← Quora archive  ·  2011 Oct 19, 2011 03:17 PM PDT

Question

Is Herman Cain's 9-9-9 plan smart economics?

Answer

No. The numbers are too low, too equal and miss the whole point of tax law design. I don't know the exact rate/yield curve for the US economy (basically, up to a point tax revenues increase with tax levels, and then start decreasing as people feel burdened and start hiding financial activity), but 9-9-9 would likely yield far too little.

The second problem is the inequality in the plan. The rich aren't just taxed more for social justice reasons. They genuinely use far more (and higher quality) public resources than the poor. If you can't afford a car, you don't cause as much road wear as someone who does, for instance. On a larger scale, our free market economy is set up to disproportionately reward shareholders, and dump the social costs on others. There is a disingenuous appeal to a sense of "equality" here.

The third problem is that it is a misguided attempt at making tax law simple. The byzantine maze (deductions, exemptions etc.) do have a point to them, though there is definitely a lot of bureaucratic bullshit as well. The complexity is how the political process influences all sorts of subtle things. Money talks, and tax law is its voice. Unfortunately, Americans tend to respond well politically to anyone who grabs the "simplicity" banner and distrust complexity by default, associating it with deceitfulness. But our economic problems are not simple, and expecting the solutions to be is deluded. This is not to say you shouldn't try bold, dramatic moves. But that's not the same as saying you should blunder about like a bull in a china shop.

The only real value to the plan is its political/rhetorical value. For better or worse, 9-9-9 has almost become the incumbent framing of the conservative position, even though it is ridiculous.