Herman Cain's 9-9-9 Plan: 'Is It 'Wacky' or 'Constitutional'?

By Frank Hill

We have heard some pundits say that Herman Cain's '9-9-9' plan is a 'bad idea'.

'Compared to 'what'?', you have to ask yourself.

And you have to ask the brain surgeons such as Chris Matthews of 'Hardball' who deify themselves as the arbiters of all that is good about this great nation of ours.

(Why do the images of the Pharisees and Sadducees come to mind on the rare occasions we happen to catch Mr. Matthews harrumphing on a channel hardly anyone watches anymore?)

'Just how flipping 'great' is the current US progressive income tax system working out for ya, Chris? With all the loopholes and exemptions, it looks like a case of moldy Swiss cheese that is crippling the ingenuity and vigor of the American economy, especially now when we need clarity and certainty to get our economy going again'.

We heard Mr. Matthews sniff and snuffle and look down his nose at those who 'dare disagree' with him about how the 'grand tradition' of American public policy has 'long been the progressive tax system where people who earn more pay more of their income in taxes for the privilege of living in this great country of ours.' (paraphrased)

Oh, really?

Where in the US Constitution does it say anything about the vaunted 'progressive income tax system'?


Where does the 'progressive income tax system' come into play in the Declaration of Independence, The Emancipation Proclamation or maybe even going back to the Magna Carta, all of which are 'freedom' documents of the nth degree?

Let's take a step back into time and think about what the early settlers of America and the Founding Fathers were thinking when they were forming this new great land that we have inherited from them and their sacrifice and labor:

'Well, after we pioneer our way from the East Coast into the Midwest and fight all the Indians and the French soldiers and conquer this land, let's make sure we institute the 'progressive income tax system' so all of the people who took those risks pay more of their income for the things the rest of us all want.'

(Overheard at the crossing of the Delaware on a freezing cold Christmas night in 1776)

'You know, George (Washington), after we surprise the British here on Christmas day, we think the best thing we can do for this new republic we are fighting to start is to institute the 'progressive income tax system' so primarily only the rich people will pay for most of the huge public sector we are sure we are going to need down the road.'

Nothing could be further from the truth. They were fighting for freedom, plain and simple.

Much of that freedom was tied into being freed from the capricious taxation decision-making of King George III who seemingly popped out new taxes on the colonists like popcorn from a Jiffy Pop Popcorn aluminum bubble.

You know what the very first order of business was in the very first Congress in 1789?

Finding a way to pay for the new Republic.

You can look it up in the Congressional Record in the Archives in the basement of the Senate Dirksen Building. Page 1 of Volume 1 starts out with the call to order and then dives right into the issue of instituting and raising revenues to pay for the new country through import taxes.

What are 'import taxes', class?

Right. 'Consumption taxes' based on the importation of goods from overseas.

And who would be more likely to buy expensive perfumes from France and fine linens from England in 1789 America?

Correct. The rich people. The more they bought, the more taxes that were collected for the young republic.

Talk about 'progressive'! We have a feeling that the wealthy back then paid perhaps 75-90% of all import taxes whether they were consuming the goods or importing them and then re-selling them to the general public.

Here's an interesting 'fact' that many people, including the savant Mr. Matthews, don't know:

In 1805, President Thomas Jefferson reported to Congress that revenues from import taxes in 1804 totaled $11.8 million for the past fiscal year. Expenses totaled $8.7 million for the young nation.

The surplus in 1804 was $3.1 million. Which is about $80 billion in 2012 terms.

All of the revenue back then came from import taxes. It stayed mostly that way in America up until the Civil War when Abraham Lincoln instituted an income tax to help pay for the Union side of the things in that bloody war.

Which was summarily repealed in 1872 after years of heated debate. Income taxes were revived in 1894. The U.S. Supreme Court ruled the income tax to be unconstitutional in 1895.

Congress proposed the 16th Amendment in 1909 to make the income tax constitutional and it was ratified in 1913.

Here is the entire text of the 16th Amendment:
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
It says absolutely nothing about the 'progressive' income tax system. It could be a flat tax. In fact, the first income tax system under Lincoln was a 'flat tax' of 3% on any income above $800 earned in a year so there is some precedent for the flat tax from one of our 3 greatest Presidents, yes?

So for over half of our nation's history, import 'consumption' taxes were the way we funded virtually all of our federal government's activities. 'Consumption taxes' have always been a part of the US landscape ranging from import taxes to excise taxes to sales taxes.

