By Dick Morris on October 28, 2011

I used to like the flat tax. In fact, I used to propose exactly what Rick Perry is now pushing – an optional flat tax where taxpayers could either make their way through the labyrinth of IRS fine print in search of deductions or could just pay a flat percent of their income in taxes and be done with it.

But then came 2007-2008 and the flaws in our economy became glaringly apparent: The pursuit of wealth through loopholes in the tax code and other speculative devices rather than by productive investment in economic growth. So when Herman Cain proposed 9-9-9, I was and am ready to embrace the idea.

Though imitation is the sincerest form of flattery, Perry’s rush to put his own tax reform on the table is an obvious attempt to horn in on the limelight in which Cain has basked. But the proposals are just not comparable.

Cain’s goal is to reduce the drag that the income tax puts on entrepreneurial initiative and hard work. By slashing the income tax rate, effectively, in half, he makes it that much more worthwhile to get up in the morning, take risks, work hard, take chances, and invest in progress. By eliminating the capital gains tax, he rewards investment and ownership and makes it possible for people to move up the economic ladder, not through phony teaser Fannie Mae mortgages, but by smart purchases and skillful investint.

The goal of Perry’s proposal is far more modest: He wants to cut our paperwork. He wants to make it possible to file one’s taxes in a few minutes rather than devote days and weeks to the task. He proposes, essentially, a short form for middle income and rich people so tax preparation won’t consume their lives. It’s a worthy goal. We need to trim the ranks of IRS auditors and staff and free people to make sound investment decisions regardless of the tax consequences. We need to get the IRS out of our lives and a flat tax is a good way to do it.

But Cain’s proposal is so very much more important. Perry will nibble around the edges, freeing valuable hours from tax preparation to be available for wealth creation. But Herman Cain would establish America as a beacon for investors, entrepreneurs, inventors, creative business people, and all manner of upwardly mobile, ambitious men and women. He would give the U.S. the lowest personal and corporate tax rates in the world, and the only place where investment earnings are tax free. In the process, he and his plan would kindle decades of robust economic growth. He would make the next few decades a continuation of the American Century.

To trivialize Cain’s big idea by comparing to to Perry’s small one is a vast disservice. Perry would not reduce the amount of money taken in by income and corporate profit taxation. He would just shift it to shorter forms and a nominally lower rate (but not really lower). Taxes would appear to be cut, but the amount we would have to pay would be more or less the same. He even strives to have his program seen as revenue neutral.

Cain would shift about half of our nation’s tax revenues to consumption taxes and away from income taxes. He would vastly reduce the disincentive to earn and encourage savings and investment by taxing spending.

It is not enough to undo the damage Obama has done to the economy by repealing his spending, taxing, health care, and regulatory actions. All that will do is dial us back to the sick economy Bush bequeathed to America. The diseases of the first decade of the 21st Century will still be with us. But Cain’s ideas really get at the heart of the problem — in much the same way that Reagan’s reducing of the top personal tax rate from 70% to 28% solved the stagflation of the 70s.

Cain’s reforms are the real deal. Perry’s are a pale imitation.

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Please leave a comment below - I would love to hear what you think! Thanks, Dick
think about the employees. The IRS has nearly 90,000 employees. If they were forced to downsize then what would the IRS employees do?

You don’t think Obama and liberals would flip this idea as a jobs killer plan?

Cain lacks overall substance to defend his stances. He does not sound credible when he does.

  • lmcqueeney on October 29, 2011 5:33 am

    The difference between OWS and Tea Party:
    OWS wants government to pay them with some other citizen’s money
    Tea Party wants government to get out of the way so they can EARN money

  • backura on October 29, 2011 6:53 am

    We have NO state income tax here in Texas. We have good jobs, not minimum wage jobs, good paying jobs!! We buy real estate and new cars at a very healthy rate. We have a number of uninsured citizens in our state, but mostly because they CHOOSE not to pay for insurance. We get it, Dick. You clearly don’t like Perry and it’s starting to appear to be personal. If Rick Perry can do for this country what he has done for Texas, then Perry should be everyone’s pick for the GOP.

