Federal spending is completely out of control: Outlays dwarf receipts by 69% in 2021

 

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Hey Mark Levin you big dope: Tariffs were the main source of all Federal revenue from 1790 to 1914

That's why the federal government stayed SMALL from 1790 to 1914.

IT'LL NEVER BE SMALL YOUR WAY (just a little smaller) 

STARVE THE BEAST! A spillover effect we can all appreciate.

The Tax Foundation says Trump tax plan will blow up the deficit, reducing revenues to 12% of GDP

From Alan Cole, here:

"Looking at these rates, collectively, note that Mr. Trump is frequently cutting rates in half, and sometimes cutting them by even more than that. Taken together, these rate reductions are enough—by my estimates—to reduce tax collections from about 18 percent of GDP to about 12 percent. Under rates as low as these, economic growth—moderate or otherwise—cannot restore federal revenues to current-law levels.

"Tax cuts can do a great deal of good; each of the provisions I outlined above could help a lot of people lead better lives. However, the reductions in federal revenue need to be acknowledged, and likely mitigated through substantial cuts in spending, in order to make this plan feasible."

Surprise: Lefty Michael Tomasky wants to punish the middle class with an increase in the regressive gasoline tax

Here in "Pony Up, Middle Class, for a Gas Tax", recommending Hillary do it in 2017 like her husband did with income taxes in 1993, by lying about it:

"And the rich, even though they’re rich, only have so much to contribute. The top marginal tax rate just isn’t going to get much higher, and the corporate tax rate if anything should be lowered (although as loopholes are simultaneously closed). So you’re going to have to pay a little.

"I wouldn’t necessarily recommend this for a campaign. But let us not forget that the husband of the putative Democratic nominee in 2016 got into office in 1993 and promptly raised taxes, and fairly substantially, on just about everybody."

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Of course, Tomasky doesn't mention Bill Clinton specifically promising in October 1992 NOT TO RAISE TAXES on the middle class, period.

Americans were forced in the aftermath of those tax increases to plunder home equity to maintain their standard of living. Owners' equity as a percentage of the value of household real estate subsequently plunged from 60.88% when Clinton was elected to 57.43% in the autumn of 1997 even as those housing values began to soar in the gestating housing bubble. We won't digress about how Clinton then threw gasoline on the housing fire in the Taxpayer Relief Act of 1997 just as the percentage of owners' equity had hit that new low.

What's noteworthy is how enthusiastic the left is to punish the middle class, now as then. They haven't changed a wit, and neither have their methods. Everyone is paying higher taxes now in the form of healthcare premiums (hello HillaryCare), and if they get their way they'll raise federal gasoline taxes, too.

Of all the taxes which hurt working and middle class people more it's gasoline taxes, euphemistically referred to as user taxes by libertarians. The current federal gasoline tax of 18.4 cents per gallon generates about $131 of federal revenue for every vehicle driven 15,000 miles annually getting 21mpg. While that's hardly noticeable to your person making $50,000 per year, a mere quarter percentage point, it's like adding almost one percentage point to the taxes of a minimum wage earner making $15,000.

The problem is then greatly magnified by the states, which add on another 29.89 cents per gallon on average, also in the name of transportation funding. Suddenly your 1% tax on the poorest drivers becomes a 2.3% tax.

Any addition at the federal level will only exacerbate this regressiveness. It's not that liberals don't know any of this. They do. It's just that they don't care.

Everyone benefits from roads, not just the users. Everyone should pay for them.

Carnage in Commodities: Gold/Oil Ratio soars to 18.08

Gold continues to lose ground to plunging oil prices, making oil the preferred investment of the two, if you had to chose between them. Gold would have to plunge to 987.60 to restore the ratio to parity of 15 at the current price of oil, 65.84, or 17%.

Gold is presently about 200 off its 2014 high of 1385 (London fix), about 14%, while West Texas Intermediate Crude is down over 35% from its June close at 102.07.

The surging dollar in 2014 has been deflationary for commodities. Closing as low as 79.09 in early May, .DXY closed yesterday at 89.36, up almost 13% in just seven months.

