{"id":2646,"date":"2011-10-21T16:06:22","date_gmt":"2011-10-21T20:06:22","guid":{"rendered":"http:\/\/stateimpact.npr.org\/new-hampshire\/?p=2646"},"modified":"2012-01-10T17:10:53","modified_gmt":"2012-01-10T22:10:53","slug":"what-the-9-9-9-plan-could-mean-for-a-state-without-sales-tax","status":"publish","type":"post","link":"https:\/\/stateimpact.npr.org\/new-hampshire\/2011\/10\/21\/what-the-9-9-9-plan-could-mean-for-a-state-without-sales-tax\/","title":{"rendered":"For New Hampshire, Cain&#8217;s 9-9-9 Means New Taxes"},"content":{"rendered":"<div id=\"attachment_2652\"  class=\"wp-caption module image right\" style=\"max-width: 300px;\"><a class=\"fancybox\" title=\"Republican presidential front-runner Herman Cain's 9-9-9 plan is generating a lot of buzz, but what will it do to states without sales taxes?\" href=\"http:\/\/stateimpact.npr.org\/new-hampshire\/files\/2011\/10\/129894379.jpg\" rel=\"\"><img decoding=\"async\" loading=\"lazy\" class=\"size-medium wp-image-2652\" title=\"Republican Presidential Candidate Herman Cain Unveils His Opportunity Zone Economic Plan\" src=\"http:\/\/stateimpact.npr.org\/new-hampshire\/files\/2011\/10\/129894379-300x192.jpg\" alt=\"\" width=\"300\" height=\"192\" srcset=\"https:\/\/stateimpact.npr.org\/new-hampshire\/files\/2011\/10\/129894379-300x192.jpg 300w, https:\/\/stateimpact.npr.org\/new-hampshire\/files\/2011\/10\/129894379-620x397.jpg 620w, https:\/\/stateimpact.npr.org\/new-hampshire\/files\/2011\/10\/129894379-220x140.jpg 220w\" sizes=\"(max-width: 300px) 100vw, 300px\" \/><\/a><p class=\"wp-media-credit\">Bill Pugliano \/ Getty Images<\/p><p class=\"wp-caption-text\">Republican presidential front-runner Herman Cain&#39;s 9-9-9 plan is generating a lot of buzz, but what will it do to New Hampshire and other states without sales taxes?<\/p><\/div>\n<p>New Hampshire is one of a small minority of states without a sales tax.* So when Republican presidential candidate Herman Cain announced his 9-9-9 Plan \u2014 9 percent corporate tax, 9 percent income tax, and a 9 percent national sales tax \u2014 residents of New Hampshire started feeling a bit nervous. \u00a0While the Cain plan is a federal tax overhaul that he claims is low impact for most Americans, it would essentially force residents of New Hampshire to pay a brand-new tax.<\/p>\n<p>So we wondered how the Cain plan could affect businesses and individuals in the Granite State. As the only New England state without a sales tax, New Hampshire is a major force in regional retail sales. \u00a0So could 9-9-9, a plan designed to spur business and job growth, actually have a negative effect on businesses in New Hampshire?<!--more--><br \/>\nThat&#8217;s a tough question, for a number of reasons.<\/p>\n<p><div class=\"related-content alignleft\"><h4 class=\"related-header\">Related<\/h4><div class=\"links\"><h5>Posts<\/h5><ul><li class=\"link\"><a href=\"http:\/\/stateimpact.npr.org\/new-hampshire\/2011\/08\/29\/is-new-hampshires-gas-tax-really-too-high\/\">Is New Hampshire\u2019s Gas Tax Really Too\u00a0High?<\/a><\/li><li class=\"link\"><a href=\"http:\/\/stateimpact.npr.org\/new-hampshire\/2011\/08\/04\/six-ways-to-look-at-how-nh-does-%e2%80%94-and-doesnt-%e2%80%94-attract-economic-development\/\">Six Ways To Look At How NH Does \u2014 And Doesn\u2019t \u2014 Attract Economic Development<\/a><\/li><li class=\"link\"><a href=\"http:\/\/stateimpact.npr.org\/new-hampshire\/2011\/08\/23\/more-on-the-massachusetts-vs-new-hampshire-economic-debate\/\">More On The Massachusetts-vs-New Hampshire Economic Debate<\/a><\/li><\/ul><\/div><div class=\"topics\"><h5>Topics<\/h5><p class=\"topic\"><img class=\"alignleft\" src=\"http:\/\/stateimpact.npr.org\/new-hampshire\/files\/2011\/08\/5457170804_0caa03c34f-60x60.jpg\" height=\"60\" width=\"60\" \/><a href=\"http:\/\/stateimpact.npr.org\/new-hampshire\/topic\/taxes\/\">Your