Many of you have heard Herman Cain spout his nonsense across the airwaves and for the most part – with the exception of the liberal media – no one is really looking at what he is saying.
The background of Herman Cain contains a few interesting facts.
Herman Cain was a keynote speaker at the prestigious ALEC Annual Meeting.
Herman Cain was the president of the National Restaurant Association – a corporate sector member of ALEC.
In addition (from wiki)
he … worked as chauffeur for Coca-Cola president and later actually worked for Coca Cola (an ALEC corporate sector member).
At age 36, Cain was assigned in the 1980s first to analyze and ultimately to take the reins of Burger King (an ALEC Corporate sector member).
Starting in 2005, Cain worked for the Koch family funded Americans for Prosperity (AFP) alongside Mark Block.
Cain credits [Jack] Kemp with his becoming interested in politics (Kemp being one of the founding fathers of ALEC).
Just some tidbits..
Cain wants voters to buy into his Empowerment / Zones and 9-9-9 tax structure. And he's hoping no one will pull the curtain back to look at the possible details.
A little bit about Cain's "zone theory".
“Further, Cain said his plan would create “empowerment zones,” which would designate an “area” or “zone” that would qualify for lower tax rates. Those areas would be defined by various economic parameters, which the campaign is in the process of more specifically defining before finalizing its “empowerment zone” plan.
Cain said that while Kemp spoke incessantly of enterprise zones, the tax code stood in the way of Kemp’s implementing economic reforms that economically depressed communities—“
And a little bit more about Cain's "Zone Theory" and 9-9-9 theory
I will be talking with the people of Detroit about Opportunity Zones which is part of my Vision for Renewing Cities Across the USA. Join us to learn more about how Opportunity Zones and my 9-9-9 will reenergize our economy in Detroit and across America.
The 9-9-9 Plan will essentially turn the whole country into one giant Opportunity Zone. Some of the most attractive features of the original Enterprise Zones, such as a zero capital gains tax, immediate expensing of business equipment, and no payroll taxes are “factory installed” in the 9-9-9 Plan for the whole country to benefit.
But you see, Opportunity Zones will bring even more economic benefits to areas in need.
Herman Cain is introducing his “Enterprise Zone” oops, I mean Opportunity Zones, oops, I mean Empowerment Zones– oh well, what will he call them next.
But the point is a zone theory that looks like a duck and quacks like a duck is probably ALEC duck zone theory.
By the way – the “Enterprise Zone” just happens to be ALEC “model legislation”.
Let’s take a look at ALEC’s “Enterprise Zone Act”
Part VI: Empowerment, Opportunity and Urban Poverty
Volume I: Sourcebook of American State Legislation 1995 (the original)
ENTERPRISE ZONE ACT
Summary
The Enterprise Zone Act establishes zones in depressed areas that have reduced taxes and removal of unnecessary government barriers to the production and earning of wages and profits and the creation of economic growth.
SOUND FAMILIAR???????????
What does this mean for ALEC corporate sector / private enterprise members?
First let’s look at the intent
The legislature hereby finds and declares that the health, safety and welfare of the people are enhanced by the continual encouragement, development, growth and expansion of private enterprise within the state.
There’s the first focus on the ALEC corporate sector / private enterprise members.
Who would run this venture?
For the purposes of carrying out the provisions of this Act, there is hereby created the Enterprise Zone authority of (State) consisting of nine (9) members.
The authority shall be appointed as follows:
a. one member appointed by the governor …
b. one member appointed by the governor …
c. one member appointed by the governor
d. three members appointed by the governor
e. the Speaker of the House of Representatives or his designee;
f. the President Pro Tempore of the Senate or his designee;
g. and the Secretary of Commerce.
Well – based on that it would be safe to assume that today, states like Wisconsin, Ohio, Oklahoma and Michigan would be screwed.
Let’s look at the “reduced taxes and removal of unnecessary government barriers to …the creation of economic growth”
And just what would the corporations receive for doing this?
… shall receive a tax credit equivalent to 50 percent of the state and local tax on their income.
State and local income taxes on capital gains from the sale of qualified property within the zone are hereby abolished.
All sales taxes in transactions by qualified businesses shall be reduced by 100 percent.
Building materials used in remodeling, rehabilitation, or new construction in a zone, and new and used equipment and machinery purchased by qualified businesses for use in the zone, certified by the purchaser to be used for these purposes, shall be exempt from sales and use taxes.
All property taxes within an Enterprise Zone shall be reduced by 50 percent ratable over the first two years
Motor vehicles purchased and used by qualified businesses located in the Enterprise Zone shall be exempt from any motor vehicle usage tax.
All unemployment insurance taxes on qualified businesses shall be reduced by 100 percent.
All interest payment on loans made to qualified businesses or on mortgage loans made on any property within an enterprise zone shall be exempt from all state and local taxes,
For state tax purposes, qualified Enterprise Zone businesses may carry forward their net operating losses, including casualty losses, for so long as the zone in which they are located shall be designated.
All tax reductions provided by this Act applying within a particular Enterprise Zone are to continue for 20 years after the zone is established. … The reductions are then to be phased out rationally over the next five years.
