Scrapping the Sales Tax From 9-9-9?

Reporting on Politics and Policy.
Oct. 18 2011 2:59 PM

Scrapping the Sales Tax From 9-9-9?

James Pethokoukis finds Stephen Moore considering the option, as he predicts that 9-9-9 will put the economy "on steroids."

David Weigel David Weigel

David Weigel, a former Slate politics reporter, is a reporter for Bloomberg Politics

Art Laffer and I helped design the plan. But I’ve come to the conclusion that the American people and the voters do not want a national sales tax. He’s going to have to replace that national sales tax with a 9 percent payroll tax. And if you do that it’s a total winner.

This doesn't make sense. 9-9-9 is a multi-stage plan, and the final stage is the Fair Tax -- a 27 percent sales tax. As designed the plan just gets people ready for a sales tax that has 12 or more years of Republican thinking behind it. Take this analysis, for example -- it's from 1995.

This is the only plan that fixes every one of the defects of the current income tax system. Here is how:
1) Because the sales tax exempts all savings and investment, the double taxation problem would be eliminated. Because the sales tax is a single flat rate, the disincentive effects from high marginal rates would be eliminated.
2) The sales tax eliminates the income tax entirely. Compliance costs would be substantially reduced.
3) The sales tax would virtually eliminate the Internal Revenue Service. The sales tax is the only plan that solves the invasive nature of the current system.
4) A sales tax would be paid by consumers every time they purchased a good or service at the cash register. The tax would appear on the receipt. Hence, the sales tax is one of the most visible taxes.

The author of that analysis was Stephen Moore, then at Cato. My point: Cain really believes in phasing in the sales tax. So, at one point, did Moore. And now, because the tax is politically tricky -- despite all of the economic benefits Moore sees -- it can be scrapped? This is serious tax policy?

David Weigel, a former Slate politics reporter, is a reporter for Bloomberg Politics



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