Friday, October 14, 2011

Future Congresses Could change 9-9-9 to 20-20-20 Via Reconciliation

Cain has claimed that his 999 bill would only be subject to amendment with a 2/3 vote of Congress. That just isn't true. The Senate could use reconciliation, which only requires a vote of 51, to pass changes to 999.

A reconciliation instruction (Budget Reconciliation) is a provision in a budget resolution directing one or more committees to submit legislation changing existing law in order to bring spending, revenues, or the debt-limit into conformity with the budget resolution. The instructions specify the committees to which they apply, indicate the appropriate dollar changes to be achieved, and usually provide a deadline by which the legislation is to be reported or submitted.


999 falls under a revenue bill and therefore would be subject to a reconciliation vote. The only way to prevent changes to 999 via reconciliation is to pass 999 as a constitutional amendment with wording that requires a specific number of votes, such as 2/3.


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14 comments:

Anonymous said...

Thanks for doing the homework on 999, Dan.

-Martha

Anonymous said...

I have heard this concern rumbling around among political people. We, the taxpayers have become some of the most vulnerable people in the United States. The 999 plan raises some very real questions.

AZ

Ohio JOE said...

You may not want to hear this Dan L, but my old (very Right-Wing)Economic Professor would agree with much of what you have written in your last two articles. He liked both the Fair and Flat taxes, but he fears that having two different taxes at once would open the door to raising the rates. So yes 9-9-9 could become 10-10-10 until it eventually became 23.5-23.5-23.5 or something.

In New Zealand (and yes I realize we are not New Zealand) they sold a national sales tax by reducing income tax. In Canada, they actually reduce income tax a year become they implimented their national sales taxes and the people hated it; NZ politicians warned Canadians not to do this separatedly, but they ignored and paid the political price.

For the record, I do not think 9-9-9 in either a majic number nor a majic plan, but I admire Mr. Cain for bringing this issue to the floor. I think the other candidates look stupid when they say that they can buy a pizza for $9.99 because they are not taking the issue of taxes seriously. For the record, Mr. Cain is not my second choice ideologically because I think that he is Romney-lite rather than being Right Wing enough. However, I will probably hold my nose and support him because he is the best on the big 3 whether one like 9-9-9 or not.

I realize that there could be political and Constitutional challenges to 9-9-9, but even 10-10-10 would be worth persuing. The bottom line is that we need to lower income tax and make the tax system less complicated and 9-9-9 is a good starting point for me.

DanL said...

OJ, thanks for the good post, there was nothing in there to upset me. I'm glad that your economics professor would likely agree with me.

I also think that the tax code should be simplified and that tax rates for most should be lowered. I also think that we should expand the tax base, meaning that we should tax those who aren't paying any income tax. But I think that we should ease into that and enact a modest increase in mandatory taxes for that group. And I am coming around to the idea of getting rid of a lot of deductions and credits, but not all of them.

DanL said...

You're welcome Martha, and I am glad to see you back here.

BigR said...

Whatever is done tax wise we have to tap the huge cash economy. A sales tax is the only way to safely do this. Many states have a balanced budget, no income tax, only a sales tax and the citizens end the year with no tax problems or hassle. To pay any form of income tax it has to be reported. If I had my way it would be zero corporate tax as a starter. Corporate collections last year were a small percentage of the totla compared to payroll and income tax collection but a huge impediment for business growth. That would bring many jobs home and be a real incentive to grow the economy. Growing the economy is the only way to get out of this mess.

Terrye said...

I think most people would agree with tax reform that includes lowering rates and doing away with certain deductions and loopholes and credits..but I really don't think that people are going to like a national sales tax.

BigR said...

