Economics Questions

Re: Herman Cain's 9-9-9 plan, has an Austrian economist adressed it yet?

John James — Tue, 25 Oct 2011 06:49:06 GMT

I heard that too. In fact, his point about price being always set at the profit-maximizing level is exactly the point Rothbard was making about why a sales tax couldn't be passed on to the consumer (i.e. if you have a sales tax that adds 20% on to the purchase price, you're not going to make the same amount of sales, because if people were willing to purchase the same amount at a 20% higher price, why did you need a tax to raise your price? Why didn't you already have it that high?)

But of course Schiff debunks this as an argument against scrapping our current tax code and instituting a sales tax instead right away by pointing out that without an income tax, (and a payroll tax, and a capital gains tax, and an estate tax, etc.), people are going to have a lot more money to spend in the first place, so higher prices aren't going to affect them all that much (if at all.)

But yes, Schiff does spend a good 6 minutes reiterating some of what Rothbard says in his critique. Schiff even echoes Rothbard's point that in the long run, the tax could disincentivise producers to a point at which they simply produce less, thus getting the equalibrium back to a level of profitability at the higher tax rate.

As to your question, I can't figure it either. It would certainly seem that, ceteris paribus, a sales tax would be ultimately absorbed in the same way (i.e. by the same people) as a profits tax.

But ultimately, as important as that part of the tax discussion is, it isn't relevant for this particular debate in question. And the bottom line for me is, I still don't buy Wenzel's beef. I see no reason why he should be against 9-9-9 when compared to what we currently have, and in all his time on Schiff's show, and all his 7 or 8 blog posts about it, he has given absolutely nothing to defend his position of being against Schiff (let alone offered anything to suggest Schiff is wrong about any of it.) All Peter's been saying is...

1) We want government spending to be essentially zero, so that taxes are essentially zero. That's ideal.

2) Recognizing that government is not going to disappear any time soon, certainly not overnight, we recognize that it will continue to exist for a while and will therefore have to be funded.

3) Granting that government will have to be funded, there are better and worse ways of doing it.

4) Recognizing that 9-9-9 is not as great as Cain makes it out to be, it's still better than what we have now, and a good step toward something even better than itself. i.e. No tax > FairTax > 9-9-9 > what we have now.

That's Schiff's whole argument. And I have heard nothing from the old codger that hurts any of it. The best he's been able to come up with (aside from a bunch of whining and Krugman-esque sensationalizing and nonsense characterizing), is "The greatest economist of all time, Murray Rothbard said—did I mention he's the greatest economist of all time? Cuz he is—anyway, he said that any sales tax really doesn't affect the consumer, it just hurts the producer and the land owner. So..uh...yeah. Sales tax is no good. Rothbard!"

If he's actually presented something of substance that I've missed, someone please enlighten me.

Re: Herman Cain's 9-9-9 plan, has an Austrian economist adressed it yet?

Smiling Dave — Tue, 25 Oct 2011 03:55:58 GMT

I don't understand something Peter said in today's show.

He explains that a profit tax is not passed on to the consumer, because the profit maximizing price is usually the one set before the tax. Changing that price because of the tax will bring in less money. He restates this as "If $10 per widget brings you the most profit, and then a profits tax lets you keep only 75% of your profits, well 75% of profits is also maximized at $10 a widget."

All of which I understand. What I don't get is the next part, where he says that the above analysis only applies to a profits tax, not to a sales tax. A sales tax, he says, is passed on totally to the consumer, [just as a payroll tax is passed on totally to the employees].

I don't get it. Won't passing the sales tax on to the consumer also reduce total sales, exactly and for the same reason as when it's a profits tax?

Re: Herman Cain's 9-9-9 plan, has an Austrian economist adressed it yet?

John James — Mon, 24 Oct 2011 21:26:02 GMT

Schiff responds to Wenzel's blog-a-thon...

(Please visit the site to view this media)

Re: Herman Cain's 9-9-9 plan, has an Austrian economist adressed it yet?

