Friday, October 14, 2011

Bartlett on Cain Tax Plan

Former Reagan and Bush (senior) budget official Bruce Bartlett slices and dices GOP Presidential candidate Herman Cain's "9-9-9" tax plan on his New York Times blog.

At a minimum, the Cain plan is a distributional monstrosity. The poor would pay more while the rich would have their taxes cut, with no guarantee that economic growth will increase and good reason to believe that the budget deficit will increase. Even allowing for the poorly thought through promises routinely made on the campaign trail, Mr. Cain’s tax plan stands out as exceptionally ill conceived.

In its basic form the plan calls for lowering individual and corporate income taxes to a flat 9% while levying a 9% tax on all goods and services. As Bartlett notes, this would result in a huge shift of the tax burden from the wealthy and corporate interests to the poor and middle class. This seems consistent with other GOP tax proposals, all based on the unquestioned presumption that such tax cuts for the wealthy would create massive economic growth. Bartlett takes this assumption apart:

Mr. Cain says these three proposals, which he would put into effect immediately without offsetting the lost revenue, will jump-start economic growth. He offers no evidence for this assertion; it is simply put forward as self-evident. But the experience of the George W. Bush administration was that cuts in tax rates on the wealthy and on capital gains had no effect whatsoever on growth, according to the Congressional Research Service.

--Ballard Burgher

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