Texas has a state sales tax, balanced budget, legislators are essentially part timers and meet for 90 days every two years, pass a two year budget, and basically is a reasonable debt free place to work. It has a huge funded infra stucture back log, construction everywhere and is still producing jobs in a severe drought and huge amounts of lost land due to fires. No citizen files an income tax, has a tax lawyer, has income state tax liens - at the end of the year your purchases have paid your fair share of state taxes. Raising the sales tax takes a lot of energy and not easily done. It has been 6.25% since 1990 - 21 years.

leighrow said...

I could never go for a national sales tax and a national income tax especially seeing that reconciliation gave us Healthcare worth trillions.

An Obama like administration would use the reconciliation to revise all the rates such as transitioning the 9% income tax to a progressive tax where they raise the rates for the wealthy and step them down from there. So we would end up with a progressive tax with an increased National sales tax. The national sales tax would never go away and the government would keep on spending for their programs.

BigR said...

Fine with me. I will keep to my cash life style, pay Texas its sales tax, and all of the rest of you can stay the course on pile on the earners and subsidize or pay back the low income folks with that free money we borrow to get votes. Keep Congress in the give out power world to keep managing a grossly unfair and very bad tax code. Your call folks. If you like the current malaise and grid lock and continuing do nothing then keep electing folks that fit that bill. Time for the shazam to rise up and some back bone national will to do a severe course correction. Some states have a good model and we should follow their model. Every model has its warts and flowers. More moving vans coming to Texas or Indiana than Michigan or California. Also time for some constitutional amendments - like a balanced budget as a starter.

DanL said...

BigR,

Comparing Texas tax code to the US tax code is a joke. Texas doesn't maintain a costly military or engage in war. TX doesn't manage SS, medicare or medicaid. Texas doesn't even pay that much of a percentage for highway construction in its own state, instead receiving most of its funding from the federal government or from private toll companies.

If federal dollars stopped flowing into Texas to subsidize many and varied institutions in that state then watch such things as the port of Houston, MD Anderson Houston, Lockheed Martin and many others just die on the vine. And if the US wasn't spending so much money in Texas many tens of thousands of jobs would be lost from the various military bases and the industries that service them and make their technologies. Does Texas subsidize the student loans for Texas colleges? No, the federal gov't does. I could go on and on, but suffice it to say that NO state tax code is a good model for the federal code because the federal gov't does so many more things than any state does.

"If you like the current malaise and grid lock and continuing do nothing then keep electing folks that fit that bill." That is a false argument. Just because there are those of us who don't want to put a match to the US and burn it down with a ridiculous tax code doesn't mean that we don't want things changed. Change is our goal, but within the code we have now.

"More moving vans coming to Texas..." Full of illegals taking the majority of those great jobs that Perry has created.

BigR said...

DanL - no counter argument. Texas is one of the largest economies in the world. Second in the US to California. We send a huge amount of money to Washington and I expect a good return with little skim back to Texas. My money up and my money back with little regulations. We have a huge immigration problem that we are trying to work with despite no support from others. I just suggested a model to consider. Imagine taking all your paycheck home and then paying your taxes seamlessly as you purchase items. 999 is Cain's first step to the Fair Tax. See his site for details. If you like the status quo then ignore my intrusion to this blog. I personally am looking for new ideas to change the status quo. It has to start somewhere.

leighrow said...

Big R

No thank you, I will pass on Cain's dubious 999 theory. I have read many articles regarding the plan and there are too many red flags. I am of the opinion of Grover Norquist that the additional national sales tax revenue stream is a very risky approach especially since politicians like to spend.

Anonymous said...

Cain's tax adds ANOTHER tax for the government to collect. Please remember how vulnerable we are whenever we allow the government another tax!

Another problem with 999 that really needs to be researched and debated is the disproportionate effect a sales tax has on poor people and especially people with large families. One thing we really DO NOT need to do is discourage working, tax-paying Americans from having children! We already know that we offer incentives to people on welfare to have more children. I know that's not the intent, but that is what we do. We are an aging population as it is. This is certainly a discussion that should be had before implementing any new tax--how it will affect people and their behavior.

AZ