With everyone talking about Herman Cain’s 9-9-9 plan today, I decided to ask Grover Norquist, president of Americans for Tax Reform, for his take on the idea.
Norquist said he understands why Cain’s plan is popular. “When you hear 9-9-9, the only thing people really know is — ‘I get it, everybody pays the same rate, everybody can see what everyone’s doing’.”
But while a flatter and more transparent tax might be a good thing, Norquist warned that “there are very, very real dangers in creating new taxes that can grow.” (Cain’s plan would replace the current tax code with a 9 percent corporate tax, a 9 percent income tax — and add a new 9 percent national sales tax.)
Norquist cited New Jersey’s tax system as a warning against adding a new national tax. “In New Jersey, they had property taxes [which were] very high — and no income tax,” he said. New Jersey then sought to correct this by adding an income tax. “And so you went from New Jersey having the highest property taxes in the country — to New Jersey having the highest property taxes and income taxes,” he explained.
“You know, you can drain out more blood with two needles than with one,” he said.
Norquist’s theory is that government tends to push any tax available to the breaking point. “That’s why states with no income tax have lower overall taxes,” he said.
Norquist also argued that the only reason that the United States tax burden is lower than most European nations is because they have a value-added tax (VAT).
Norquist, though, said he wasn’t overly-alarmed by Cain’s plan — mainly because he doesn’t think it has a chance of becoming law. “If [Cain] was elected president, he wouldn’t do 9-9-9. He’d cut the marginal tax rates,” Norquist said.
So how bad is the idea?
“If this bill was before Congress, I would say, vote ‘no’,” But since it’s not before Congress — and what we’re doing is having a conversation about flatter tax reform — Norquist hopes this will lead to a healthy debate over tax reform.