Guide To New Hampshire State\u00a0Taxes<\/a><\/p><\/div><\/div>First of all, <a href=\"http:\/\/nymag.com\/daily\/intel\/2011\/10\/cain_999_plan.html\">the Cain plan is one page long<\/a>. \u00a0(Technically it&#8217;s two pages, if you count the full-page faux engraving of Herman Cain haloed by the shining hope of the 9-9-9 plan.) \u00a0One page of information doesn&#8217;t offer much for economists and advocates to parse. \u00a0And the <a title=\"Business And Industry Association: New Hampshire's Statewide Chamber Of Commerce\" href=\"http:\/\/www.nhbia.org\" target=\"_blank\">Business and Industry Association<\/a>, the state&#8217;s Chamber of Commerce, declined to talk with me on the grounds that it doesn&#8217;t comment on political issues.<\/p>\n<p>We do know from recent polling that New Hampshire voters tend to be anti-tax types. \u00a0But as one pollster explained to me, although they&#8217;re legendarily well-educated voters, most people from New Hampshire aren&#8217;t really that focused on politics until after the World Series. \u00a0So right now may actually be early to ask Granite Staters about 9-9-9.<\/p>\n<p>And we tried contacting the <a title=\"Herman Cain: President 2012\" href=\"http:\/\/www.hermancain.com\/press-resources\" target=\"_blank\">Cain campaign<\/a>, but they haven&#8217;t gotten back with us. \u00a0(More on that next week.)<\/p>\n<p>There was, however, one person who studies New Hampshire policy who was able to talk with us in-depth about 9-9-9. \u00a0He\u2019s Charlie Arlinghaus, President of the <a title=\"Josiah Bartlett Center For Public Policy\" href=\"http:\/\/www.jbartlett.org\/\" target=\"_blank\">Josiah Bartlett Center for Public Policy<\/a>, a free market (read: economically conservative) think tank.<\/p>\n<p class=\"question\"><span class=\"abbr\" title=\"question\">Q: <\/span>What\u2019s your understanding of how the 9-9-9 plan works?<\/p>\n<p class=\"answer\"><span class=\"abbr\" title=\"answer\">A: <\/span>The 999 plan is an attempt to simplify taxes and eliminate deductions so that taxation is as simple and transparent as possible. \u00a0And so the idea would be that every level of taxation, whether it\u2019s corporate taxes or income taxes, or a consumption-based tax, which is a sales tax, would be 9 percent. \u00a0And the goal is simplification and the goal is to eliminate as many loopholes as possible.<\/p>\n<p class=\"question\"><span class=\"abbr\" title=\"question\">Q: <\/span>Could you explain a little bit about how, if at all, this would affect taxes at the state level?<\/p>\n<p class=\"answer\"><span class=\"abbr\" title=\"answer\">A: <\/span>The Cain proposal is to change the way federal taxes, which everybody in the country pays in the same way, are paid. \u00a0It would have no impact whatsoever on state taxes. \u00a0So all of the state taxes we pay, cigarette taxes, room and meals tax, business taxes, at the state level, etc., would not change. \u00a0We don\u2019t have a state income tax, so we don\u2019t pay a state income tax. \u00a0We don\u2019t have a state sales tax, we wouldn\u2019t get a state sales tax. \u00a0Although this would impose a federal sales tax, which we currently don\u2019t have.<\/p>\n<p class=\"question\"><span class=\"abbr\" title=\"question\">Q: <\/span>I\u2019m looking at the summary of this plan right now, and it describes the sales tax as being a \u201creplacement tax,\u201d meaning that it is replacing taxes that are already somehow embedded into selling prices. \u00a0[In other words, it&#8217;s an invisible sales tax.] \u00a0Am I reading a little bit of skepticism, on your end, about that?<\/p>\n<div id=\"attachment_2662\"  class=\"wp-caption module image right\" style=\"max-width: 300px;\"><a class=\"fancybox\" title=\"Some people are skeptical of 9-9-9.  