by Alex M. Parker

Simplicity, as with Herman Cain's '9-9-9' proposal sells on the campaign trail but it's hard to pull off in Washington

On the campaign trail, candidates love to sell simple plans. Herman Cain, the former Godfather's Pizza CEO who has turned into an unlikely contender in the GOP presidential race, has relentlessly hawked a "9-9-9" economic plan, promising a simple 9 percent sales, income, and corporate tax. Texas Gov. Rick Perry has said that his economic plan will center on a flat tax, similar to the one which magazine publisher Steve Forbes tried to ride to the White House 15 years ago.

It's not hard to see why politicians want to get simple. Almost everyone agrees that the tax system is too complicated, with too many special interest loopholes gumming up the works. By offering to make filing taxes easier, politicians are not only promising simplicity in policy, they're offering to make life less complicated for every American. And in the age of Twitter, it doesn't hurt to have an economic plan that can be summed up and understood quickly. But there's a problem, too. In Washington, almost nothing ends up being simple.

"I worked at the White House. One lesson I learned is that there is not a dollar in the tax code that's not adamantly defended by someone," says Jared Bernstein, an economist who worked as an adviser to Vice President Joe Biden. It's not just that lobbyists can influence the process through campaign donations. Every tax loophole in the books has, in theory, a reason for being. And while some are blatant giveaways, whether to get rid of others can be a heated debate. Lawmakers with different ideologies and constituencies will see these issues differently, and as always in Washington those with the most money and power will influence the outcome of the debate.

Cain may have learned this already.

After critics noted that a flat 9 percent income tax would hit poor Americans the most, Cain modified his plan to include exemptions for those living near the poverty line. He also said that "Opportunity Zones," already a part of his plan to give tax incentives to those living in low-income areas, would also apply to businesses. But when one adjustment gets made, it raises the possibility that others might as well. The home mortgage interest deduction, for example, or the employer exemption for healthcare, two tax deductions which benefit millions of middle-class Americans and corporations.

This isn't the first time a presidential primary has centered on a simple-sounding policy tax proposal.

In 2008, former Arkansas Gov. Mike Huckabee shook up the GOP race with the so-called Fair Tax, a national sales tax to replace the federal income tax. Like the flat tax, it seemed simple, but the proposal had wrinkles. To help poorer people cover basic necessities the tax system would include a monthly tax rebate, which critics claim this rebate could turn into a massive and ungainly entitlement. Once again, the devil is in the details.

[Read how Mitt Romney got the front-runner treatment during this week's debate.]

Not everyone is following the urge for simplicity. "Simple answers are always very helpful, but often times inadequate," Romney said during the October 11 GOP debate in New Hampshire. Rather than try to keep things short, Romney took the opposite approach with his economic play, laying out 59 points in a 160-page report.

Sweeping overhauls that result in simpler systems can happen in Congress.

Twenty-five years ago, the Tax Reform Act of 1986 lowered income tax rates while removing many tax incentives, and was hammered out as a compromise between President Ronald Reagan and the Democratic Congress. "In the view of almost everyone who was involved, it was good legislation that was useful reform," Bernstein says. "It wasn't a major change in the structure of the system." Tweaking the current system might not play well on the campaign trail, but history has shown it's the most realistic way to make any changes.

 

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GOP Tax Proposals: Nothing Is Simple As It Seems | Politics

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