The main architect of Cain's 9-9-9 tax plan-this is what it's become known as though in fact that is really only stage 2 of the 3 step process, with step 3 being the Fair Tax-which is well named as it the most unfair tax proposal in the land-is a fellow named Rich Lowrie. Mr. Lowrie is not an economist but a financial advisor at Wells Fargo, who also happens to be affiliated with the Koch brothers.
You can ask yourself whether a real economist would make these predictions:
"LOWRIE: What will happen, economically, is that the economy will expand by two trillion dollars. Six million jobs are going to be created, bringing the unemployment rate back down to a more typical or natural rate of four, four and a half percent. Wages are going to go up by 10 percent. Business investment will go up by a third."
Incidentally, or should I say not so incidentally, he said this in a Fox news interview. Seems kind of fitting that Mr. Lowrie, who is not a real economist, would make such absurdly optimistic predictions on Fox news ,which is not a real news network.
I mean a 2 trillion dollar expansion in the economy 4 percent natural unemployment rate, with both a wage hike of 10 percent and an increase of a third in business investment? Why not promise everybody The Rapture while you're at it?
He's going to achieve this while adding an eventual 30 percent sales tax on the undeserving and unproductive nonmillionaires out there who have only themselves to blame. It's tough to sort out all the moving parts of the Cain plan because it has 3 unwieldy stages. As Bruce Bartlett points out even one round of radical changes is hard to achieve but making it 3 stages is surreal to think he could achieve in one term.
Bartlett gives a good, cursory summation of these 3 stages. Here is his description of phase 1:
"First, the 9-9-9 plan is actually an intermediate step in Mr. Cain’s plan to overhaul the tax system and jump-start growth. Phase 1 would reduce individual and business taxes to a maximum of 25 percent, which I assume means reducing the top statutory tax rate to 25 percent from 35 percent.
No mention is made on the site of a tax cut for those now in the 10 percent, 15 percent or 25 percent brackets. This means that the only people who would get a tax rate cut are those now in the 28 percent, 33 percent or 35 percent brackets. According to the Joint Committee on Taxation, only 4 percent of taxpayers pay any taxes at those rates."
http://economix.blogs.nytimes.com/2011/10/11/inside-the-cain-tax-plan/
This is one of the very interesting points about conservatives, they claim to have never seen a tax cut they don't like but that's not true. They don't like demand side tax cuts. You can say they favor the rich vs. the poor which is true; they also favor savers over consumers. In an economy like this where aggregate demand is so contracted it is unreal that the next 2 phases of Cain's are concentrated on raising the sales tax ultimately to 30 percent on consumers-this is phase 3, the endgame: The Fair Tax. When asked about this he "suggested" that consumers with modest incomes should by used goods.
This endgame will be with no taxes to pay for revenue except the Fair Tax which is one single federal sales tax. This will of course hit the middle class and the poor much harder than the rich as they spend a much greater portion of their income on consumption. Then too, this is only the federal sales tax. This plan would do nothing to the state tax systems so Americans would continue to pay a state sales tax on top of this 30 percent federal tax. In most states that's going to give a cumulative sales tax for consumers of at least 35 with some closer to 40 percent.
In addition they would continue to pay their state income taxes as well as property taxes, etc. When you add this all up it's not unrealistic to talk about something approaching a 50 percent tax.
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