Rival Jon Huntsman used the name to make fun of Cain's time as CEO of Godfather's Pizza, saying, &quot;I thought it was the price of a pizza.&quot;\" href=\"http:\/\/stateimpact.npr.org\/new-hampshire\/files\/2011\/10\/6238962053_fe26efdb1b.jpg\" rel=\"\"><img decoding=\"async\" loading=\"lazy\" class=\"size-medium wp-image-2662\" title=\"Herman Cain's Cheesy Tax Plan\" src=\"http:\/\/stateimpact.npr.org\/new-hampshire\/files\/2011\/10\/6238962053_fe26efdb1b-300x297.jpg\" alt=\"\" width=\"300\" height=\"297\" srcset=\"https:\/\/stateimpact.npr.org\/new-hampshire\/files\/2011\/10\/6238962053_fe26efdb1b-300x297.jpg 300w, https:\/\/stateimpact.npr.org\/new-hampshire\/files\/2011\/10\/6238962053_fe26efdb1b-150x150.jpg 150w, https:\/\/stateimpact.npr.org\/new-hampshire\/files\/2011\/10\/6238962053_fe26efdb1b-140x140.jpg 140w, https:\/\/stateimpact.npr.org\/new-hampshire\/files\/2011\/10\/6238962053_fe26efdb1b-60x60.jpg 60w, https:\/\/stateimpact.npr.org\/new-hampshire\/files\/2011\/10\/6238962053_fe26efdb1b-220x217.jpg 220w, https:\/\/stateimpact.npr.org\/new-hampshire\/files\/2011\/10\/6238962053_fe26efdb1b-100x100.jpg 100w, https:\/\/stateimpact.npr.org\/new-hampshire\/files\/2011\/10\/6238962053_fe26efdb1b.jpg 500w\" sizes=\"(max-width: 300px) 100vw, 300px\" \/><\/a><p class=\"wp-media-credit\">Mike Licht \/ Flickr<\/p><p class=\"wp-caption-text\">Some people are skeptical of 9-9-9. Rival Jon Huntsman used the name to make fun of Cain&#39;s time as CEO of Godfather&#39;s Pizza, saying, &quot;I thought it was the price of a pizza.&quot;<\/p><\/div>\n<p class=\"answer\"><span class=\"abbr\" title=\"answer\">A: <\/span>The proponents always tell you this tax replaces that tax, and we\u2019re changing this and we\u2019re all going to come out better because of this&#8230;The difficulty with this in a state that doesn\u2019t have a sales tax is we reap an advantage from people shopping here where they don\u2019t pay a sales tax. \u00a0It\u2019s not based on a 6 percent vs. a 4 percent advantage, it\u2019s based on, we don\u2019t have one and the other states have one. \u00a0And that would change, and it would certainly affect the retail sector of New Hampshire significantly \u2014 imposing a sales tax, when so much of our retail sector is based upon the fact that we have no sales tax, [while] other states have some sales tax. \u00a0It\u2019s a psychological advantage. \u00a0If you eliminate that, where people have to just be concerned about the rate, well, it\u2019s two points, four points, five points higher, you eliminate some of the psychological attraction of retail sales in New Hampshire.<\/p>\n<p class=\"question\"><span class=\"abbr\" title=\"question\">Q: <\/span>But do you have a full understanding&#8230;about this notion of a replacement tax, that taxes are already embedded into sales prices? \u00a0Do you have any idea of what that could possibly mean?<\/p>\n<p class=\"answer\"><span class=\"abbr\" title=\"answer\">A: <\/span>Well, there are a lot of taxes and fees on the federal level that producers pay on some level or the business pays on some level, and every cost of doing business ends up in the price of the product. \u00a0You know, the price you pay for a cup of coffee is not based entirely on how much beans cost, it\u2019s based on everything. \u00a0How much the coffee shop has to pay its consumers, what licensing fees it has to pay, etc. So the goal of Cain\u2019s plan is to try to eliminate those, a myriad of taxes and fees and licensing regulations, etc., and to encompass them into one very visible sales tax.<\/p>\n<p class=\"question\"><span class=\"abbr\" title=\"question\">Q: <\/span>[How much of New Hampshire&#8217;s retail sales pie is made up of sales to out-of-staters?]