Many pundits have suggested that if Americans had to personally pay their taxes every month, instead of having it withheld from their paychecks, they would be less apathetic about their government. And on CNBC Thursday, Herman Cain senior economic adviser Rich Lowrie said this was one motivation behind the “9-9-9″ tax proposal.
Lowrie also explained on “The Kudlow Report” that Cain’s plan would produce greater economic growth than the current system.
“Two trillion dollars more GDP,” Lowrie replied. “Six million jobs, business investment increases by a third. Wages go up by 10 percent. And if you fold all that growth together, federal revenues go up by 15 percent.”
One of the critiques of the proposal is that it would force a greater tax burden on the middle class. But Lowrie says while that tax burden will be more transparent, and the total cost will be the same. It is that transparency, he said, that will show taxpayers just how much their government costs them.
“This is not an add-on tax like you find at the state level,” Lowrie said. “This is a replacement tax, and all we’re doing is pulling out taxes that are invisible, we’re cutting the rates, we’re putting them back in at lower rates.
“Marginal costs will go down. And prices will not go up if you have marginal costs that go down. So a $1 bottle of water is going to cost 90 cents, let’s say, and put a 9 percent tax on that, you’ll get back to close to where you started.
“But what we’ve done is made the tax already embedded in the product visible, so more people know what they really pay for government. And our feeling is by making it transparent, people will want less government as a result.”
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