  • mperoni101 on October 29, 2011 9:28 am

    backura, the stats show that most of the jobs “created” by Perry (obviously he did not create them himself) were low paying jobs.

  • GA on October 29, 2011 11:59 am

    Are you people really so slow as one said, “I am not interested in paying 17 cents on every dollar I spend in state and national sales taxes.” No you should keep paying your 8 cents state tax and the 15-20 cents in embedded taxes you don’t see on everything else…don’t think for yourselves, please, you might become conservatives if you thought for yourselves.

    Why is it so easy for you to add the sales taxes but you guys always forget to deduct (that’s subtraction) all the other taxes you won’t still be paying under 9-9-9? New math where they didn’t teach you that huh?

    And then the liberal nutcase that wants to preserve 90k jobs at the IRS…too funny. A real conservative would know that the country and govt would better off if it shed 50% of ALL it’s employees, not counting military.

  • blueglas on October 29, 2011 12:03 pm

    But Dick: The third “9” requires a full explanation. One would assume that is is for all “purchases” ONLY. It should not include all our normal bills we pay each month, quarter, semiannual, and annually…like our home’s utility bills, phone bills, water bills, life insurance bills, car payments, property taxes, etc. What about are grocery store purchases? And, in a year that I would have to buy a new car, I still would have my New Jersey 7% sales tax on top of a 9% Federal consumption tax. A Federal consumption tax is like tuberculosis “consumption”…it takes our breath away. I say, change the 9-9-9 to a 9-9-0.

  • Herman Cain’s 9-9-9 » EppsNet: Notes from the Golden Orange on October 29, 2011 2:30 pm

    […] economic growth. He would make the next few decades a continuation of the American Century. — Dick Morris […]

  • ajfulton on October 30, 2011 12:35 pm

    GA — Thanks for your comments and calling me stupid. No I was not taught new math. We had to learn it the old fashioned way without calculators and computers. I’m still pretty good with figures, how about you? As far as your comments, you seem to know it all. So tell me please, how will we, as consumers, know that all of these hidden taxes are eliminated from the products that we buy? Will this be another “trust me” situation? Or, maybe the 90,000 IRS employees could form a new bureau that could police this to make sure all the hidden taxes are taken out of the final price? Who’s to say that some of these hidden taxes, since they are so well hidden, will not go back to the company’s treasury? “Trust me?” Because you say that 15 to 20 cents should be deducted, where do those numbers come from? The common consumer has no idea how much hidden tax is in each item they consume, so IF these numbers are accurate, fine, but I don’t trust your numbers any more than I would trust a politician. To me, it’s fuzzy math, not new math. The same is true of Perry’s plan. With two options, the math is only as good as the assumptions you use to develop the numbers. Another “fuzzy math” situation.

  • backura on October 30, 2011 3:14 pm

    Mperoni101 – please cite your sources. If you have none, then you are just a mouthpiece for Obama. I have lived in Texas most of my life, and I have a very large network of friends and colleagues, and I can guarantee you that very few jobs are minimum wage. In medicine, energy, technology, etc….NO ONE works for minimum wage. If you’re speaking of fast food restaurants and fruit pickers, then yes. Those jobs are minimum wage, just like in every other state of the union.

  • GA on October 31, 2011 9:13 am

    hey ajfulton…if you were more of a conservative you would understand and have a little faith in something called the free market, Adam Smith’s invisible hand etc.

    You are correct, there is no guarantee some of the embedded taxes would not go into corp treasuries …at least some will try until their competitors in the market drop their prices and that forces others to do the same. As a conservative, I would trust a free market before I trust the Govt.

    Btw the 15-20 I referenced were estimates taken from various sources. You can read up on how insidious embedded taxes are and how expensive they are in The Fair Tax book. That is a good source right there.

    C’mon this 9-9-9 is the basic form of a plan. You KNOW that congress will chew on this , the liberals socialist will demagogue it and all your concerns will be addressed before it becomes law. But seriously, to do nothing or to try to fool people with a Flat Tax which is the same old same old bs, that just won’t fly anymore.

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    […] Perry’s Flat Tax is Simplification but Not Reform (Dick Morris) To trivialize Cain’s big idea [9-9-9] by comparing to to Perry’s small one is a vast disservice. […]