Behind that no doubt has been the Yellen Federal Reserve's commitment to end QE, which it did in October, and the continued Republican stranglehold on spendthrift liberalism, creating positive fiscal conditions liked by markets. Federal revenues are at an all time high of $2.775 trillion in fiscal 2013 while outlays remain stabilized at about $3.5 trillion for each of the last five fiscal years in a row. At $3.4 trillion in fiscal 2013, the often ugly dance between a Republican House and a Democrat Senate and Executive has meant that federal spending has risen only 2.75% in nominal terms for each fiscal year since the 2008 baseline. The S&P500 is up over 12% year-to-date on top of last year's stellar 32% gain.

The permanency of the Bush tax cuts and the AMT fix which heralded in the new year in 2013 continue to work their magic in combination with the stronger dollar and Washington gridlock, for which neither John Boehner nor Barack Obama will ever get their due.

What a country.

Largest Sums Of Federal Revenue Forfeited Because Of The Tax Code, Joint Committee On Taxation, 2012-2016

$706.6 billion: exclusion of employer contributions for healthcare, health insurance premiums and long term care insurance premiums.

$596.0 billion: reduced rates of taxation on dividends and long term capital gains.

$505.3 billion: net exclusion of pension contributions and earnings to defined benefit/contribution plans.

$364.0 billion: mortgage interest deduction.

$319.7 billion: earned income tax credit.

$305.0 billion: exclusion of Medicare Parts A&B benefits.

$289.4 billion: credit for children under 17.

$259.2 billion: deduction of nonbusiness state and local government income taxes, sales taxes and personal property taxes.

$239.7 billion: deferral of active income of controlled foreign corporations.

$236.1 billion: exclusion of capital gains at death.

$184.3 billion: subsidies for participation in healthcare exchanges.

$182.8 billion: exclusion of interest on public purpose state and local government bonds.

$175.8 billion: exclusion of benefits provided under cafeteria plans.

$172.4 billion: deduction for charitable contributions.

$172.1 billion: exclusion of untaxed Social Security and railroad retirement benefits.

$153.8 billion: exclusion of investment income on life insurance and annuity contracts.

$143.0 billion: property tax deduction.

$124.1 billion: exclusion of capital gains on the sale of a home.

$119.1 billion: credits for tuition for post-secondary education.

Total Public Debt Outstanding Kept At $16.738 Trillion By Treasury Dept. For Four Months!

I can't show you all of the data because the format is too long for me to capture it all in a single screen shot.

All of June, all of July, all of August, and now all of September at $16.738 trillion, despite the fact that federal revenues are estimated to be running at $226 billion per month in fiscal 2013.

See for yourself here.

Foreign Holdings Of US Treasuries Up Almost 11% Since 2011

Foreign holdings of US Treasury securities is up about 11% from November 2011, when the total outstanding was $5.01 trillion. In November 2012 $5.56 trillion is outstanding, according to the US Treasury, here.

About $548 billion in new monies has thus been lent by foreigners to the US in the twelve months through November 2012.

Federal revenues for fiscal 2012 are estimated at $2.5 trillion, with outlays at $3.8 trillion. That leaves about $750 billion of lending to the feds made up from domestic sources to pay for all the spending.

Rush Limbaugh Is Back And He's As Big An Idiot As Ever

Rush Limbaugh is back and he's still a big fat idiot.

He actually says Obama won a "massive victory" in the fiscal cliff deal, for raising taxes on the top 0.3%. You know, on people just like Rush. Rush's salary? $38 million/year.

If ever anyone needed any proof that Rush couldn't care less about the principled nature of the lower Bush tax rates for all Americans, this is it, because those rates just became permanent for everyone, except for Rush and about 600,000 other rich Americans who make $400,000 a year or more. Their taxes go up about 13%, but only on paper. You would think a so-called conservative would at least acknowledge that victory and give George Bush some credit, but no, not even after a caller reminds him about that at the end of the first hour. The entire opening monologue was completely self-referential, and suggests that Rush is talking his book here. He doesn't even understand the math in the deal, which now lets the income rich keep $1.8 trillion over ten years from the permanent AMT fix. Their cost under the deal? $600 billion over ten years, as I said, on paper. Even the income rich can still shift income out of the "ordinary" category to the now 33% higher, but still low dividend and capital gains rate category to escape the 39.6% top income tax rate. They will, and the somewhat rosier federal revenue scenario used to sell this deal won't even materialize. The rich will stay that way. They will not pay much more. And the Democrats will be stuck with another failed scheme.