John James — Mon, 24 Oct 2011 05:43:53 GMT

Oh look who's back. Now Wenzel's got another post regarding the show (making it an even 6 now). This time he's going to tell us "how it really went down". He quotes from the audio hobbiest who posted in the comments explaining how the audio setup on radio generally works, and that basically anytime Peter talks, the audio of the other person gets drowned out...and even Peter can't hear them. Kind of like a walkie-talkie. Let's hear how Wenzel deals with this:

Although it sounds like I stopped talking, Peter interrupted me three times during the first part of the interview. He just talked over me. The first time it happened I thought it was rude, but, hey, I have had worse things happen. I waited for him to finish and then continued with a point. He interrupted me again, this time I thought I was not letting him get away with it. I said, "Peter...Peter...Peter...Peter." Trying to indicate that I did not give up the floor when he interrupted me. I was amazed that Peter didn't respond, since I thought it would show how rude Peter was being. Especially, when I called out Peter's name four times and gave him opportunity to stop between each time I called out his name. Now, I realize why he was unconcerned.

Oh really, Bob? You realize why he was "unconcerned"? You mean, because he couldn't hear you? Jeez this guy's bitter. And of course Peter cut him off, he wouldn't talk any sense or answer the question he was asked. He would just keep going on and on with the same confused nonsense. It's one thing when you're having a private conversation with someone...but when you're broadcasting live on the air (in an audio-only medium, especially) attention has to be given to the quality of the conversation. No one wants to listen to some old geezer continuously miss the boat and keep rambling on about the same non-point...and then when he can't come up with anything else to say, keep trying to change the subject. It's bad radio.

Hosts have to deal with crappy guests all the time. Directing the conversation is one of the biggest parts of their job. I don't doubt that Peter is usually more interested in what he has to say that what his guests have to say...but it's The Peter Schiff Show. People tune in to listen to him. And if you know anything about Schiff and his background and the history of the show, it's pretty obvious he does the show more than anything, for himself. It's his therapy. It's his de-stress time. He gets 80 minutes a day to talk about whatever's on his mind, and express his opinions, and hear from people who are interested in the same things he is. I wouldn't be surprised if the show barely breaks even, even by now, having been around a year already. It's obviously not about money. I guarantee you there's plenty of more profitable things a guy like Peter Schiff could be doing with 2 hours every weekday.

It's his show, he's doing it for him, but also for the listeners, and if they don't tune in, there's little point to him continuing to do the show...certainly not in paying for it. So he's gonna run the show his way and he's gonna talk when he feels like it, but he's also gonna do what he can to try and keep it entertaining. And I think in cases like this, those are one in the same. I wouldn't even be surprised if Schiff wasn't even thinking about the quality of the broadcast when he was interrupting Wenzel, he was just thinking how annoying it is when someone is so stuck on their own idea that they can't take two seconds and answer a question that takes them outside of their comfortable little box. He was thinking how boring it is to have to listen to someone ramble on and on explaining something that you not only already understand, but that isn't even relevant. Of course he's going to try to steer the conversation back to an intelligble dialogue. And it just happens that in the radio setting, any time he has to do that, he loses the audio of the other person.

Again I think Wenzel is just bitter because he got out-debated. He begins to close out the blog post with

At this point I had figured out The Peter Schiff Show game, which was that I had the opportunity to get one sentence out before Peter could technically take me out of the conversation. Since Peter wasn't going to allow me to completely express my view on the consumption tax on his show, despite his inviting me on the show for just that purpose, I decided to take the debate over here to EPJ.

Give me a break. Wenzel expressed his view. Multiple times. "A consumption tax doesn't affect the consumer, it's carried by land and production." We got it. And he wasn't there to discuss the consumption tax, he was there to explain his ridiculous claim that Schiff endorses the 9-9-9 plan, and explain why it's not an improvement over the system we currently have. All Schiff was trying to do was get to the point of "Okay, you say 9-9-9 is no good, and now you're saying consumption tax in general is no good...what tax system would you have?" Wenzel just didn't have an answer for that so he did what most confused old men do when they don't have an answer...just keep re-explaining something they do know. And then when that doesn't work any more, they change the subject. Surely I'm not the only one who has noticed this in senile people? (But then again, I guess this is a tactic of young ignorant people too...but I don't think Wenzel fits into those categories.)

