Wed September 28, 2011
Cain's Catchy 9-9-9 Tax Plan Draws Interest, Doubters
Last weekend, pizza magnate Herman Cain did something that surprised the political world: He came in first in a Florida GOP presidential straw poll.
One way Cain has attracted the attention of Republican voters is with what he calls his 9-9-9 plan. It's a cleverly marketed idea for changing the nation's tax code.
At last week's Republican debate in Florida, moderator Chris Wallace had barely gotten his question out about the plan before the audience erupted in applause.
"Mr. Cain, I want to follow up on your 9-9-9 plan for economic growth," Wallace said as applause began within the crowd. "Well, they seem to already know what it is."
Cain's proposal is a pithy way of describing a plan to radically overhaul the U.S. tax system. More than one commentator has likened it to a marketing campaign, such as buy one pizza, get one free.
Like a lot of Republicans, Cain sees taxes as a major impediment to economic growth.
"Our tax code is the 21st century version of slavery," he said in a campaign video.
But no other Republican has proposed such a sweeping overhaul of the tax code. If Cain has his way, the estate tax and capital-gains tax would be gone for good. So would most tax deductions, including the one for mortgage interest.
Instead, there would be a 9 percent flat income tax, a 9 percent corporate tax and a 9 percent national sales tax.
"My 9-9-9 economic growth and jobs plan is a major step towards tearing the chains off the backs of the American people," Cain says in his video.
Debate Over The Details
Cain hasn't fleshed out all the plan's details, and his campaign didn't return a call to NPR. But parts of the plan have been kicking around policy circles for some time.
Economist Will McBride of the Tax Foundation says some of Cain's ideas make a lot of sense. A national sales tax, for instance, would mean taxing people for the things they consume, which means they'd spend less and save more. And McBride says a higher savings rate would benefit the economy long-term.
"When you tax saving and investment you are taxing growth, essentially, and you want to encourage thrift, not discourage it," he says.
But McBride also voices a concern expressed by a few conservative politicians. They're wary of the government imposing a new tax of any kind and they worry that Cain's 9 percent would drift higher over time.
"It sounds good in theory but we have to think about the prospective political situation and that would be to raise the rates," McBride says.
There's also the question of how much revenue Cain's plan would bring in and whether it would deepen the budget deficit. Cain says the plan would be revenue-neutral, meaning it wouldn't raise more money in total, and that it would lead to higher economic growth, so revenues would increase over time.
But William Gale of the Brookings Institution says we've heard all that before. He says there's no evidence tax cuts do much to affect economic growth.
"Tax policy is full of these Utopian ideas that have never been tried, but everyone's promising that their idea is going to make the difference," Gale says. "And I just don't see it."
Without more details, Gale says, it's hard to really pass judgment on Cain's plan. But whatever the outcome, the sentiment seems to have struck a chord with some Republican voters and helped Cain stand out in the crowded field of Republican presidential candidates.