Obama didn't win a victory here, the American people and George Bush did, and I still haven't heard a single so-called conservative radio talker even acknowledge it, let alone be grateful for it. That doesn't buy ears. Only what bleeds does, or what might bleed, which is why all Rush can talk about is some hypothetical threat in the future, when an actual threat, increased tax rates on everyone, has been completely neutralized in the present by good Republican leadership.

I say, "thank you". All Rush can say? "@#$% you".

Liberals Hate Middle Class: Bruce Bartlett Attacks The Mortgage Interest Deduction

Eliminating the mortgage interest deduction has become something of a fetish for liberals and libertarians in America. The enthusiasm for eliminating the deduction suggests a hatred for bourgeois values.

Liberals use it like a shield to obscure the hidden privileges they enjoy under the tax code, privileges which the vast lumpen proletariat is too dumb to understand. Extracting more revenue from their lessers so that they have more money to play with is the goal of liberals, whose constant refrain is "the money is in the middle." Actually, the money escaping taxation in America is at the top, where nearly $2 trillion of net compensation escapes Social Security taxation, amounting to a tax loss to the feds of about $300 billion annually.

Libertarians use elimination of the mortgage interest deduction more actively. To them it is like a club which they can use as a weapon to drive people from their homes in their effort to turn workers into interchangeable parts, which they can then move around wherever they need them and thus drive down the cost of their labor. If you are unemployed for a very long time because you won't move from your home, to a libertarian like a John Tamny or a Megan McArdle at The Atlantic, you are nothing but a depreciating asset, as she has put it.

Just look how Bruce Bartlett attacks the mortgage interest deduction here, misrepresenting its place not simply by singling it out but also by failing to place it within the spectrum of tax loss expenditures generally:

"The problem, insofar as tax reform is concerned, is that the mortgage interest deduction and that for property taxes reduce federal revenues by $100 billion per year."

If only that were an impressive number compared to the usual categories of tax loss expenditures.

The Joint Committee on Taxation, for example, puts the combined tax loss from deductions for health-related and cafeteria plans at $140 billion.

Tax loss from exclusion of retirement-related benefits comes to $160 billion when you include Social Security and Railroad retirement benefits, capital gains excluded at death, and pension and 401k plan contributions.

The last two together alone come to $91 billion.

Coincidently, reduced rates of tax on capital gains and dividends as a category by itself means a tax loss of nearly $91 billion, more than the mortgage interest deduction at $78 billion. 

The rich may benefit a lot from the tax perspective from the mortgage interest deduction, but they benefit more than anyone from reduced rates of tax on capital gains, and Bruce Bartlett knows it:

For most people, income is simple: it means wages or perhaps a pension or Social Security benefits. Income from capital – dividends, interest, rent and capital gains – seldom enters into the calculation. The vast bulk of such income is earned by the ultrawealthy, like Mr. Romney.

Bruce Bartlett has made it a regular habit to sniff at the proposals of Republicans, who recently restored the mortgage interest deduction plank in their platform, the real inspiration for his screed.

In this he reminds me of no one so much as Katie Couric when she went nosing around the "unwashed middle" before her ilk got hosed off in the November 2010 elections. But liberals still have a certain air about them.

I think they need another bath.

Interest on Federal Debt Topped $454 Billion in Fiscal 2011

So says the US Department of the Treasury here.

With fiscal 2011 receipts running at $2.3 trillion according to Treasury here, interest payments now represent 20 percent of federal revenues. Since we're spending $1.5 trillion more than we presently took in, you could say that almost a third of this deficit spending is interest payments.

Total US government debt is running at approximately $15 trillion, so an interest payment of $450 billion per fiscal year implies an interest rate of about 3 percent.

Double that interest rate to 6 percent and interest payments balloon to $900 billion and 40 percent of current revenues.

Mark Steyn recently had some unhappy, pornographic thoughts about that, here:

R.I.P.

[W]ere interest rates to return to their 1990-2010 average (5.7%), debt service alone would consume about 40% of federal revenues by mid-decade. That's not paying down the debt, but just staying current on the interest payments.

And yet, when it comes to spending and stimulus and entitlements and agencies and regulations and bureaucrats, "more more more/how do you like it?" remains the way to bet. Will a Republican president make a difference to this grim trajectory? I would doubt it. Unless the public conversation shifts significantly, neither President Romney nor President Insert-Name-Of-This-Week's-UnRomney-Here will have a mandate for the measures necessary to save the republic.








