I'm not going to lie. I was getting close to hitching a ride on the Cain Train. The 999 plan's simplicity was appealing and almost mesmerizing. Paul Ryan giving it some love was the cherry on top. Ryan told the Daily Caller:
"We need more bold ideas like this because it is specific and credible I’m more of a flat-tax kind of a guy."
But then I heard Cain's interview with CNN's Erin Burnett (transcript) and Cain said this in response to a question about affirmative action:
"I believe in empowerment zones. Most of the unemployed black Americans in this country are in these mostly economically depressed areas. It could be, and I'm only using this as an example, because we haven't finished establishing the parameters yet. Instead of in a designated empowerment zone, it being 9-9-9, it could be, as an example only, 3-3-3.
What this does, because you have a lot of African-Americans located in cities like Detroit, disproportionately, it would encourage businesses to stay in business there or to move there. It would encourage people to work there, because if you live in the empowerment zone, you're going to pay a smaller percentage in taxes."
[exchange starts at 2:25]
And so we have the first tax loophole. So much for the flat tax.
Rich Lowrie, Cain's economic advisor, told the Bangor Daily News that critics of the 999 plan should withhold judgement until they've seen "the empowerment zone piece that we are rolling out next.”
This is likely in response to criticism that his plan would disproportionately affect the poor (whether real or perceived). And frankly, I think the only way Cain's plan could ever pass would be for there to be some sort of progressive aspect to it. Whether that means a lower rate for the bottom 5% or an exemption of some sort for the lowest wage earners, I just can't imagine a scenario where a 9% sales and income tax on the poor could ever pass.
But "empowerment zones" smack of big government intervention and take us right back to Big Brother picking winners and losers. It begins the process of a sprawling, complicated tax code with a myriad of rules, regulations, and loopholes. If Cain is opening that door this early in the process, his plan is doomed. D.O.A.