And even taking into consideration his appeal that "he really was making great points, we just couldn't hear them", I seriously doubt it. I just don't see how he could be talking almost total irrelevant nonsense on the air the whole time and everytime Peter moves in to redirect the focus, the minute Schiff starts talking and Wenzel is drowned out he starts speaking spades. I just don't buy it. There's no way anything the guy said off the air was that much better than what got on the air.

Re: Herman Cain's 9-9-9 plan, has an Austrian economist adressed it yet?

John James — Mon, 24 Oct 2011 05:41:13 GMT

So, reading some of Rothbard's critique, it would appear that Rothbard himself contradicts Wenzel. In the interview Wenzel claimed that "increased costs to the consumer entice him to buy less, leaving extra inventory for the producer, meaning he'll have to lower his prices". It's possible I'm reading this wrong, but it sounds to me like Wenzel's idol says the exact opposite:

"There will therefore be no shift by Jones in favor of savings-and-investment due to a consumption tax. In fact [...] there will be a shift in favor of consumption because a diminished amount of money will shift the taxpayer's time preference rate in the direction of consumption. Hence, paradoxically, a pure tax on consumption will and up taxing savings more than consumption!"

Sounds like Wenzel doesn't know what he's talking about, according to his godsource.

Granted, I haven't read Rothbard's entire critique yet (it's pretty long), but on the surface I just fail to see why the hell it matters in the first place. Claiming that a sales tax "is really just borne by the producer" sounds like nothing more than a tautology...a way of looking at the world. I remember reading Rothbard's explanation of the exact same concept in MES and thinking the same thing...wondering what he was talking about and where he was supposed to be going with all that.

Not only that, but the backbone of Rothbard's whole "taxes can't be shifted forward to consumers" rests on the supposition that the only option the retailer has is to raise prices on those items sold. He says that:

"Prices, at all times, tend to be set at the maximum net revenue point for each seller. If the sellers can simply pass the 20 percent increase in costs onto the consumers, why did they have to wait until a sales tax to raise prices? Prices are already at highest net income levels for each firm. Any increase in cost, therefore, will have to be absorbed by the firm; it cannot be passed forward to the consumers."

I however see no reason these retailers could not (or would not) simply begin charging for something they previously gave away for free. This is precisely what we're seeing in the banking industry right now. All sorts of new fees are popping up in direct response to Dodd-Frank (which is essentially the same as an excise tax). The latest I can think of is the new $5 monthly fee for using your debit card. This is the retailer's way of shifting new costs forward to the consumer...precisely what Rothbard argues cannot be done.

Getting back to Wenzel though...As mentioned earlier, he made note on his blog that Bob Murphy got in the mix and made a post on his own blog concerning the consumption tax...which of course Wenzel sensationally titled "Murphy Atttacks Rothbard on His Consumption Tax View". So of course Murphy had to come back with his own clarification and explain that [surprise surprise] Wenzel claimed Murphy was saying something he in fact wasn't....

"What I was getting at in my post—and yes here I did explicitly disagree with Rothbard on one particular point—is that Rothbard somewhere challenged the standard supply-side critique of an income tax, on the grounds that it “discourages savings.”[...] That is the argument from Rothbard I was criticizing. In response, Wenzel didn’t get that distinction, and instead thinks I was attacking the claim about consumption taxes being shifted onto productive factors (the claim I specifically said I would have to think about)."

Well well well, whatya know, Wenzel puts words in someone's mouth so that he can make them out to be foolish. Never saw that one coming. And in fact, I'm obviously not the only one who recognizes Wenzel's MO, as Murphy closes out the post with:

Are you Wenzel fans sure you want to go with him on this one? Now a consumption tax doesn’t hurt the consumer at all? So retired people (who no longer work), who have all their assets in ~~gold~~ bonds or actual cash* (so they won’t be hurt by declining corporate earnings or land rents) will be unaffected if Cain institutes a 9%, or for that matter a 99%, national sales tax? Do you Wenzel fans really think that can possibly be correct? If so, Cain should incorporate that into his schtick.