(source)

Today's Economy is Already Being Stimulated by a Bipartisan Attack on Federal Revenue

I'm talking about the Social Security Tax Holiday for 2011, which continues to add $112 billion this year to workers' paychecks as we speak.

If it's doing any good for the economy, remember it's going away in about six weeks and will all be reversed next year. It's called pulling prosperity forward. Which leaves a void in . . . the future, to be filled by . . . what, exactly?

Except Obama doesn't want there to be a question about the immediate future, which is why his famous, urgently-needed "today" jobs bill from last August but which still isn't going anywhere includes an extension and expansion of the holiday, and will cost the Social Security program $240 billion next year on top of this year's cost.

Obviously necessary, if you're running for reelection.

But it's just more gimmickry from our professional grifter class. Refresh your memory about it here, but think about it this way: These same crackpots keep wanting to take away your tax deductions PERMANENTLY while at the same time offering you TEMPORARY crumbs from our masters' table.

$112 billion this year, $240 billion next year, but in the disguise of tax reform they want to saddle you forever with paying higher income taxes to the tune of $88 billion each and every year because you can no longer deduct your mortgage interest. Tax deductions have a permanency tax rates do not. The lower overall rates bequeathed to us by the 1986 tax reform which today's Republicans so proudly do hail were gone like a fart in the windstorm by 1992 when Bill Clinton took over.

A bowl of pottage for your birthright.

The Broadest Tax Base Which Can Possibly Be Imagined Implies a Tax Rate of 6.2%

Herman Cain's 999 Plan is focusing attention on the perennially perplexing problem of taxation for the American electorate in 2012. His plan has brought questions about broadening the tax base for tax reform front and center, including: What tax base is large enough to generate adequate federal revenues? and: What rate of taxation is fair?

Herman's big idea is to scrap the entire tax code and start over with three new bases taxed at the same low rate for a temporary period of time, eventually transitioning the country permanently to just one of these bases, taxed at a much higher single rate.

His scheme is quite conventional in that it looks to the existing traditional bases of taxation with which we have been familiar for decades: corporations and individuals.

What is new, however, is the national sales tax, the base for which was fairly sizable in 2008 at $10.1 trillion in personal consumption expenditures [PCE], and running at almost $10.8 trillion annualized through August 2011.

Currently the overwhelming burden of taxation falls on the individual filer whose personal income is taxed in order to provide Social Insurance and Federal revenues, which in 2011 are currently running at an annualized rate of $2.3 trillion, as shown here by the Bureau of Economic Analysis. Corporations, excises and tariffs provide puny sums by comparison: less than $500 billion in 2008.

This means that in 2011, Herman Cain's ultimate idea of taxing consumption to replace current revenues of approximately $3 trillion would imply a national sales tax rate of 28 percent on $10.8 trillion in goods and services expenditures this year. That's a pretty hefty rate by comparison with present conditions.

Currently the personal income base on which we exact that $2.3 trillion in Social Insurance and Federal taxes is just over $13 trillion. This implies an overall tax rate of 18 percent. If personal income in that aggregate amount had to do all the pulling to generate the full $3 trillion in revenues, personal income would have to be taxed at a rate of 23 percent to do the same thing as the consumption tax. Not as high, but still much higher than the 9 percent Herman Cain has called for currently, if only temporarily, in deference to the God of the Bible who asked for just 10 percent from his chosen people.

By way of comparison, if there were some way to easily tax GDP, currently running at $15 trillion, the effective tax rate would have to be 20 percent.

So is there a tax base which is broader still, from which we can derive the necessary sums and get that rate even lower?

Given that people by definition receive income in consequence of the conduct of business of one kind or another (aside from gambling, prostitution and bank robbery), it seems reasonable to look at the size of the various tax bases available strictly from businesses, without whom none of the other tax bases would exist in the first place. If we really mean it when we say we want to tax income only once, we need to go to its source, and for nearly everyone in our society, that source is business.

Corporations in 2008 had total receipts of $28.5 trillion, 2.8 times the size of Herman Cain's PCE tax base. It would have taken a gross receipts tax of merely 10.5 percent on this sum to have generated $3 trillion in tax revenue in tax year 2008, a year when revenues were actually lower at $2.5 trillion. That implies a gross receipts tax of only 8.8 percent on corporations in 2008.