… may exempt designated zones from the provisions of any regulation, in part or in whole, which has been promulgated by another state or local agency.
State and local laws requiring individuals to obtain any form of license before they may practice a particular occupation are waived
All property within the neighborhood area of a certified corporation that is owned by state and local government and that is not in current use by such government shall be leased to the corporation. The term of the lease shall not be less than 99 years and the full amount of rental fees under such lease shall not exceed one dollar ($1). The lease may be renewed upon expiration if the corporation has continuously complied with the requirements of this Act.
Well –
that definitely will result in smaller government –
cause there will be no money coming in to the city or state from this enterprise free zone.
And where will this happen?
Any area or areas of a city, county or urban county government may be designated an
enterprise zone which:
(1) has a continuous boundary, and
(2) is an area of pervasive poverty, unemployment and economic distress.
An area meets the requirements of Subsection (A)(2) of this Section if:
(1) the average rate of unemployment in such area of the most recent 18 month period for which data are available was at least one and one-half times the average national rate of unemployment for such eighteen 18 month period; and
(2) at least 70 percent of the residents living in the area have incomes below 80 percent of the median income of the residents of the city, county, or urban county government requesting designation;
Those two pieces of information are really important.
Please reread them before you go on to the next part of this diary.
And what do the people living in this area receive?
State and local laws controlling prices rents, wages, building codes and zoning shall not be effective in Enterprise Zones.
The state minimum wage may be lowered to 75 percent of its current level for youths under 21 years of age who live and work in the Enterprise Zone.
Individuals residing in an Enterprise Zone may establish, under the provisions of this Act, a neighborhood enterprise association corporation. There shall be only one such corporation for each geographic neighborhood area.
Any person living within or outside the Enterprise Zone who invests in a new zone business may deduct the full amount of the investment from his or her personal income subject to state taxation, in the same year that the investment was made, subject to a limit of $30,000
C) The incorporating residents shall send to all eligible residents of the corporation’s neighborhood area:
(1) an explanation of the proposed new corporation and their rights in it;
(2) a copy of the corporate charter and by-laws; and
(3) an offer of the stock interest to which each particular resident is entitled without any charge for such stock.
Let’s see and those FOUR proposed benefits for the citizens living in the “Enterprise Zone” are for people who:
(1) the average rate of unemployment in such area of the most recent 18 month period for which data are available was at least one and one-half times the average national rate of unemployment for such eighteen 18 month period; and
(2) at least 70 percent of the residents living in the area have incomes below 80 percent of the median income of the residents of the city, county, or urban county government requesting designation;
As you can see the list of benefits for the citizens are much smaller and much less significant than the benefits for the ALEC corporate sector / private enterprise members.
So if the Cain enterprise, empowerment, opportunity zone looks anything like ALEC's Enterprise Zone - guess who is getting the shaft?
oh.............and just as an aside, Cain's 9 – 9 – 9 is based on the work of Arthur Laffer which Cain so aptly describes here:
That’s why it’s nice to have respected economist Arthur Laffer bring a little reality to the discussion in a piece he wrote last week for the Wall Street Journal. Mr. Laffer, you might remember, was the originator of the Laffer Curve, a notion in economics that demonstrates you get diminishing returns from higher marginal tax rates because they discourage investment and economic growth.
Some of Arthur Laffer’s credentials include:
2000 – Speaker at an ALEC conference (they didn’t say which one in the ALEC Annual report)
2007 – Keynote speaker American Legislative Exchange Council’s 2007 States & Nation
Policy Summit
2007 – coauthor of the 1st edition of Rich States, Poor States - ALEC-Laffer State Economic Competitiveness Index
2009 – Keynote speaker American Legislative Exchange Council’s 2009 Annual Meeting
2009 – coauthored and article entitled “Soak the Rich, Lose the Rich.” The Wall Street Journal. May 18, 2009.
2009 – coauthor of the 2nd edition of Rich States, Poor States - ALEC-Laffer State Economic Competitiveness Index
2010 – coauthor of the 2nd edition of Rich States, Poor States ALEC-Laffer State Economic Competitiveness Index
2011 – Member of the ALEC Board of Scholars this group represents a “convergence of ALEC with the great policy thinkers [that] will further ALEC’s mission of expanding free markets, limited government, and individual liberty” (ALEC, 2011).
2011 – Keynote speaker American Legislative Exchange Council’s 2011 Annual Meeting and Mark Pocan reported in The Progressive that Laffer was awarded some type of an award at a luncheon at the 2011 ALEC Annual Meeting.
If Cain gets any further in this process - I think people better start pulling ALL the curtains open or we will be stuck with the Laffer – Soak the Rich, Lose the Rich…. government model.
PLEASE
ALEC members and those affiliated with ALEC in any manner
MUST NOT BE ELECTED of RE-ELECTED.
Without state and federal legislators ALEC will cease to exist and it will implode.
For more information on ALEC –
Please read this or this or this
or this series of six articles.
is what ALEC is About - Mark Pocan on the ALEC Annual Meeting