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Before Beltway Conservatives, Cain Defends Tax Plan



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In an early-morning talk at the American Enterprise Institute, Herman Cain defended his 9-9-9 tax plan, adding that he isn’t just a “flavor of the week.”

“The momentum is coming from the grassroots and the people,” he said to a standing-room-only audience on Monday. “That’s why this ‘flavor of the week’ is now the ‘flavor of the month,’ and it still tastes good!”

Cain began defending his plan, arguing that anything would be better than the current system, and emphasizing the value of the proposal’s simplicity. “If the American people understand it, they will demand it,” he said. “This isn’t going to pass based upon my ability to persuade Congress alone. This is going to pass because of the strength and the voice of the American people. So we want it to be simple.”

He then offered the same defenses of the plan that he has presented in the presidential debates, arguing that his plan would add a 9 percent sales tax, but it would also cut the “invisible taxes” which raise the price of goods by 30 to 40 percent. And instead of burdening those living below the poverty level, his proposed “opportunity zones” would enable the poor to prosper.

Cain added that the government shouldn’t try to create fairness through tax exemptions. Instead, he said, the free market should determine who succeeds. “Leveling the playing field is the government’s role, in my opinion,” he said. “Level the playing field, let the free-market system, let people’s decisions determine what’s fair, not the government. Because when the government gets into picking winners and losers — can we say Solyndra? — when they get into that business, where does it stop?”

On that riff, Cain also took a jab at Gov. Rick Perry’s flat-tax plan, calling it “flat-tax light.” Instead of functioning like a pure flat tax, Perry’s plan preserves popular deductions in order to dodge critics, he said.

“I’m not interested in a plan that’s going to reduce criticism,” he added. “I’m interested in a plan that’s going to solve the problem.”

But despite exuding confidence and drawing applause and laughter from the audience, Cain left one important critic unsatisfied: Grover Norquist, the president of Americans for Tax Reform.

Kevin Hassett of AEI moderated a panel discussion after Cain’s talk which featured Norquist, as well as William Gale of the Brookings Institution, Stephen Moore of the Wall Street Journal, and Cain’s senior economic adviser, Rich Lowrie.

The panelists were hesitant to praise 9-9-9, especially Norquist, who argued that without a despot to keep taxes from going up, Cain’s proposal would only enable higher taxation, bringing “a possibility that these things would grow” above 9 percent. Instead, reformers should focus on “trimming the current system,” he said.

 

“And that’s strictly political,” Norquist added. “If you were a tsar, if you were probably one of Obama’s tsars, and you were able to set up a code and then nobody was able to have elections to change anything, you could have a conversation about that. But that’s not the way we work.”

He cited Connecticut and New Jersey as examples of places where flat taxes have gone awry. “Let’s not put ourselves in a position where we create additional taxes that can grow,” he said.



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