In such a world, there would be no more income taxes on individuals, no Social Security or Medicare taxes either, and no capital gains taxes nor taxes on investment income or savings of any kind, and government would not go wanting. Nor would business be constrained by other taxes and fees imposed on it if we were to throw out the current code and replace it with this simple levy.

But the base could be made broader still in order to lower the effective rate even more.

Add in partnerships, which had $5.9 trillion in total receipts in 2008. And S corporations, which had $6.1 trillion in total receipts in 2008. Both of these added to corporation total receipts yields a gargantuan tax base for 2008 of $40.5 trillion in gross receipts.

All of that could have been taxed at a mere 6.2 percent to meet the federal revenue of $2.5 trillion collected in 2008.

No more talk of a flat income tax, nor of a progressive income tax, nor of a consumption tax. No more compliance costs of $450 billion because of the current code. No more lost time equivalent to 3 million full time jobs.  Just one, low, simple, rate on business. That's it.

In addition to God, John Tamny might go for it, too:

"The answer as always is for the government to simply get out of the way. If it must tax corporations, its taxation should be blind in the way that justice is. A flat gross receipts tax would make all corporations equal before the IRS. That would ensure the most economic allocation of capital on the way to rational, market-driven growth."

Federal Revenues Came From Tariffs and Land Sales in First Half of 1800s, From Tariffs and Excises in Second Half

A largely forgotten fact when discussing the history and meaning of US tax policy.

Gary M. Anderson and Dolores T. Martin examined the role of land sales in considerable detail in 1987 here.

I provide a few excerpts:

[F]rom 1800 until the beginning of the Civil War, proceeds from the sale of public lands constituted a major source of revenue for the federal government, accounting for 48 percent of net receipts in 1836. ...

After 1820, receipts from land sales became a major component of federal revenues. During 1836, for example, receipts from land sales exceeded 48 percent of total federal revenues. From 1820 to 1860, receipts from land sales averaged 10.8 percent of total federal receipts per annum.

From the program’s beginnings in 1796 until 1862, privatization of the public lands via sales to the private sector scored several major successes. By 1862, acreage equaling about 67 percent of the public domain in 1802 had been sold, and land sale receipts provided a significant, although fluctuating, fraction of total federal revenues. ...

Before the Civil War, proceeds from land sales and tariff revenues were the two major components in federal receipts. The proceeds from these different sources were highly substitutable; one dollar of revenue from land sales could replace one dollar from a tariff and vice versa. There is strong evidence to suggest that this substitutability may have been a significant factor in the demise of the system of revenue-maximizing land sales.

Of course the rise in reliance on excises from 1862 onwards could also explain why reliance on land sales declined to almost nothing by century's end, quite apart from the so-called rent-seeking aspects of tariff politics which the authors explore. But they seem not to notice the role of excises.

Excises on alcohol and tobacco ramp up dramatically to $100 million to $150 million per year from 1862, from next to nothing beforehand, while tariffs move up and down around a trendline of $200 million in revenues per year starting also at the same time, having been in the $50 million and below range per year for most of the century prior to the War Between the States.

The importance of alcohol, and tobacco, in the social and economic history of America should not be underestimated, as Daniel Okrent's important recent book on Prohibition has reminded us.

Gotta go. Time to light up and have a drink!

The 1913 Income Tax Enabled Stark Increases to Government Revenues to Pay for WWI

Revenues went up by a factor of 6 in three short years, and dramatically reversed federal reliance on tariffs, excises and other taxes of one kind or another to finance the preponderance of government spending. Note the overnight reversal between 1917 and 1918 in the income tax share of the federal revenue. The analogy today would be like going from $3 trillion in revenues to $18 trillion.

Excises on alcohol started disappearing in 1920 with enactment of Prohibition. Such taxes had routinely accounted for 20-40 percent of all federal revenues from the War Between The States until that time. Over the course of a decade from 1920 through 1932 alcohol excises dropped in the end by a factor of 10, but instantly surpassed their 1920 levels with Repeal in 1933, a year in which everyone desperately needed a drink.

