I'm not a fan of Cain's 999 plan, but I was curious after the last debate to see his 'independent analysis' that went against the Tax Policy Center's analysis.
First off, the analysis is done by a private financial services firm with 5 (including the secretary) employees. None of them have a PhD in Economics (not that you can't know what is going on without a PhD, but I would expect serious analysis of a national tax plan to be done by at least one person with a PhD), and only 2 have degrees in anything related to finance.
But, once again, I decided to give them the benefit of the doubt and read the 'analysis' anyways (FYI--took me a while to figure out that the charts are located seperately from the analysis document for some reason). Both are located on Cain's website, in the header under the 999 plan section. Oh--and there are tons of typos (maybe because they posted the 'draft' copy--as seen in the footer--on their website?)
I'm no PhD in Economics, but I have taken a decent number of Economics classes, and the analysis just doesn't make sense to me at all. Maybe I'm just a fool--and that's why I'm here. I need someone better than me at Economics to look this over and 'please' tell me that this isn't just a bunch of poorly written financial mumbo-jumbo. If this really is as bad as I think it is, then the media totally needs to be reporting on it!!
Here are a few example paragraphs that just don't make sense to me.
From Pg 3 (Last paragraph on the page):
"In the course of imputing non-business capital income, Commerce reclassifies the purchases of
homes and the capital of nonprofits from consumption to investment. For our purposes, to
measure the investment purchases made by businesses, this reclassification must be reversed.
As Table 1c shows, removing the imputed items and reclassifying investment reduces total
GDP from $14,396 billion to $12,966 billion, or about 9.8 percent. The biggest change is the
25 percent reduction in investment from $2,097 billion to $1,576 billion."
Umm... I can read the words, but I can't understand why they need to reverse this? Is it just to get the answers they want, or is there some logical reason for this that I'm missing?
From Pg 9 (First paragraph in the comprehensive variant section).
"Also subject to tax is compensation in the institution sector and the untaxed
services provided by the financial sector."
Can anyone describe to me what an 'institution sector' is or includes?
From Pg 10 (Only paragraph in the economic impacts of broad reform section):
"Table 11 shows the static and dynamic results of adopting one of the broad-based alternatives
shown above. In the long run GDP would be nearly $2 trillion larger than the 2008 baseline or
nearly 15% higher. The private business capital stock would be more than one-third higher.
Hours worked would be 4.4% higher translating into 6 million more jobs. Not shown is that
wage rates will be 10% higher. Total federal receipts would be nearly 15% higher. This means
that rates could be reduced by another 4 percentage points while maintaining a constant level of
federal revenues."
I should note that table 11 includes such gems as 'current surplus of government enterprises = -4'... WTF? Oh, and they don't describe anywhere how they come up with the above figures. This is seriously the only paragraph on the economic impacts, and may only be there because the other analysis seems to suggest that Cain needs to have a 13-13-13 plan instead of the much more catchy 9-9-9.
There are far more problems I have than this, but most just involve being totally confused by the general point they are trying to make. Please read it and see if it makes sense to you!!
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Originally Posted by Brian4Liberty
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