Herman Cain's 9-9-9 tax plan will be "win-win-win" for everyone, says former Reagan economist Art Laffer.
The "9-9-9" tax plan is a nine percent tax on income, a nine percent national sales tax, and a nine percent corporate income tax.
Sutton Porter, filling in for Rick Amato on the Amato for Liberty radio show this week, asked Laffer about the plan put forward by the former business executive who is among the top-tier of candidates for the GOP nomination for president.
His thoughts?
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"I love it. I think it would be a great plan to put in place," he told Porter.
Laffer says in the interview that the "marginal tax rates are way too high."
"If you simplify the tax code, lower the marginal tax rates, you're going to create, with higher incentives, more output, more employment, more jobs, and more tax revenue," he said.
Laffer should know, having served both terms as an economic adviser to Ronald Reagan, and also as creator of what's known as the Laffer Curve. He's also written "Return to Prosperity: How America Can Regain Its Economic Superpower Status"
Listen to the interview:
The Laffer Curve basically says that if the government taxes everyone at 0 percent, obviously no revenue is raised. Conversely if the government taxes everyone 100 percent of what they earn, no revenue will come in. No one will bother working.
The Laffer Curve says that the optimum tax rate is achieved at greater than 0 percent but less than 100 percent.
Critics of Cain's economic plan say that a 9 percent income tax and sales tax will hurt the poor in this country, who don't pay taxes under the present system.
Laffer says, "The Cain plan has exemptions for everyone who earns below the poverty line, for all three of the '9's'."
"They [the poor] will clearly be better off with the Cain plan," he said.
Laffer says that in his view, very few if any, will be worse off under this plan.
"Because it will create jobs, output, employment, productivity. You will move people out of the path of poverty category into the tax paying category, and it will be a win, win, win for everybody," he said.
Even the thought of future legislative bodies raising these rates higher to suit their goals isn't a deterrent for Laffer.
"We cannot constrain future congresses from doing stuff," he said.
"But that's true at any time," he said. "We all worry about future congresses."
He continued, "I don't think the Cain plan makes it any easier on future governments from raising rates, and we might as well have a little bit of efficiency while we're still alive on this planet."
He said, "I would prefer if the plan was 8-8-8 or 7-7-7.
"I don't want to make it 6-6-6 though," he said.
Laffer said that all the Republican candidates have plans of a lower tax rate and a flatter tax.
"What he [Cain] did, is he got one that was comprehensive and complete, and was catchy," he said. "Obviously the other candidates are a little bit jealous."
Laffer said Cain has put a dream out in front of the American people of a more efficient tax system. And he said that there's nothing wrong in America that "a little tax reform and monetary reform won't solve."
When asked about the Occupy Wall Street movement happening across the country, Laffer chuckled and said, "If you're not a socialist when you're young you have no heart. If you're not a capitalist when you're older, you have no brain."
He said, "These are just kids, most of whom have never had a job and feel that the world owes them a living."
He also said that backing of the movement by unions and even Nancy Pelosi doesn't matter.
"She and Reid and these other people are just an anachronism from a time gone by. They're like baby teeth, and they're going to be lost and gone and no one will even notice."
Laffer says that young people have to go through a transition period in their political thought.
"Up until the time that you're 22 or 23, you're a total dependant. You're a welfare recipient from your parents and everyone else until you finally start earning a living," he said. "Once you start earning a living you start to realize what the government takes out of your paycheck.
"Up until then, its all idealism, without having any responsibility."
Asked about how America gets out of the economic mess it's in, Laffer says that any of the 2012 presidential candidates has the potential to lead, with the exception of Obama.
"Look at him, he's a college professor, he's a success story all the way through, and the reason he's a success story is because he had so many options open to him, and now he closes everyone else's options.
"That's not the right thing to do. He just doesn't believe in the world that created him," he said. "He could have created a wonderful, prosperous America, but he just doesn't believe in the right things,” Laffer said.