Herman Cain has been taking heat for his proposal to scrap the Federal tax code and replace it with three flat taxes on consumption, on individual income, and on business income of 9% each.
Many have criticized his 9-9-9 plan because the sales tax could so easily be raised. Indeed, giving Congress any tax rate to raise, as P. J. O'Rourke says, is like giving whiskey and car keys to teenage boys.
Others have criticized it because, for months, Cain named no economist who had designed or helped him design the plan. Last week at Dartmouth, Cain named the previously unknown Rich Lowrie of Cleveland, Texas -- or Cleveland, Ohio -- as his economist.
Then there have been the jokes. Michelle Bachmann likened it to the evil 666, the number of the beast, and Mitt Romney said he thought it was the price of a pizza, connecting it to Herman Cain's time as CEO of Godfather's Pizza,
Before naming Lowrie, Cain had said only that there were well known economists who had helped him and that their names would come out when they were ready. When he named Lowrie, people snickered, but now it appears that Cain's strategy was to give them enough rope to tie themselves in knots.
In this morning's Wall Street Journal, Art Laffer came out for 9-9-9. Yes, he says, even with the exemption of those below the poverty level, and even with the deduction for charitable donations, it is revenue neutral, raising as much money as the current unplanned patchwork. And yes, he says, it is incredibly stimulative, since it would reduce to zero the wasteful expenditures on tax avoidance. And yes, he says, it would mean that there would be those whose taxes would increase, but that is a consequence of any revenue-neutral tax system change. And yes, he says, the sales tax rate could easily be increased by Congress, but what Federal tax rate can't?
Bam! Cain's 9-9-9 liability just came off the ropes, punching back like Muhammad Ali.
My immediate thought when I first heard Cain's plan was that the rates weren't high enough to raise the same revenue as our present Federal tax system. My second was that they might be, since I remembered Art Laffer saying that he had designed a revenue-neutral system of dual flat taxes on personal income and business income when he was economic adviser to Moonbeam Brown running for the Dem nomination for president against Slick Willy Clinton; the two rates were both 13%.
Sherry says that Cain's rope-a-dope strategy in withholding his advisers' names smacks of Andrew Breitbart's incremental release of Hannah Giles' and James O'Keefe's ACORN-pimp-and-prostitute sting videos that brought the lame stream media as low as ACORN. If she's right, there will soon be other economic names endorsing 9-9-9.
After all, Godfather Cain probably knows lots of economists. He was Chairman of the Kansas City Federal Reserve Bank.