(NOTE: I am NOT here saying that Rothbard said a consumption tax doesn’t hurt consumers at all. As I said all along, I need to go study that argument again, because there are a lot of moving parts. I’m saying that Wenzel’s quick reaction to my post, implies such an absurdity.)

* EDIT: I originally had “gold” as the asset, but changed it to “bonds or actual cash” because the retired people would get hit with the national sales tax (perhaps) when selling off their gold holdings. Now I’m waiting for a new Wenzel post: “Murphy says holding US fiat dollars a better investment than gold!!”

Ain't life grand.

Re: Herman Cain's 9-9-9 plan, has an Austrian economist adressed it yet?

Smiling Dave — Sat, 22 Oct 2011 11:07:28 GMT

Could you please link to the part you're talking about?

You are right. I listened again and he said it in referrence to a head tax. Will modify blog accordingly.

Re: Herman Cain's 9-9-9 plan, has an Austrian economist adressed it yet?

John James — Sat, 22 Oct 2011 04:36:18 GMT

Smiling Dave:
I'm not referring to the radio debate here, but rather to the idea expressed at length by Rothbard, quoted at length on Wenzel's blog, which I don't think Peter has rebutted. As I said in the blog, my impression was that Rothbard's idea was not well expressed in the radio show, so Peter didn't know what he was being asked to reply to.

I'll grant you Wenzel wasn't talking any sense, but even granting the notion that a sales tax is still an income tax, I still don't see how that defeats any of Peter's overall point on this whole tax issue.

I was referring to an earlier part of the radio show, while they were still discussing sales tax vs income tax, and head tax was not yet brought up.

Could you please link to the part you're talking about? I want to know where else Peter mentioned a natural ceiling so that I might try to figure out why he would even bring that up outside the context of a capitation tax.

In other news Wenzel appears to have gotten my comment (although he didn't publish it...figures) about him lying about Peter Schiff (possibly just to ease a bruised ego). So naturally he posted again, this time to make himself out to be the victim who got unfairly silenced by the big bad radio host and his mute button. See, Wenzel actually was making a great case in that discussion. He and Peter were "really going at it". He really put Schiff in his place. But alas, his economic prowess was censored by an unfair bully.

Granted, I don't doubt there were times he was still rambling on and we couldn't hear him. But as a commentor with audio experience points out, the fact that we heard Schiff over Wenzel doesn't necessarily mean the latter was being muted.

And he actually does acknowledge he was totally wrong in his claim that Peter said capitation was unconstitutional. He doesn't apologize for falsely accusing Schiff (twice), and he certainly doesn't publicize it, but at least it's there. And of course it's mixed right in with a full explanation of why Wenzel wasn't really wrong, it was just that Schiff was cutting him off and he didn't hear all of Schiff's statements, and that Schiff's statements were totally irrelevent anyway, so of course Wenzel innocently thought Schiff was just ignorant. See Wenzel already addressed Schiff's question before he asked it, we "just didn't hear him", so Schiff's question had nothing to do with the point he was making. And that of course means Schiff said it was unconstitutional. Because that's what asking a question always means.

See? Wenzel's just a hapless victim yet again. Schiff doesn't deserve an apology. It's all his fault Wenzel assumed he was making an ignorant claim in the first place.

Re: Herman Cain's 9-9-9 plan, has an Austrian economist adressed it yet?

Smiling Dave — Sat, 22 Oct 2011 04:04:49 GMT

I think Wenzel wins this round, at least till we hear a rebuttal from Peter.
You're going to have to explain this one.

I'm not referring to the radio debate here, but rather to the idea expressed at length by Rothbard, quoted at length on Wenzel's blog, which I don't think Peter has rebutted. As I said in the blog, my impression was that Rothbard's idea was not well expressed in the radio show, so Peter didn't know what he was being asked to reply to.

...I'm sorry, was Wenzel arguing for an income tax? ...

I was referring to an earlier part of the radio show, while they were still discussing sales tax vs income tax, and head tax was not yet brought up.

Re: Herman Cain's 9-9-9 plan, has an Austrian economist adressed it yet?

