20-12′ in 2012
Mark Easley | Thursday, December 1, 2011
Republican presidential candidate Herman Cain has come up with a bold plan not just to reform the current tax code, but to replace it. It’s called ‘9-9-9′ — perhaps you have heard of it. It is both elegant and simple in execution: 9 percent personal income tax, 9 percent corporate tax, and 9 percent national sales tax. This both significantly decreases taxes for all Americans while increasing the efficiency and simplicity of tax collection. While this is one possible and popular tax code reform, other tweaks can also be made to achieve similar or better results. The tax code debate is here, ladies and gentleman!
The one good thing about this recession and the failed economic policies of President Obama is we finally will be able to get this nationwide burden rectified. The middle class is increasingly pushing this issue to the forefront because our tax code is so bad. If you get the code printed by the U.S. government printing office, it amounts to well over 16,000 pages. These are rules, exemptions and regulations written by Congress and the Internal Revenue Service. Inside these pages are loopholes for rich and poor alike to cheat the system and pay much less than their due. This creates a system that is unfair to everyone and generates momentum for class warfare. Everyone hates to see big companies like GE (a company favored by the Obama administration, hmm…) or Google pay little or no taxes.
Meanwhile, the middle class hates the fact that only half of Americans actually pay taxes, and only the top 1 percent pay the majority of the taxes that are collected. Lowering the taxes via a flat taxation scheme will simplify the process, create certainty in the market, reintroduce fairness to the tax code, and eliminate the power of lobbying and crony capitalism.
Presidential candidate Rick Perry has proposed a flat tax alternative that will set both personal income tax and corporate taxes at percent. This maintains a flat and simple tax code without the potential disaster of enacting a national sales tax. This is a very reasonable proposal but I would do it one better in typical Herman Cain theatrical fashion. ‘9-9-9′ sounds good, but what about ‘20-12′ in 2012. ‘20-12′ will stand for 20 percent corporate tax, 12 percent personal income tax and 0 percent national sales tax. This would lower the corporate tax from 35 percent to 20 percent, making America a much more competitive place to do business. The days of China as a cheap place to manufacture things are coming to an end. Studies show that in the next decade it will begin to be cheaper once again to produce products that are sold to Americans in America. This is due to wage and price inflation in China as they become richer. We can accelerate this process and bring some of those factories back by lowering our corporate taxes (and encouraging energy independence, but that’s for another discussion). U.S. companies want to be in America, but it doesn’t make business sense to do so if America remains non-competitive in the global marketplace.
A 12 percent personal income tax will drop the income tax significantly for most Americans. That means when you get your paycheck you suddenly have 10 to 20 percent more cash then you did before. How awesome is that? What are you going to do with that money? Well you are going to buy more stuff you need, invest it or save it in a bank so it gets loaned out to people that need it. Multiply this effect by millions of Americans, and you can see how this plan is going to rev up our economic engine and get us back on track. Government can never spend money more wisely than you can. Never forget that. And frankly, I don’t care if you only made $100 this year, you can pay your $12 contribution to our nation just like the guy that pays $12,000 on his $100,000. No more loop holes and exceptions. We are all citizens of this country, and we should all pay in something for our benefits.
The 9 percent sales tax is quite worrisome to many conservatives because of the potential negative effects it will have on the poor and the economy as a whole. By adding a sales tax, you artificially increase prices across the board, which can have much greater long-term negative effects than just making the consumer pay more for products. It also complicates an otherwise simple solution to our tax problems. Leave it out, and instead let’s adopt ‘20-12′ in 2012 because not only does it sound good, but it’s going to feel good, too.
Mark Easley is a senior computer science major. He can be contacted at [email protected]
The views expressed in this column are those of the author and not necessarily those of The Observer.