They all work the same. And guess what? They all produce far more income from people who buy more goods and purchase large consumer goods such as Bentleys than from people who purchase 30 year-old used Gremlins. If they were applied to new mansions as a true consumption tax would work if truly universal, a person buying a $10 million home might pay 9% in a consumption tax to the federal government at closing.

Today, he/she pays zero to the federal government for a purchase of a new home. Or a Bentley.

More later on the details of the 9-9-9 plan as we get the chance to study it in more detail.

But the operative question we want to leave you with today is this:

'Are you willing to keep putting up with a bankrupt and corrupt current federal income tax system? Or are you willing to try something simpler and more transparent and direct?

If you answer affirmatively to the second question, you need to take a deeper look at Herman Cain's 9-9-9 plan.

(Editor's Note: Frank Hill's resumé includes working as chief of staff for Senator Elizabeth Dole and Congressman Alex McMillan, serving on the House Budget Committee and serving on the Commission on Entitlement and Tax Reform. He takes on politics from a fiercely independent perspective at the blog Telemachus).


  1. Actually, a so called "progressive" income tax is a violation of the equal protection clause. They get around it by saying it applies not to people, but to income (as though the two are somehow distinct).

  2. "without apportionment...without regard to census or enumeration"

    That's the part that permitted progressive taxes. Prior to the 16th Amendment, states paid taxes to government proportional to their population. In other words, those that had the most votes in the House had to pay the most taxes.

    Congress' power to levy taxes comes with the power to set tax rates.

    Equal protection does not apply. The due process clause just means that Congress must pass a law which deprives us of income disproportionately.

    I oppose progressive taxes on every social, moral, and economic ground, but it's a waste of oxygen to say they are not legal.

    The 9% sales tax can be either regressive or progressive depending on how it's structured. It will also have a secondary impact on state finances since many states rely on a sales tax.

    A flat tax is not the same as a proportional tax. Most people use the former term when they mean the latter. A proportional tax is truly "flat" in that every dollar is taxed at the same rate. A flat tax can have a standard deduction such that lower income people can still pay zero tax. Flat taxes are mildly progressive, and they are probably the most politically palatable. But hue standard deduction and exemptions will become political footballs.

    Cain is very brave with his proposal, but 9-9-9 will be a middle class tax hike. And it should be. We can't dig our way out of debt unless the vast bulk of taxpayers pays a little more. Cutting government isn't enough to erase the deficit or debt. But once the debt is gone, tax rates must be lowered. Good luck with that.

  3. 'Are you willing to keep putting up with a bankrupt and corrupt current federal income tax system? Or are you willing to try something simpler and more transparent and direct?'

    Why, yes. Yes I am. And a great many of us are. Cain fired the first salvo. Now let us see who responds with a plan of their own.

    (I'm biased, as I am voting for Cain all the way)

  4. IMHO, the powers that be, as in big corporate influence, was able to get the govt to shift the tax burden directly to the people. Who, by the way, have less ability to lobby the Govt to do what is right!
    And now we have too many in congress with a conflict of interest...
    Power corrupts and absolute power corrupts absolutely!

  5. Http://yes-we-cain.com
    As a fellow math/finance guy 9-9-9 is far better than it is being portrayed as. The deeper you understand it, the better it looks.

  6. He is an interesting thing about taxes and who should pay them. I have always believed in a straight or simple tax. If you are an American or a company that wants to do business in America there is a cost, which all should share equally in. Every citizen enjoys the same laws (supposedly) and the same national defense, so why should anyone not pay or some should pay more than others.

    We are all equal, plain and simple, so everyone should pay a straight head tax. This would also set the federal budget because the politicians couldn't just go around raising the tax because it would be highly unpopular and raise it high enough and there would be real riots in the streets.

    The tax would have to be low enough that it won't be such a burden on the poor, but they should also have to pay because they are citizens and enjoy the benefits. If you set it at $2000 for every citizen over 18 then you get a federal income of say $300 billion, so you have to make some very serious decisions about what you are going to fund.

    Of course we can never have such madness because we need to soak the rich and make them pay for all these perks.

    How else could the government raise money, oh those nasty people that employ us need to pay up as well. See Canada's solution to the economic downturn, they dropped corporate tax to 15%. What are they thinking, how are they going to pay for all those social programs? Increased revenue from new business that is how. If America is soaking you to the tune of 40+% then head to the Great White North and pay less than 20%.

    We need to do something and fast. It means lowering corporate taxes and making every American pay (that way they might actually care how much of their money is wasted, since right now it is only other people's money being wasted).