By 1875 One Third of Federal Revenues Came From Taxes on Alcohol

According to Daniel Okrent's Last Call: The Rise and Fall of Prohibition:

After lapsing in 1802, the alcohol excise was reimposed under James Madison to pay for the War of 1812, suspended in 1817, and then brought back by Abraham Lincoln in 1862 to finance the Civil War. This time the tax did not fade away . . . For most of the next thirty years the impost on alcohol annually provided at least 20 percent of all federal revenue, and in some years more than 40 percent. By the time the excise was doubled to cover the cost of the Spanish-American War, the brewers had finally realized that the tax they had once so strongly opposed might be their salvation, and they patriotically (and shamelessly) declared that they had financed 40 percent of the war's cost.

By way of comparison, tariffs in 1875 funded 55 percent of the federal budget. Seven years after the passage of the Income Tax, tariffs in 1920 funded barely 13 percent of the federal budget.

The significance of Daniel Okrent's recent history of Prohibition is not in the least that it shows how much federal government had depended on liquor taxes in addition to tariffs and property taxes to fund itself.

The perfidy of Prohibition is that it was brought to us by the same folks who gave us the Income Tax in the first place. They knew something would be needed to replace the federal revenue which would be lost when alcohol sales were finally banned. But when Prohibition got the boot, the Income Tax did not.

So the flipside to the Temperance movement is its Intemperance toward the original intent of the constitution, which was to prohibit direct taxation without apportionment by population in favor of tariffs, excises and ad valorem taxes.

Before The Income Tax, Federal Tariffs and Real Estate Taxes Punished Farmers

From a helpful history of the estate tax from the IRS, here (emphases added), which is unaware of the significant federal revenue contributed by alcohol taxes (between 30 and 40 percent):

The War Revenue Act of 1898

Throughout the last half of the 19th century, the industrial revolution brought about profound changes in the U.S. economy. Industry replaced agriculture as the primary source of wealth and political power in the United States. Tariffs and real estate taxes had traditionally been the primary sources of Federal revenue, both of which fell disproportionately on farmers, leaving the wealth of industrialists relatively untouched. Many social reformers advocated taxes on the wealthy as a way of forcing the wealthy to pay their fair share, while opponents argued that such taxes would destroy incentives to accumulate wealth and stunt the growth of capital markets.

Against this backdrop, a Federal legacy tax was proposed in 1898 as a means to raise revenue for the Spanish-American War. Unlike the two previous Federal death taxes levied in times of war, the 1898 tax proposal provoked heated debate. Despite strong opposition, the legacy tax was made law. Although called a legacy tax, it was a duty on the estate itself, not on its beneficiaries, and served as a precursor to the present Federal estate tax. Tax rates ranged from 0.75 percent to 15 percent, depending both on the size of the estate and on the relationship of a legatee to the decedent. Only personal property was subject to taxation. A $10,000 exemption was provided to exclude small estates from the tax; bequests to the surviving spouse also were excluded. In 1901, certain gifts were exempted from tax, including gifts to charitable, religious, literary, and educational organizations and gifts to organizations dedicated to the encouragement of the arts and the prevention of cruelty to children. The end of the Spanish-American War came in 1902, and the tax was repealed later that year. Although short-lived, the tax raised about $14.1 million. [About 2.5 percent of the federal budget].

Recalculating Herman Cain's 999 Plan For Calendar Year 2008

Herman Cain's 999 Plan continues to get tweaked by none other than Herman Cain himself, in response to criticisms and questions about it in the media in the wake of recent Republican presidential debates.

Some of the additional information he is supplying looks to have been latent and just previously unexplained, while other information has the feel of modification. In any event, the unsettling thing about this is that the 999 Plan appears to be something of a work in progress, not a finished, fully vetted proposal, which makes it less sellable politically.

One question which seems so important to the left, for obvious reasons, has been the plan's ability to fund the Leviathan State's appetite.

Previously it seemed to me that the plan was woefully inadequate to the task. But some of the additional information that has come out makes me more sanguine, if that's the right word as the taxpayer stares into the maw of the bloodthirsty Beast.

For example, with respect to the 9 percent corporate tax, it turns out that, for reasons which I still do not understand, business' cost of labor is no longer deductible for tax purposes under the plan. So for 2008 when corporate profits posted as $1.25 trillion, you theoretically must add back in net compensation of nearly $6.2 trillion. I think. A 9 percent tax on $7.45 trillion now yields a much higher corporate contribution to federal revenue for 2008 of $671 billion.

