Sales vs. Income Taxes- Why The Panic?

I'm writing this post on this blog, rather than my companion political one, because it's a non-partisan, economic topic of interest to me.

Ever since Herman Cain announced his 9-9-9 tax plan, there have been objections from those who are also adamantly against an American VAT tax, as well.

The most commonly-heard criticism of Cain's plan is that the sales tax portion is set at 9%, but can be raised in the future. So therefore, it's a bad idea.

Why is the fact that our income tax, initiated by a Constitutional amendment, has been raised and radically modified many times, not relevant in this regard? Clearly, whatever federal tax is proposed and levied on individuals, Congress will seek to modify it, effectively, or not, when they spend more than they collect in taxes.

A sales tax, or a VAT, is no different in this respect than an income tax. Congress will attempt to raise any of them when it suits their purpose, and voters let them get away with it.

Cain's sales tax is simpler to understand and operate than a VAT. Or that other odd tax that Huckabee was pushing in 2008 when he ran for president. And it does two valuable things which many critics miss.

First, it is actually less regressive, as Cain maintains, because a 9% sales tax is less onerous to the poor than a 15% payroll tax. Second, it hits the 50% of Americans who currently pay no federal income tax.

Taken in the context of eliminating all other taxes, a 9% sales tax isn't such a bad idea. It taxes spending, not savings. It is imposed as the double-taxation of dividends is eliminated, as is the separate taxation of capital gains.

Though many criticize Cain's tax plan as too simplistic, I don't really think it is. It is, instead, an Alexandrian type of solution to a tax code which is the equivalent of the famous Gordian knot.