Kudlow’s Money Politics

Larry Kudlow’s daily web log of matters political and financial.

Cain Advisor: 9-9-9 Plan to Add $2 Trillion to GDP


Republican presidential hopeful Herman Cain’s 9-9-9 plan will add $2 trillion to U.S. GDP, as well as create six million jobs, his economic advisor Rich Lowrie told me on Thursday.

Lowrie also said that under the plan, business investments will increase by one-third and wages will go up by 10 percent. “And if you fold all that growth together,” he said, “federal revenues go up by 15 percent.”

Cain’s 9-9-9 plan would scrap the current tax code and replace it with a 9 percent tax on personal income and corporations, as well as a new 9 percent sales tax.

The controversial plan has helped fuel the Georgia businessman’s sudden surge in the GOP race. A new NBC News/Wall Street Journal poll has Cain leading the rest of the pack among Republican primary voters.

Critics contend the 9-9-9 plan will unleash a new revenue source with its national sales tax and will hurt the middle class. But Lowrie said the sales tax is a replacement tax, not an add-on tax like you’d find at the state level.

“All we are doing is pulling out taxes that are invisible,” he said. “We’re cutting the rates. We’re putting them back in at lower rates. Margin costs will go down and prices will not go up if you have marginal costs that go down.”

Lowrie also rebuffed criticism that the plan was unfair to the middle class. He called the plan fair and efficient.

The payroll tax, he said, will go from 15 percent to 9 percent, and there will be no hidden taxes. “[That] means I pay 9 percent, you pay 9 percent, and if you make a million times more you pay a million times more,” he said.

“We’re trying to strive for transparency,” he added, “and we want to make people aware of just exactly how much in taxes they are paying that is hidden right now.”


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