<\/p>\n<p class=\"answer\"><span class=\"abbr\" title=\"answer\">A: <\/span>Because we don\u2019t have a sales tax, it\u2019s hard to know, but if you talk to a number of people in border towns, maybe in the central part of the state, it\u2019s a lot less, but there\u2019s a reason the Pheasant Lane mall in Nashua is built on the border, and that the parking lots are in Massachusetts, but all the shops are in New Hampshire.<\/p>\n<p>Another conservative-minded think tank, the <a title=\"Maine Heritage Policy Center\" href=\"http:\/\/www.mainepolicy.org\/\" target=\"_blank\">Maine Heritage Policy Center<\/a>, has done some calculations. \u00a0And they&#8217;ve determined that sales tax-free New Hampshire takes a giant slice out of Maine&#8217;s retail sales pie. In &#8220;<a title=\"The Great Tax Divide: Maine\u2019s Retail Desert vs. New Hampshire\u2019s Retail Oasis\" href=\"http:\/\/www.mainepolicy.org\/wp-content\/uploads\/VER-2-Path-to-Prosperity-The-Great-Tax-Divide-041311.pdf\" target=\"_blank\">The Great Tax Divide: Maine\u2019s Retail Desert vs. New Hampshire\u2019s Retail Oasis<\/a>&#8221; published last spring, Chief Economist J. Scott Moody writes:<\/p>\n<blockquote><p>&#8220;Maine has one of the highest tax burdens in the country at 12.6 percent of personal income (6th highest) while New Hampshire has one of the lowest tax burdens at 8.7 percent of personal income (49th highest)&#8230;<\/p>\n<p>The close geographic proximity of the two states leads to numerous arbitrage opportunities for Mainers to escape their significantly higher tax burden. The most obvious way is through direct cross-border shopping which previous MHPC studies have shown to be occurring up and down the Maine-New Hampshire border&#8230;<\/p>\n<p>[P]er capita retail sales in the adjacent bordering counties in Maine (Oxford and York) and New Hampshire (Coos, Carroll, Strafford and Rockingham) have been diverging ever since Maine adopted the sales tax in 1951. By 2007, the retail gap was $8,660 per person ($19,976 versus $11,316). If Maine had the same level of retail activity as New Hampshire, retail sales would have been up to $2.2 billion higher\u2014from $2.9 billion to $5.1 billion\u2014and created thousands of retail jobs.&#8221;<\/p><\/blockquote>\n<p>*Delaware, Oregon, Alaska and Montana also do not have state sales taxes.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>New Hampshire is one of a small minority of states without a sales tax.* So when Republican presidential candidate Herman Cain announced his 9-9-9 Plan \u2014 9 percent corporate tax, 9 percent income tax, and a 9 percent national sales tax \u2014 residents of New Hampshire started feeling a bit nervous. \u00a0While the Cain plan [&hellip;]<\/p>\n","protected":false},"author":28,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[54],"tags":[191,525,227,506,501,508,521],"acf":[],"_links":{"self":[{"href":"https:\/\/stateimpact.npr.org\/new-hampshire\/wp-json\/wp\/v2\/posts\/2646"}],"collection":[{"href":"https:\/\/stateimpact.npr.org\/new-hampshire\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stateimpact.npr.org\/new-hampshire\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stateimpact.npr.org\/new-hampshire\/wp-json\/wp\/v2\/users\/28"}],"replies":[{"embeddable":true,"href":"https:\/\/stateimpact.npr.org\/new-hampshire\/wp-json\/wp\/v2\/comments?post=2646"}],"version-history":[{"count":18,"href":"https:\/\/stateimpact.npr.org\/new-hampshire\/wp-json\/wp\/v2\/posts\/2646\/revisions"}],"predecessor-version":[{"id":2667,"href":"https:\/\/stateimpact.npr.org\/new-hampshire\/wp-json\/wp\/v2\/posts\/2646\/revisions\/2667"}],"wp:attachment":[{"href":"https:\/\/stateimpact.npr.org\/new-hampshire\/wp-json\/wp\/v2\/media?parent=2646"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stateimpact.npr.org\/new-hampshire\/wp-json\/wp\/v2\/categories?post=2646"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stateimpact.npr.org\/new-hampshire\/wp-json\/wp\/v2\/tags?post=2646"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}