Combine that with a 9 percent tax on adjusted gross income of $8.5 trillion equaling $765 billion and with a 9 percent tax on personal consumption expenditures of approximately $10.5 trillion equaling $945 billion, the resulting sum is $2.38 trillion, just shy of the actual collected in 2008 under the current system, which was $2.5 trillion.

And if I read the language of the 999 Plan correctly, there will also be substantial tariff revenue from imports designed to level the playing field between them and our own exports. Imports in 2008 of $2.5 trillion taxed at 9 percent would yield an additional $225 billion in revenue, more than enough to cover the $120 billion shortfall. Presumably some imports would not be so taxed due to pre-existing trade agreements, but the potential is obviously there for far more revenue from tariffs than America presently collects.

Mr. Cain is also now stating that his plan is undecided about how to remove the regressivity of the sales tax on the poorest Americans, but that it will. This will, of course, reduce the revenue described above, as will the income tax deduction for charitable contributions.

Herman Cain's Little Noticed 718 Percent Tariff Increase on Foreign Imports

Most of us have been fixated on income, sales and business taxes in Herman Cain's 999 Plan, but there is a little noticed line which I think adds considerable government revenue in the form of increased tariffs on foreign imports, and considerable American competitiveness by exempting our own exports from the plan's 9 percent business tax and the 9 percent sales tax:

Exports leave our shores without the Business Tax or the Sales Tax embedded in their cost, making them world class competitive. Imports are subject to the same taxation as domestically produced goods, leveling the playing field.

In 2010, imports to this country came to $2.3 trillion, on which a paltry $25.3 billion was collected in tariffs. If I understand Cain's plan correctly, that tariff would balloon to $207 billion to match tax burdens born by domestically manufactured and sold goods and services which are subject to the 9 percent business tax.

The last time tariffs on foreign goods similarly accounted for 9.6 percent of federal revenue occurred sometime between 1930 and 1935.

Herman Cain is thereby defying free-trade ideology in the name of a level playing field, which message should win him considerable support among American patriots, regardless of party.

Herman Cain Comes Closest to a True Flat Tax

So says Stephen Moore for The Wall Street Journal, here, pointing out that FICA taxes do go in the shredder under Cain's 999 plan:

But the candidate who comes closest to a true flat tax is Herman Cain, the former Godfather's Pizza CEO. His argument for a "9-9-9" plan puts the current income and payroll taxes in the shredder and replaces them with a 9% personal income tax with no deductions, a 9% net business income tax, and a 9% national sales tax.

That would be rocket fuel for the economy, though the combination of a federal sales tax and an income tax is a big worry. But at least Mr. Cain has super-sized solutions to an economy with super-sized problems.

Solution? In 2008 Cain's 999 plan would have meant 900 billion fewer dollars in receipts for federal social insurance. I don't see how he could make up that difference, let alone an additional $300+ billion he comes up short compared to what was actually collected in 2008.

It looks more like a stealth plan to bankrupt Social Security and Medicare by ignoring it.

• A 9 percent tax on $8.50 trillion in adjusted gross incomes in 2008 comes to $765 billion (actual collected in 2008 was $1.03 trillion).

This is actually a huge tax cut on the wealthy and a big tax increase on everyone else. And does Cain intend to do away with deductions even for IRAs and 401Ks? If so that AGI number would be much higher, and the tax revenue higher, along with your tax bill. At least the billionaire will pay the same rate as the janitor, as Obama now famously says he wants.

• A 9 percent tax on $1.25 trillion in corporate profits comes to $113 billion (actual collected was $309 billion).

This is a huge tax cut on business, which is why Stephen Moore calls Cain's plan rocket fuel.

• A 9 percent tax on $4.40 trillion in total retail and food service consumer spending in 2008 comes to $396 billion. 

Does Cain intend this to be wider in scope than indicated? It is often said that 70 percent of the economy is consumer spending. In a $15 trillion economy, that's $10.5 trillion. A 9 percent tax on that would boost the receipts of a national sales tax to $945 billion.

But all told, Cain's plan would have collected only $1.274 trillion in federal revenue for 2008 when the government actually collected $2.5 trillion and still ran a deficit of close to $400 billion anyway.

We're currently spending $3.8 trillion in this country under Obama, $1 trillion more than in 2008. The 999 plan doesn't look up to the task.