Cain and the 9-9-9 tax plan.

GOP POTUS candidate Herman Cain has caught the attention of the media with his 9/9/9 plan- Nine percent corporate business flat tax, nine percent income flat tax and a nine percent national sales tax. It was a sunny day in the desert so I downloaded a copy of IRS pub 17 to read the tax code in an effort to understand Cain's proposal.

Want to have some fun? Read the IRS tax code that is what I have been doing for the last few days. It is 72,000 pages long, ergo I will not be playing much golf.

In the beginning, a tax payer paid 1% on net personal incomes greater than $3,000 and a surtax of 6% on net income greater than $500,000. When it started in 1913, it was a 3 page form with 1 page of instructions. It has involved into a gigantic industry employing tens of thousands of people.

Reading the tax code is a fascinating, but sad experience. Why?  Because it reflects conflicting societal attempts to redistribute wealth and to spurr business investment. For wealth redistribution, the IRS code has the earned income credit, the child tax credit and the additional child tax credit. For business investment, there is a the bonus capital depreciation, which allows a business to purchase a $100,000 computer system and expense it the same year. There are other examples.

The tax code needs some serious simplification. However, there is nothing inherently wrong with a complex tax code that a simpler tax code corrects. It is merely that our current tax code does not make much sense. It does not seem to spur investment nor help the people who need financial help. The problem is that the tax code is a poor method of accomplishing either of the purposes that it seems to have been relegated.

Cain's tax plan may have some merit, but no one can be sure.  I call his plan the McDonald's happy meal tax code plan. It may still not be healthy eating, but it is easy to order.   And the simplicity of the ordering process eludes the necessity to check the details.  I like the Cain concept, but it will never be able to fly. In his plan, some people will pay more, some people will pay less, but no one will be sure which side they will be on because the details of the plan are yet to be written. Until that time, it is still a happy meal. It is easy to order, but we can not be sure it is healthy.