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Herman Cain has called for a plan he calls “nine-nine-nine:” a flat 9% individual income tax rate, a 9% corporate tax rate, and a 9% national sales tax. He has uttered the triple digits repeatedly.
Mr. Cain’s rivals have tried to use the plan’s simplicity against him, responding that it sounds like the price of a pie with pepperoni, for example. (Har, har, Republicans.)
Mr. Cain and his proposal are getting new scrutiny as Republicans flirt with their candidates less than three months before casting the first votes of the primary season. A poll released Wednesday by NBC News and The Wall Street Journal found that Mr. Cain was effectively tied with Mitt Romney.
Although the specifics of the nine-nine-nine plan were developed in the last few months, it is only the latest incarnation of ideas popular among some supply-side conservatives.
Mr. Cain was a co-chairman in 1996 of the presidential campaign of Steve Forbes, who advocated a flat tax — a single rate on income for all payers. Beyond the obvious problems of the flat tax (increased tax burden on poor people, reduced charitable donations, etc.), the flat tax would effectively double the taxes on the middle class.
The nine-nine-nine plan would be a radical and complex overhaul of the tax system. In developing it, Mr. Cain relied heavily on Rich Lowrie, an investment adviser at a Wells Fargo
office in Pepper Pike, Ohio
. Mr. Lowrie has never worked for a policy research group or an academic institution, or made a name through economic analysis.
Mr. Lowrie has a bachelor of science degree in accountancy. On his Facebook page, he describes his political views as “free markets.” Mr. Lowrie is involved with the Ohio chapter of Americans for Prosperity, the conservative organization supported by the billionaire Koch brothers.
The plan could have major economic and political challenges: It would result in a substantial revenue loss for the government and shift the tax burden toward lower- and middle-income people.
In an interview, Mr. Cain said he asked Mr. Lowrie to do a “regression analysis” that would allow the government to eliminate all taxes and collect the same revenue from just three streams. “The number came up to be 9%,” Mr. Cain said. “And that’s how we came up with nine-nine-nine.”
Mr. Lowrie, however, admits that he is not an economist. “I don’t list myself as an economist,” he said. “I have an accounting degree, and I’m an investment adviser.”
A former staff member for Mr. Cain in Iowa described his and Mr. Lowrie’s relationship as “buddy-buddy,” adding, “They were just like two executives palling around together.”
Their plan has drawn fire from right and left. Conservatives are wary of a national sales tax, concerned that it would create another method of taxation.
Critics, especially liberals, say the plan offers a huge tax break for the wealthy while imposing a steep new sales tax on the middle-class and working poor; everyday items like milk and bread would be subject to a 9% tax.
In Tuesday’s debate, Mr. Romney took aim at Mr. Cain’s: “Simple answers are always very helpful, but oftentimes inadequate.”
Mr. Cain said an independent analyst examined the plan and found it would raise the same revenue as the existing tax structure. The analyst, Gary Robbins, a consultant in Virginia, said the Cain plan was “revenue neutral.” Even Mr. Robbins, however, has reservations.
“It’s not the plan I particularly would do, but it’s a sound plan,” said Mr. Robbins. Actually, Mr. Robbins’s math determined that the across-the-board rates necessary to raise the same money as existing federal taxes should be 9.1%.
Somehow, 9.1-9.1-9.1 does not trip off the tongue.