19 Oct Cain’s Stimulating ‘9-9-9’ Tax Reform
Writing in the Wall Street Journal, Dr. Laffer analyzes Herman Cain’s 9-9-9 proposal to reform the federal tax system. Dr. Laffer points to his research for the Laffer Center and the high cost of complying with the current tax codes, declaring that reducing tax code complexity and the costs associated with compliance is a “win-win,” and emphasizing the economic benefits of a low-rate, flat tax as a core principle for economic growth.
“The whole purpose of a flat tax, à la 9-9-9, is to lower marginal tax rates and simplify the tax code. With lower marginal tax rates (and boy will marginal tax rates be lower with the 9-9-9 plan), both the demand for and the supply of labor and capital will increase. Output will soar, as will jobs. Tax revenues will also increase enormously—not because tax rates have increased, but because marginal tax rates have decreased.”