Herman Cain on the Economy

Ed. Herman Cain's economic proposals have evolved since the outset of his campaign; the 9-9-9 plan has garnered a lot of attention, and was a central topic of discussion at the presidential debates on October 11 and October 18, 2011. Here are a couple of other reactions: Tax Policy Center, Gary Johnson.

reprinted 10/16/11 from http://www.hermancain.com/999plan

Herman Cain's 999 Plan

Vision for Economic Growth

The natural state of our economy is prosperity. Freedom ensures that.
In order to return to prosperity, Government must get off our backs, out of our pockets and out of our way

Economic Guiding Principles

Production drives the economy, not spending. Production is the engine, consumption is the caboose.

We can not spend our way to prosperity.
Government spending is like taking a bucket of water from the deep end of the pool, pouring it in the shallow end. Then they HOPE that the water level will CHANGE.

Risk taking drives growth .

Business formation and job creation are dependent on entrepreneurs taking risks.
Investors who fund those entrepreneurs likewise take risks.

Measurements must be dependable.

A dollar must always be a dollar just as an hour is always 60 minutes.
Sound money is crucial for prosperity.

UNITE, never DIVIDE; UNITED around ECONOMIC GROWTH

When one party is so focused on spending so that the other must focus on cutting, we must unite around economic growth
Unite income tax payers with payroll taxpayers so we all pull for low rates
Unite those wanting to eliminate deductions with those seeking lower rates.
Unite the Flat-Taxers with the Fair-Taxers

Phase One

Our current economic crisis calls for bold action to truly stimulate the economy and Renew America back to its greatness. The 9-9-9 Plan gets Washington D.C. out of the business of picking winners and losers, using the tax code to dole out favors, and dividing the country with class warfare. It is fair, simple, transparent and efficient. It taxes everything once and nothing twice. It taxes the broadest possible base at the lowest possible rates. It is neutral with respect to savings and consumption,capital and labor, imports and exports and whether companies pay dividends or retain earnings.

9% Business Flat Tax

Gross income less all purchases from other U.S. located businesses, all capital investment, and net exports.
Empowerment Zones will offer deductions for the payroll of those employed in the zone

9% Individual Flat Tax.

Gross income less charitable deductions.
Empowerment Zones will offer additional deductions for those living and/or working in the zone.

9% National Sales Tax.

Unlike a state sales tax, which is an add-on tax that increases the price of goods and services, this is a replacement tax. It replaces taxes that are already embedded in selling prices. By replacing higher marginal rates in the production process with lower marginal rates, marginal production costs actually decline, which will lead to prices being the same or lower, not higher.

Economic Impact

According to former Reagan Treasury official Gary Robbins, of Fiscal Associates, the 9-9-9 Plan will expand GDP by $2 trillion, create 6 million new jobs, increase business investment by one third, and increase wages by 10%.

9-9-9 Plan: Summary

Removes all payroll taxes and unites all tax payers
Provides the least incentive to evade taxes and the fewest opportunities to do so
Lifts a $430 billion dead-weight burden on the economy due to compliance, enforcement, collection, etc…
Is fair, simple, efficient, neutral, and transparent
Ends nearly all deductions and special interest favors
Features zero tax on capital gains and repatriated profits
Exports leave our shores without the Business Tax or the Sales Tax embedded in their cost, making them world class competitive. Imports are subject to the same taxation as domestically produced goods, leveling the playing field.
Lowest marginal rates on production
Kills the Death Tax
Allows immediate expensing of business investments
Eliminates double taxation of dividends
Increases capital formation which aids capital availability for small businesses
Increased capital per worker drives productivity and wage growth
Features a platform to launch properly structured Empowerment Zones to renew our inner cities
The pro-growth, pro-job, pro-export economic policies of the 9-9-9 Plan equals a strong dollar policy

Phase 2 – The Fair Tax

Amidst a backdrop of the economic renewal created by the 9-9-9 Plan, I will begin the process of educating the American people on the benefits of continuing the next step to the Fair Tax.