John James — Fri, 21 Oct 2011 23:12:00 GMT

I think people like Wenzel at least deserve a little snarkiness. Sure he's not a journalist, but his blog has a decent amount of traffic, and certanly gets cited more than enough for the plain-text blogspot dot com site that it is. Yet the guy doesn't take 5 minutes to get his facts straight, and writes sensational headlines that he either barely backs up, or are just plain wrong...all the meanwhile berating other people and dishing out plenty of snarkiness of his own. It's certainly irritating, but I think even more so because the guy is supposed to be on the Austro-libertarian team, and he constantly pulls this crap. Just a huge disappointment.

But then again, his economics seem to be wrong just as often as they are right (or at least often enough to be called shoddy), so I'm not so sure it's much of a loss anyway. Just one more reason to feel okay about writing him off.

I shall check out your assessment.

:EDIT:

I figured my response would be best served here...

1. The scheme will will not reduce the amount of taxes actually being collected. Cain said this himself, in Orwellian language, of course.

I have to assume you're referring to his comment that the plan would be "revenue neutral". Saying it will not reduce the taxes collected doesn't paint the whole picture. It's a bit misleading. While it is what "revenue neutral" means, it leaves out the point that the whole reason for saying it that way is to illustrate that taxes can end up being a lower percentage of a person's total wealth...which is kind of a big deal. If sales and incomes and overall GDP rise enough, "being taxed the same amount" could become the 0% utopia Bob is looking for. A $2 trillion tax revenue would not be a problem for me if GDP were $200 Trillion. Obviously this is not realistic but it illustrates my point.

2. A much bigger problem than how the taxes get divvied up is the total amount of taxes being collected.

Again, this completely ignores the GDP of the economy as a whole. This is the whole reason people speak in percentages. You're saying "look how much this guy is paying in income taxes...a million dollars? That's insane." To be perfectly honest, I really don't give a crap if my taxes are $1 million if my income is $1 billion/yr. I'm not saying government taxing/spending isn't important, obviously it should be zero, but my point is it's foolish to ignore proportion.

Note that Wenzel is not saying that the 9-9-9 scheme is worse than what we have now [by this reasoning], only that it is not an improvement.

It sure sounded like he preferred the current system over the 9-9-9. Why else was he so averse to consumption tax, yet had nothing to say about an income tax?

I think Wenzel wins this round, at least till we hear a rebuttal from Peter.

You're going to have to explain this one. I thought I illustrated quite well in the earlier post that it was Wenzel who was completely confused and didn't have an answer for anything...all he had for the majority of the discussion was "taxes should be lower". And finally when Peter pressed him and he comes out with a capitation tax. So Peter questioned him on the whether it would be apportioned, as stipulated in the Constitution or whether the Constitution would be amended, and Wenzel claims he's throwing around legal terms that Wenzel isn't familiar with so he can't answer. So Peter moves on to explain why the founders didn't like Wenzel's tax system and why they made it hard to implement it. And Wenzel has nothing to do but run off to his blog like Krugman and falsely claim Schiff said the tax was unconstitutional.

I don't see how that is considered a win for Wenzel.

3. Peter argued that if sales taxes get too high, people just won't buy as much, and the govt will get less money, so there is a built in ceiling to a sales tax. Of course, the same is true of an income tax, as is well known, so I think Peter's argument here falls short.

I'm sorry, was Wenzel arguing for an income tax? Because I thought the built in ceiling thing was Peter's explanation of the reasoning of the Founding Fathers as to why they didn't like a capitation tax...because no one could avoid any of it. That was the whole reason he brought up that point, because Wenzel said "count up everyone 18 years or over and divide". Obviously if Wenzel had said "tax the public income", Schiff wouldn't have said anything about a built-in ceiling. The whole point was that Wenzel's capitation tax doesn't have a built in ceiling. So I have no idea why you're even bringing up an income tax, or why the fact that it has a ceiling just the same as a consumption tax does, is even relevant.

Re: Herman Cain's 9-9-9 plan, has an Austrian economist adressed it yet?