  7. "We are all equal, plain and simple, so everyone should pay a straight head tax. "

    I don't agree with that. Taxing a head is basically government demanding money from someone just for the privilege of "allowing" them to live. Not to mention the question of when the head tax should start. At what age? Taxing commerce makes sense to me, but in the end, it's the amount not the method. Truth be told, our tax system now might not be "fair" but it works in that it takes from where the money is. I can't imagine what life would be like for a family of four living on 40 grand a year would be like if they were expected to pay more to the government. It would be brutal. Impossible actually. The spending is the problem. That's where the discussion should be focused. A discussion centered around revenue ignores the problem.

    Crack addicts all eventually think they have a revenue problem. They never did. In reality, they didn't have a spending problem either. It's a soul problem. A reality problem. A priority problem.

  8. I agree with the true problem being a spending problem, so like a crack addict we need to keep the crack away from them. We can't keep feeding their addiction and expect a different outcome.

    Why is it unfair to expect a citizen to pay for the rights of citizenship? If we all enjoy a robust defense then we should all pay for it.

    I do think that we should tax consumption on some level and use that to raise any additional funds the government may need after the straight tax. Because it then becomes a choice not a gun to the head requirement as it is now.

    I have been at all ends of the tax paying spectrum and I haven't gotten any thing different regardless of how much I've paid, so why should I pay more for making more? Why should I be forced with jail to pay for other people's benefits? They should have to work hard and pay for their own. Forced charity is slavery and I will have nothing of it.

  9. "Why is it unfair to expect a citizen to pay for the rights of citizenship? If we all enjoy a robust defense then we should all pay for it."

    Smarter men than me have written very heavy books on that subject, my friend. hehe The whole "social contract" deal is where libertarians, conservatives and "liberals" part ways. Your question is valid one, but it's logical implications are quite stark. Most people would call me a conservative, but I oppose the draft on moral grounds. Original sin is one thing, but being born with a debt to a gang of government workers is an epistemological bridge too far for me.


  10. "I have been at all ends of the tax paying spectrum and I haven't gotten any thing different regardless of how much I've paid, so why should I pay more for making more?"

    Your question sort of answers itself. Why should the guy with an axe be expected to cut down trees? Revenue can only come from where it exists in the first place. I'm not making a moral case for anything, by the way. I'm simply explaining how things are. If congress tomorrow passed some measure to raise money by taxing people who live on what the median income in this country currently is, they would succeed in doing nothing but creating a shitload of criminals. It wouldn't raise any money. Hell it would eliminate what is currently being gotten out of that sector of the taxpaying public. You don't have to like the way things are to understand how things are.

    There is a part of me that would like to see the tax code used as a cudgel to show the American people how unsustainable current spending levels are, but it's just a fantasy. In the end, the American people get what they demand of government as long as government is there to give it. I'm at the point where default looks like the only wake up call that will be heeded.

  11. I would have to agree that just hoping for serious change is pure fantasy. You are probably right about default being the only wake up call this country will heed. The good/bad news it won't be too long before we find out as service to the debt continues to grow with the growing debt. Pretty soon within five years debt service will equal revenue and we will borrow every dollar we spend. How long is that going to last?

  12. Who knows? I'm really not a fatalist. No matter what happens, we're still the USA. Opulence has gotten us where we are right now. The end of opulence won't mean the end of the USA.

    I'm not an educated man, but my predictions are usually pretty reliable. I think the American people are the leading indicator and that government is their follower. There's a delayed reaction, but the trend line is pretty true. I think Brakabama is the end of of the blessed "civil rights movement". What gets called austerity in other countries is actually going to happen here for real.

    I look forward to our future. We are the best people on this Earth. It has dick to do with the constitution too. Greatness is our heritage. We really are that metaphorical melting pot (an alloy not a soup) We make mistakes on the way to greatness, but greatness is our destiny.

  13. It is interesting just how 'unequal' our laws make Americans.

    No wonder we have class/age/gender/race warfare....everyone is fighting to get something before the other guy does.

    The consumption tax does away with all that....

    here's a small case differential to noodle on: You can vote, go to Iraq and get shot at and pay taxes at age 18..but you can't drink a 3.2% alcohol beer?

    that is not a pressing issue (but used to be) but it points out just how uneven our public policy is...from taxes, to government programs to restrictions on business.

    There is always 'something' in the national laws and tax codes that puts someone at an advantage versus someone else at a relative 'disadvantage'

    we got to change that. Somehow.


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