an exercise in creative deck-chair placement. Conservatives must re-learn to champion the right to private property, and we seem to have little time before the barbarians break through the gates.

Nine more

I'm even more disappointed in Mr. Cain's proposed 9% tax on corporations. There are lots of reasons we should do away with corporate income taxes altogether, starting with our founding principle of "No Taxation Without Representation." But the most compelling reason for not taxing businesses is that, in reality, we can't. The idea that companies can be taxed is a leftist fiction that truth-telling conservatives should refute, rather than regurgitate. As Ronald Reagan said:

The most dangerous myth is the demagoguery that business can be made to pay a larger share, thus relieving the individual. Politicians preaching this are either deliberately dishonest, or economically illiterate, and either one should scare us. Business doesn't pay taxes, and who better than business to make this message known? Only people pay taxes, and people pay as consumers every tax that is assessed against a business. Begin with the food and fiber raised in the farm, to the ore drilled in a mine, to the oil and gas from out of the ground, whatever it may be — through the processing, through the manufacturing, on out to the retailer's license. If the tax cannot be included in the price of the product, no one along that line can stay in business.

Corporate taxes are a lie that enables Marxists to crush the poor by inflaming their envy and anger toward the rich. I love to see Herman Cain debate his proposal because he shines a light on taxes that upside-downers want to remain hidden. Dopey journalists think he's trying to make the poor pay more taxes. Cain doesn't put it this way, but he could: Under "9-9-9" their real taxes would go down. But in his zeal to remove "imbedded taxes," he overlooks the 9% corporate tax and compliance costs hidden in his own plan.

The back nine

Mr. Cain's final proposal of a consumption tax is the one "9" I can support. At the same time, it's the one that most alarms me. We absolutely cannot allow a national sales tax on top of an income tax, as Cain proposes, even temporarily. Abolish the income tax; then-and-only-then institute a sales tax. Otherwise, we compound an injustice inherent in our current tax code: that of taxing each dollar multiple times. Thomas Jefferson wrote:

For example. If the system be established on basis of Income, and his just proportion on that scale has been already drawn from every one, to step into the field of Consumption, and tax special articles in that, as broadcloth or homespun, wine or whiskey, a coach or a wagon, is doubly taxing the same article. For that portion of Income with which these articles are purchased, having already paid its tax as Income, to pay another tax on the thing it purchased, is paying twice for the same thing....

Here again, conservatives should be educating, not capitulating.

Now, the famous "9-9-9" proposal is only Phase I of Herman Cain's plan. Phase II is the "Fair Tax," which is a consumption tax. But there's no guarantee we would ever get to Phase II. In a recent Renew America article, How conservatives kill tax reform, Adam Graham called this concern, "fear of the unknown." Graham chided fellow conservatives for "trying to imagine what horrors may come upon us from a future Congress." But I submit that the general tendencies of future Congresses are not "unknown;" they're as certain as the dawn. Congress will try to raise taxes every time it can, every way it can. That's not speculation. It's a realization of the fallen nature of human beings holding the reins of power over other human beings. It's an echo of our Founders' pessimism upon which they built our entire system of limited government. If anything, history has shown that they weren't pessimistic enough.

People who don't consider possible bad outcomes of their good intentions are called in the Bible "fools," and in politics "leftists." Such credulous citizens gave us the "Great Society" and the election of Barack Obama, among many "horrors" that turned out to be worse than imagined.

I believe that Christians and conservatives should be working for a just tax code. In this context, that would imply: protection of private property (no income tax); no taxation without representation (no business tax); no hidden taxes; and each dollar taxed only once per level of government. Instead of faulting conservatives for being conservatives, maybe conservative writers and candidates should be teaching and preaching foundational American principles. Like Reagan did. And like Phase II of Mr. Cain's plan.

Why not make it Phase I?

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For more thoughts about a just system of taxation, see my articles here, here, here and here.

© Dan Popp