Smiling Dave — Fri, 21 Oct 2011 22:48:44 GMT

JJ,

That is indeed an accurate, if somewhat snarky, summary of the radio show.

I addressed the ideas involved at length in my blog.

Re: Herman Cain's 9-9-9 plan, has an Austrian economist adressed it yet?

John James — Fri, 21 Oct 2011 22:20:13 GMT

Schiff/Wenzel interview available here. (If that link ever stops working, listen here)

Satisfied now, Dave? Wenzel is so damn confused it's making my head hurt. That's why I've gotta go with senility, because I can't figure any better explanation as to how someone who references "the great economist Murray Rothbard" can sit there and argue that a sales tax will be harmful because it will move the demand curve and people won't buy as much stuff, as a way of saying a sales tax is worse than an income tax.

Seriously listen to that interview...he just keeps going round and round. Schiff keeps asking him "Yes, of course I want taxes to be lower...but the point is the government is going to take money one way or the other...either from people's income or their consumption...which would you choose?" and Wenzel just keeps saying "no, you're missing it...that's like saying you're diabetic and you need to cut sugar out of your diet...the conversation shouldn't be whether you should be having a cake or a soda or any of that stuff. It's still going to cause the same problem. It's just moving stuff around on a chess board. What needs to be done is the taxes to be lowered overall."

He even gets into detailed explanations about how increased costs to the consumer entice him to buy less, leaving extra inventory for the producer, meaning he'll have to lower his prices and blah blah blah. And Schiff is like: "Well how is that different from if the consumer has money taken out of his paycheck...he still has less money to spend, which still means less demand, which would mean the producer is still not going to sell as much and prices are still going to have to come down...so I still don't see your point."

Granted that's more of a paraphrase, and Schiff really didn't make the point that clearly, but that's what he was saying...and Wenzel just doesn't get it. And then just like any other confused old man he wants to change the subject and asks Peter for his opinion on the stock market.

Finally Schiff moves to get him to answer something so he just asks what Wenzel's tax plan would be. Wenzel says he'd want to do something to get taxes a lot lower. And Schiff of course automatically agrees and says he'd definitely be down with a 0-0-0 plan...and then he has to break it down again and try not to leave the man any geezer escape hatches...Schiff literally sits there and lays it out: "yes I would love taxes to be zero, but the government is going to have expenditures, so it can't be perpetually funded with debt. We all can stipulate that we want governement spending to collapse so that the taxes can be as low as possible, but we're gonna have some taxes...the government's not going to go away, so we have to fund it. So what would your preferred mechanism for funding the government be?

And what's Wenzel's answer? "Okay, here's what I would do...I would still very much focus on the cost side and really, you know bring government's down to zero as much as I can. " That's all he's got. Same non-answer. And where does he go from there? Well changing the subject of course. The very next sentence: "Now, this is all assuming that I could be elected president..." Schiff has to cut him off again, and restate everything "yes, we agree we want government to collect as little as possible...etc etc etc. Let's say we get it down to $1 trillion a year instead of $4 trillion...how do you say the government should go about collecting that $1 trillion?"

Wenzel: "okay, I would cut it much lower..."

Schiff: "It doesn't matter what it is! YOu're not going to get it to zero...so how are you going to collect the revenue you need?"

Finally Wenzel concedes and describes a capitation tax...basically count everyone over 18 years old, and just divide. That's his plan. That's his solution. Everyone pay exactly the same dollar amount. Not based on percentage of their income, or their overall wealth, not percentage of stuff they buy...no...just the exact same dollar amount, based on whatever the government feels like collecting. Bill Gates and John Q, both pay the same, regardless of how much they produce, how much they consume, or anything else that they do. And this is the same guy who 5 minutes earlier was talking about how a sales tax is unfair to the poor?

Eventually Peter just moved on and went on a monologue and explained everything straight up. Wenzel closed the segment saying how he would post from Rothbard's critique explaining why the consumption tax "really does not effect the consumer, but effects the producers and land owners".

