KETR

Cain's Catchy 9-9-9 Tax Plan Draws Interest, Doubters

Sep 28, 2011
Originally published on September 28, 2011 1:41 pm

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.

Copyright 2018 NPR. To see more, visit http://www.npr.org/.

DAVID GREENE, Host:

Now, some Republicans are not satisfied with their party's field of presidential candidates. They're still waiting for a fresh face to emerge. There is growing buzz that New Jersey Governor Chris Christie might be that fresh face. In a speech at the Ronald Reagan Library last night, Christie criticized the current administration, but he remained vague about his plans. During a Q&A session, a woman asked him to consider running for president.

CHRIS CHRISTIE: This is all I'll say about that tonight is that I hear exactly what you're saying and I feel the passion with which you say it and it touches me.

GREENE: As NPR's Jim Zarroli reports, it's a cleverly marketed idea for changing the nation's tax code.

JIM ZARROLI: At last week's Republican debate in Florida, moderator Chris Wallace had barely gotten his question out before the audience erupted in applause.

CHRIS WALLACE: Mr. Cain, I want to follow up on your 9-9-9 plan for economic growth. That's a nine percent...

(SOUNDBITE OF APPLAUSE AND CHEERING)

WALLACE: Well, they seem to already know what it is. But the few...

ZARROLI: What 9-9-9 is, 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, like buy one pizza get one free. Like a lot of Republicans, Cain sees taxes as a major impediment to economic growth.

HERMAN CAIN: Our tax code is the 21st century version of slavery.

ZARROLI: 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. And so would most tax deductions, including the one for mortgage interest. Instead there would be a nine percent flat income tax, a nine percent corporate tax, and a nine percent national sales tax.

CAIN: My 9-9-9 economic growth and jobs plan is a major step toward tearing the chains off the backs of the American people.

ZARROLI: Economist Will McBride, of the Tax Foundation, says some of Cain's ideas make a lot of sense. Take a national sales tax, for instance. It 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 U.S. economy long-term.

WILL MCBRIDE: When you tax saving and investment you are taxing growth essentially, and you want to encourage thrift not discourage it.

ZARROLI: 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 nine percent would drift higher over time.

MCBRIDE: It sounds good in theory, but we have to think about the prospective political situation and that would be to raise the rates.

ZARROLI: But William Gale, of the Brookings Institution, says we've heard all that before. Gale believes there's no evidence tax cuts do much to affect economic growth.

WILLIAM GALE: Tax policy is full of these utopian ideas that have never been tried. But everyone is promising that their idea is going to make the difference in all this, and I just don't see it.

ZARROLI: Jim Zarroli, NPR News, New York.

(SOUNDBITE OF MUSIC)

GREENE: And you're listening to MORNING EDITION from NPR News. Transcript provided by NPR, Copyright NPR.