Ultimately replaces individual and corporate income taxes
Ends the IRS as we know it and repeals the 16th Amendment

ONLINE BROCHURE from Friends of Herman Cain (August 2011)
Ed. Note: This buildt on earlier Cain proposals, below. It included a bit of sloganeering ("Companies don’t ship jobs overseas, Liberals ship capital overseas and the jobs merely follow."). It's also a bit woolly (@CainPress tweeted on Aug. 31, "For clarification: the "9-9-9 plan" is phase 1 of @THEHermanCain's economic plan. Phase 2 is instituting Fair Tax.") The major new point is the call for bolder action in the form of the "9-9-9 plan," which calls for a 9% business flat tax, a 9% individual flat tax, and a 9% national sales tax.
Cain's Vision for Economic Growth Part 1

Vision for Economic Growth
•    The natural state of our economy is prosperity. Freedom ensures that.
•    We must get the government off our backs, out of our pockets and out of our way in order to return to prosperity
•    Policy uncertainty is killing the economy
Economic Guiding Principles
1. Production drives the economy, not spending
•    We can not spend our way to prosperity
•    Government spending IS taxation
•    Government spending is like taking a bucket of water from the deep end of the pool, pouring it in the shallow end. Then they HOPE that the water level will CHANGE.
2. Risk taking drives growth
•    Business formation and job creation are dependent on entrepreneurs taking risks
•    Investors who fund those entrepreneurs likewise take risks
3. Measurements must be dependable
•    A dollar must always be a dollar just as an hour is always 60 minutes
•    Sound money is crucial for prosperity
We Must Unite Not Divide
•    When one party seeks to spend so that the other party must focus on cutting, we must unite around economic growth
•    Unite all tax payers, don’t divide them into “income” tax payers vs. “payroll” tax payers
•    Unite those wanting to eliminate deductions with those seeking lower rates
•    As a first step, unite the “Flat-Taxers” with the “Fair-Taxers”
Economic Growth is the Key
•    This is the worst recovery since the Depression
•    If the President’s goal was to tie for last place with the previous worst recovery, he failed by 6 million jobs
•    If we had a typical recovery, 13 million more Americans would be employed today
•    That means more tax revenue, less government spending and 13 million less people opposed to reasonable spending cuts
•    The Super Committee must deliver a robust growth solution
•    America can’t wait for 2012, we need growth NOW.
Phase 1 - Immediate Boost
•    As I have outlined, the following represent the minimum for feeding the economic engine and are the “low hanging fruit” offering the most “bang for the buck”
•    Reduce individual and business income taxes to a maximum 25%
•    Eliminate taxes on repatriated foreign profits and capital gains
•    The capital gains tax is a wall separating those with ideas from those with money
•    Why would we want to wall off those with ideas? That’s where we get business formation, job creation and innovation.
•    When companies sell products overseas they face double taxation when those profits are brought home (repatriation) to invest in America and pay its workers
•    Companies don’t ship jobs overseas, Liberals ship capital overseas and the jobs merely follow.
Phase 1 - Enhanced Plan
•    Current circumstances call for bolder action
•    The Phase 1 Enhanced Plan incorporates the features of Phase One and gets us a step closer to Phase two
•    I call on the Super Committee to pass the Phase 1 Enhanced Plan along with their spending cut package
•    The Phase 1 Enhanced Plan unites Flat Tax supporters with Fair tax supporters
•    Achieves the broadest possible tax base along with the lowest possible rate of 9%
•    It ends the Payroll Tax completely – a permanent holiday!
•    Business Flat Tax – 9%
•    Gross income less all investments, all purchases from other businesses and all dividends paid to shareholders
•    Empowerment Zones will offer additional deductions for payroll employed in the zone
•    Individual Flat Tax – 9%
•    Gross income less charitable deductions
•    Empowerment Zones will offer additional deductions for those living and/or working in the zone
•    National Sales Tax – 9%
•    This gets the Fair Tax off the sidelines and into the game.
Phase 2 – The Fair Tax
•    Amidst a backdrop of the economic boom created by the Phase 1 Enhanced Plan, I will begin the process of educating the American people on the benefits of continuing the next step to the Fair Tax.
•    The Fair Tax would ultimately replace individual and corporate income taxes
•    It would make it possible to end the IRS as we know it.
•    The Fair Tax makes our exported goods and services the most competitively internationally than any other tax system.
Phase 1 Enhanced Plan – Summary
•    Unites all tax payers so we all pay income taxes and no one pays payroll taxes
•    Provides the least incentive to evade taxes and the fewest opportunities to do so
•    Lifts a $430 billion dead-weight burden on the economy due to compliance, enforcement, collection, etc.
•    Is fair, neutral, transparent, and efficient
•    Ends nearly all deductions and special interest favors
•    Features zero tax on capital gains and repatriated profits
•    Lowest marginal rates on production
•    Allows immediate expensing of business investments
•    Dividend deductibility will help retirees, improve accounting, and moderate stock-option driven executive compensation
•    Increases capital formation. Capital per worker drives productivity and wage growth
•    Capital formation will aid capital availability for small businesses
•    Features a platform to launch properly structured Empowerment Zones to revitalize our inner cities
•    We all know the Fed has tripled the money supply since 2008. They have been printing money out of thin air to finance the Obama spending machine. While true Fed reform that restores sound money may have to wait for my election, the best thing we can do now is to pursue policies that increase the DEMAND for dollars to help mitigate the risks associated with the increase in the supply.
•    Pro-growth economic policies equal a strong dollar policy

