Sat October 29, 2011
Cain's 9-9-9 Plan A Hard Sell In Anti-Tax N.H.
The attractiveness, and simplicity, of Herman Cain's 9-9-9 plan — a nine percent federal income, corporate and sales tax — has catapulted the Georgia businessman to the head of the Republican presidential field. But for some states, such as New Hampshire, which doesn't have a sales tax, 9-9-9 wouldn't be simple at all.
People in New Hampshire, to put it mildly, dislike taxes.
"New Hampshire is definitely an anti-tax state," says Andy Smith, director of the Survey Center at the University of New Hampshire.
Smith studies, among other things, how the state's residents feel about taxes. That's because New Hampshire is one of the few states in the country that doesn't have a broad-based income tax or a sales tax. And, Smith says, his polling shows a lot of people here like it that way.
"New Hampshire is a state that prides itself on having limited government and independence of individual people," Smith says. "And I think a sales tax is seen then as a way to grow government, and it's something that will inevitably grow."
So when a Republican presidential candidate like Herman Cain comes into New Hampshire for a debate and starts talking taxes, it's a big deal.
"Continuing to pivot off the current tax code is not going to boost this economy," Cain said. "This is why we developed 9-9-9 — nine percent corporate business flat tax, nine percent personal income flat tax, and a nine percent national sales tax."
This has helped move Cain from longshot to top-tier candidate. But it has also made him a target. At a recent debate held in Las Vegas, one of his rivals, Texas Governor Rick Perry, suggested that his plan might not sell so well in the Granite State.
"Go to New Hampshire, where they don't have a sales tax, and you're fixing to give them one," Perry says.
For decades, the New Hampshire economy has relied on its tax-free status to draw retail sales from out-of-staters. So what would happen if retailers here suddenly had to deal with a federal sales tax?
"I don't think it's a good idea, as far as we're concerned, anyways," says Julie, who works at a downtown Concord gallery and frame shop and only wanted to give her first name. "It seems like we'll be getting taxed a lot extra."
The Cain campaign might be more pleased with the response from Michelle Lienhart, owner of The Just Be Boutique in Concord.
"I'm not sure how I feel about the nationwide sales tax ... but I've heard that we pay a portion of that in the other taxes we pay, so if we're not paying certain other taxes, it would kind of all wash itself out," Lienhart says.
Charlie Spano heads up the Cain campaign in the state, which at this point consists of a small handful of staffers and about 60 volunteers, working out of an office in Manchester. Spano insists the 9-9-9 plan wouldn't impose a tax on New Hampshire, because it would lower various federal taxes manufacturers, distributors, and retailers pay. Spano insists that, in the end, everyone should be trusting the market.
"All those taxes that are federally imposed will go away," Spano says. "They will be replaced by the nine percent tax, which will be levied at the point of sale, and will be invisible to the consumer. It is not, will not be, and was never designed to be, an add-on in the classic sense of a sales tax."
But not all free marketeers agree. Charlie Arlinghaus, president of the Josiah Bartlett Center, a New Hampshire-based free-market think tank, is skeptical of how 9-9-9 would work in the state.
"The proponents always tell you this tax replaces that tax, and we're changing this and we're all going to come out better because of this," Arlinghaus says. "Imposing a sales tax, when so much of our retail sector is based upon the fact that we have no sales tax, and other states have some sales tax: There's a psychological advantage."
The good news? Cain's tax plan has propelled him to the front of the pack nationally. The bad news? He's currently trailing Mitt Romney in tax-averse New Hampshire by 29 points. But, as former presidents Bill Clinton and George W. Bush could tell him, you could still lose the New Hampshire primary and go on to win the nomination ... and even the presidency.