What is Reason Number Three?

Evidently, Herman Cain read Part 1 of this series and has revised his “Fair Tax” policy, because of its catastrophic failings.

Cain’s new proposed tax reform plan is call the 999 Plan.  Each nine represents one of three theoretical tax rates within the future economy; a 9% business flat tax, 9% individual flat tax, and a 9% sales tax.  Everything else is untaxed.  These three central reforms eliminate the existing tax code, only Herman Cain’s vision would continue.

How could This Plan Help America?

The core ideology behind the plan is that people are better about allocating their money than the government.  These skimpy taxes would support a utilitarian government, one that deals exclusively with national defense and legal issues.  “Unnecessary” programs like Medicare and Social Security would be phased out.  The economic boom would create prosperity across the nation.

Why Will This Proposition Decimate the Economy?

Lets give Cain the benefit of the doubt, this plan actually sounds highly innovative.  Elements of it, such as his strong dollar policy could be perceived as beneficial.

I will write some fiction now: Herman Cain wins the 2012 election, thanks to a series of freak accidents eliminating the other candidates.  Congress was so dumbstruck by the fatalities they pass the 999 Tax plan.

Americans everywhere rejoice; on Wall Street stock transactions are no longer taxed, on Main Street shop owners frolic as new customers spend money from the tax breaks, even Grandma down in Florida smiles as her family can now afford to visit her.

Store owners rush out to buy new goods to sell.  Sure, costs are up with the strong dollar, but higher prices more than balance that out.  Wall Street is growing in leaps and bounds, without the government taxing profits what so ever.  Governments spurting funds are replaced with a growing private sector.

A hurricane spells doom for this economic salvation.  Florida receives a direct hit from a Category 3 storm, there have been dozens previously.  Property and investments, from the private sector, are demolished.  Insurance companies cover the losses; they are stretched thin, but still afloat. So is Grandma, her house is underwater from the hurricane.

FEMA and the National Guard launch a joint operation and save Grandma and many other stranded family members.

The funeral was nice, at least.

Wall Street crumbles; the revelation that the underfunded government will provide underfunded service must have slipped their minds.  After all 9% of taxes of the nation, a significant drop because the top 1% receive a 23% tax break and contribute the most, are significantly less the $3456 billion dollars currently collected annually.  Some services, critical services, will be chopped or watered down to nothing.

Without more than half of its funds the government will break down.

Wall Street, now the solitary investor in the America, will first fear an economic depression and then create one, by selling off all and any American stocks.  Herman Cain’s strong dollar policy will work against the system as foreign investors and corporations will be unwilling to sell to America because it will be more expensive for them; that is the dark side of a strong dollar.

Use your own imagination to predict the continuation of Cain’s Recession.  I would be interest in any responses, both colorful spirals of decay and ardent defenses for the destructive 999 Tax Plan.

If you are  new feel free to read Part 1, Cain’s (un)fair tax structure, and Part 2, Cain’s misguided Attack on Islam