PRESS RELEASES from Friends of Herman Cain

Wednesday, June 29, 2011

For More Information:
Ellen Carmichael

Cain Shares "Economic Vision" in Greenville, South Carolina

(Greenville, SC)- Republican presidential candidate Herman Cain shared his "Economic Vision: Jobs for America" plan today at NEXT Innovation Center in Greenville, South Carolina.

Cain's plan details his three "Economic Guiding Principles":

Production drives the economy.
Risk-taking drives growth.
Measurements must be dependable.

Production drives the economy.

Cain believes that the federal government should ease the burdens of excessive taxation and regulation to spur economic growth to increase production. This includes lowering the top corporate and personal income tax rate to a maximum rate of 25 percent, suspending taxes on repatriated profits and making the lowered tax rates permanent. He also proposes a regulatory reduction commission that would seek to review and potentially eliminate some current regulations whose compliance costs weaken job creators.

Risk-taking drives growth.
Cain believes there must be increased access to capital. To do so, he proposes eliminating taxes on capital gains and their dividends. This would also incentivize companies to invest in worker training programs, new equipment and emerging technologies. History shows that the largest beneficiaries of such a reduction on capital gains taxes are new technology investments.

"The capital gains tax represents a wall between people with money and people with ideas," Cain said. "And people with ideas are the catalyst for new businesses and new job growth."

Measurements must be dependable.
Cain's plan would help stabilize the value of the dollar in order to provide monetary stability by dramatically reducing the national debt through meaningful spending cuts and restructuring government assistance programs. Stabilizing the value of the dollar would help to eliminate uncertainty that impedes business expansion and job creation.

Cain believes that implementing these initiatives would provide economic certainty to businesses for investment, innovation and hiring purposes. He estimates that these changes would cut the unemployment rate in half when fully implemented.

Cain has held several executive roles in the private sector: as a business analyst for Coca-Cola; as Vice President of the Pillsbury Company, leading the turnaround of 450 Burger King restaurants; as Chairman and CEO of Godfather's Pizza, taking the company from the brink of bankruptcy, returning it to profitability and leading his management team in a buyout in just 14 months; and as the Chairman, President and CEO of the National Restaurant Association, leading the nation's single largest private industry. He has served on the boards of directors of several major American and multinational corporations, including Whirlpool, Nabisco, SuperValu, AGCO, Hallmark Cards, Reader's Digest and Aquila. Cain's professional record as a job creator and "turnaround artist" led his peers to elect him the Chairman of the Federal Reserve Bank of Kansas City, as well as a member of the late Secretary Jack Kemp's "Economic Growth and Tax Reform Commission."