Aftermath

Wenzel followed through and posted the portion from Rothbard's article...and then quickly followed up with another entry claiming Schiff was wrong on the capitation tax. He claims "Peter caught me off gaurd when he said that a capitation tax is not allowed by the Constitution. Peter's wrong." No, once again Bob Wenzel is wrong. The part in question can be heard here.

Schiff clearly states: "would you want the government to have to apportion it according to the Constitution, or would we amend the Constitution to allow the government to levy a capitation tax without apportionment?" Later all he says is the "Founding Fathers were familiar with a capitation tax system, and they didn't like it, that's why they made it hard for the government to levy that type of tax".

It's right there. Anyone can listen to it. Schiff said nothing about it being unconsitutional. Bob just had a bruised ego from looking foolish on the air and needed to find some way to call Schiff wrong. I just didn't realize he'd go as far as to actually make something up. (Of course we could always go with the senile defense and claim he "just misremembered").

Then of course, Wenzel follows up again with Rothbard On The Best Tax, since, you know, he didn't have an answer of his own so he just went to Rothbard to find out what his opinion should be.

It also seems this has gotten some attention, as Wenzel notes in a later post (these are all today, by the way) that "Bob Murphy attacks Rothbard on Consumption tax" on his own blog, and to top it off, (I can't be sure this isn't an extreme coincidence) the main article on Mises.org today is Rothbard's full consumption tax critique (yes, the same one Wenzel quoted from). I'm wondering if that was just pulled up from the archives and put on the front page because of today's events.

Re: Herman Cain's 9-9-9 plan, has an Austrian economist adressed it yet?

John James — Fri, 21 Oct 2011 20:14:50 GMT

So it does say that...notice it also says:

9% Individual Flat tax
• Gross income less charitable deductions
• Empowerment Zones will offer additional deductions for those
living and/or working in the zone

This might actually be the "tweak" that current news reports are talking about. [1] [2]

However...the language in those articles, and on Cain's plan summary, which says the plan "Features a platform to launch properly structured Empowerment Zones to renew our inner cities", does not sound like "the entire United States is an 'empowerment zone.'" It sounds like "inner cities and other poor areas".

And I can't find the actual details of the plan anywhere on that site (granted I didn't look very hard, but I would have to assume they would be presented for easy access if the campaign was making them available.) So I'd like to know where this yahoo got the idea that "empowerment zones" means "The United States of America." Until he can show me that, I'd say he's full of crap.

And the Fair Tax thing is expected, as he always said he was a supporter. He actually brought that up in the first debate back in May when Hannity said "all eyes are on Tim Pawlenty".

Re: Herman Cain's 9-9-9 plan, has an Austrian economist adressed it yet?

Smiling Dave — Fri, 21 Oct 2011 19:40:26 GMT

Sounds very nice. I have two questions"

1. Why doesn't he talk about cutting govt spending? In fact he says explicitly [I'm relying on Wenzel's reporting here] that it will be revenue neutral, meaning will collect the same amount of taxes as before

2.Why should someone be taxed for hiring workers abroad? What kind of idiotic idea is that? Does he not know that tarrifs are bad, including tarrifs on workers?

EDIT: schiffradio.com has the Wenzel interview available free for 24 hours. Am listening now, can't wait to get to the Wenzel part.

Re: Herman Cain's 9-9-9 plan, has an Austrian economist adressed it yet?

Wheylous — Fri, 21 Oct 2011 18:57:28 GMT

Also, unexpected:

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

Re: Herman Cain's 9-9-9 plan, has an Austrian economist adressed it yet?

Wheylous — Fri, 21 Oct 2011 18:55:51 GMT

JJ, I posted the above video on http://www.nerds4cain.com/forums/discussion/116/schiff-9-9-9-plan-is-actually-9-9-9-9-hidden-payroll-tax

and got this response:

9-9-9 establishes the entire United States territory as an empowerment zone, and payroll is fully deductible in that zone. Sure, a company cannot deduct payroll if they hire people in another country, but what's wrong with that? Therefore, the assertion that it contains an embedded 9% payroll tax is pure nonsense.

Looking up "empowerment zone" I found these details ( http://www.hermancain.com/999plan ):

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

Is Schiff wrong? There are not many details, but it appears that payroll is deducted...