You just can’t fault a guy for talking up pizza during a good debate – especially when that guy is former Godfather’s Pizza CEO and GOP presidential candidate Herman Cain.
Cain grabbed a surprising share of the spotlight in New Hampshire on Tuesday during the GOP presidential debate with talk of his “9-9-9” plan. The debate had been plugged as a showdown between top candidates Texas Governor Rick Perry and former Massachusetts Governor Mitt Romney; while Perry has been touted as the current darling of the party, Romney leads in polling in the ever important primary states of Iowa and New Hampshire.
Cain, however, just might be the spoiler in the race for the nomination. And he’s doing it with a simple plan based on his pizza industry experience. The plan has been called the “9-9-9” plan and is a mix of flat taxes: a 9% individual income tax, 9% national sales tax and 9% corporate income tax.
The plan eliminates payroll taxes, capital gains tax and the federal estate tax.
Cain claims that the plan will save taxpayers $430 billion a year. That’s the cost that it takes to fill out “the stupid tax code.” Cain proposes completely tossing the current Tax Code altogether.
It sounds so, well, simple. And that’s exactly its appeal. But the plan isn’t without its flaws. Chief among them? It’s not all that simple.
The Tax Code didn’t become so voluminous based solely on the crazy whims of Congress. It grew bigger and bigger because we taxpayers like our deductions, exemptions and exceptions.
Cain, realizing that we like those deductions, exemptions and exceptions, has already started incorporating those pieces into his plan. That individual income tax, for example? It’s a tax on gross income less deductions for charitable contributions. The national sales tax would not replace existing sales taxes – it’s a new tax on top of current state and local sales tax. And that corporate income tax is a tax on gross income with deductions or adjustments for investments, certain businesses expenses and shareholder dividends. There are also payroll deductions related to “empowerment zones” which would apply to individuals and corporations.
But the 9-9-9 scheme wouldn’t stay put for long. Cain’s plan eventually calls for a transition to the Fair Tax, eliminating the income taxes on individuals and corporations altogether.
Although the details haven’t been worked out completely, Cain’s plan is gaining momentum. But still, some folks remain skeptical. Chief among the worries: will the amount of money raised under the plan be enough to keep the government going? Or will the 9-9-9 plan turn into the 10-10-10 in the following year and perhaps the 11-11-11 plan the year after?
Those are solid worries.
But the simplicity of the plan is playing nicely against the rest of the candidates, none of whom have put up an economic proposal that has been met with much enthusiasm. Cain, realizing this, took the opportunity to attack the front-runner Romney by asking him to explain the 59 points of his economic plan. Romney could not, noting that simple answer may be “oftentimes inadequate.” I tend to agree with him.
But before you throw virtual tomatoes at me, let me clarify a few things. First, I do believe our current tax system is too complicated. And believe it or not, my work as a tax attorney is largely not contingent on the current tax system remaining complicated. Finally, this isn’t intended to be a point by point critique of the plan because, quite frankly, I haven’t seen a detailed view of the plan; I’m not even sure that one exists for public consumption (you can read what Cain’s campaign has released about it here). I am, rather, intrigued by the growing popularity of a plan based on a concept (simplicity) rather than particular components.
So I’m curious to know what you think: is simple better when it comes to budgets and tax or, is there, as Romney suggests, such a thing as a plan that’s too simple?
Of course, it if does work – a tax plan loosely based on a pizza deal – I’m thinking we could throw in a “IRS answers the phone in 30 minutes or your tax bill is free” plan (c’mon, like you didn’t see that last bit coming).