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FOR IMMEDIATE RELEASE:
Thursday, April 14, 2011

FOR MORE INFORMATION:
Ellen Carmichael

(Stockbridge, GA)- Potential Republican presidential candidate and longtime corporate executive Herman Cain will address the "Keep Them Honest Tea Party" at noon Thursday, April 14, 2011 on the East steps of the Michigan state capital, 215 North Capitol Avenue, Lansing.

At the event, Cain plans to announce a five-point tax plan to immediately stimulate the economy:

Eliminate taxes on repatriated profits to allow American-based multinational corporations to return revenues to the U.S.
Make the current income tax rates permanent.
End taxes on capital gains and their dividends to encourage investment.
Lower the corporate income tax rate from 35 percent to 25 percent, with an incremental plan to decrease the rate further over time.
Suspend payroll taxes for both employers and employees for an entire year.

If implemented, Cain's tax reform initiatives would create jobs and spur economic recovery, especially in states like Michigan that are plagued with unemployment at rates significantly higher than the rest of the country.

"Michigan has long had a rich economic heritage of manufacturing and innovation," Cain said. "But, our current federal tax system, coupled with the state's poor fiscal policies, created widespread joblessness here. Tax reform is a critical component of the long-term stability and growth for both Michigan and America."

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Excerpt from Remarks at April 27, 2011 House Party in New Hampshire

...We've got an economic crisis. Ask the 15 million people who do not have jobs. They'll tell you. We're not in a recovery; we're stalled.

There are five things that I would do.

Number one and that is lower corporate tax rates from 35 to 25 percent. We're the only country in the world that has not. What are we waiting on? This is why we're losing so many businesses and so many jobs.

Lower personal income tax rates.

Lower the capital gains tax rate to zero. Free up investment in this country. This is how you create jobs.

Suspend taxes on repatriated profits. It's been estimated that nearly a trillion dollars are held by multinational corporations in other countries. So the liberals' attitude is if we can't get a piece of it, we're going to leave it over there. I call this low hanging fruit...low hanging fruit. Take it to zero. Not 5.25%, which is what it was back in 2003 when George Bush was able to get this done for a limited period of time. Nearly $350 billion came back into the economy. It is now estimated that nearly a trillion dollars will come back into the economy.

And then the next one is give workers a full 6.2% payroll tax holiday for a year and employers.

These items, folks, are called direct stimulus because we keep the money, we spend it, we save it, we grow our businesses. That's how you get the economy going.

And the fifth leg of that is make the rates permanent. We've go to remove this uncertainty that's hanging over this economy, which is bogging us down.

Now that would be what I would propose to get passed in the first six months. And then during that time while people are seeing how well this is working — and there are plenty of studies out there that says these measures will work — liberals simply don't want them to work. Then in the second two years — During the first two years I would be educating folk on the importance about the Fair Tax, so we would replace the entire tax code with the Fair Tax.

I got a question today that just absolutely shocked me from one of the reporters. He says, Mr. Cain, I have been hearing about the Fair Tax for ever and it never seems as if its going to go anywhere. He says so why would you want to take on something that's going to not happen, that's going to be an impossibility. I just smiled and said, sir, you don't not do what's right because it's hard to do. And if the Founding Fathers had had that attitude guess what? We wouldn't be here today. Just because it's difficult, it doesn't mean you don't do it. I know it's going to be difficult, and this is why I'm not going to introduce it the first two years. We've got to educate the public because it is, has been demagogued, lied about. And if the American people know the truth, they will support it, and they will demand it. This is how you get something like that passed.