Mr. Lowrie, who is not an economist, says by “ripping out a whole bunch of taxes” prices of goods will fall, US exports will be more competitive and business will thrive. He claims the plan will create 6 million new jobs as business becomes more competitive.
“In the price of things is the embedded cost of all taxes,” he says. “We will be exporting goods without the taxes built into them and hitting imports with the sales tax. It will level the playing field.”
Independent economists who have studied Cain's 9-9-9 plan say the plan would take the nation into uncharted waters. The US has never had a national sales tax except for gasoline. It’s not clear what would happen to state and local services. States and municipalities would be carrying a new burden since they would have to pay the tax too. And, economists say the plan would favor those with high incomes.
“I can understand how a presidential candidate may want to start out and go a different way,” says John Silvia, chief economist at Wells Fargo Securities in Charlotte, N.C. “But, we have to know how we’re going to get from here to there – there are a lot of implications for this.”