{"id":2793,"date":"2011-10-28T13:41:13","date_gmt":"2011-10-28T17:41:13","guid":{"rendered":"http:\/\/stateimpact.npr.org\/new-hampshire\/?p=2793"},"modified":"2012-01-10T17:09:16","modified_gmt":"2012-01-10T22:09:16","slug":"cains-9-9-9-touches-third-rail-of-new-hampshire-tax-policy","status":"publish","type":"post","link":"https:\/\/stateimpact.npr.org\/new-hampshire\/2011\/10\/28\/cains-9-9-9-touches-third-rail-of-new-hampshire-tax-policy\/","title":{"rendered":"Cain’s 9-9-9 Touches Third Rail Of New Hampshire Tax Policy"},"content":{"rendered":"
\"\"<\/a>

Scott Olson \/ Getty Images<\/p>

Herman Cain's 9-9-9 plan has made him an unforeseen contender for the presidency. But how does the plan play in New Hampshire, a state known for its libertarian values and unorthodox tax structure?<\/p><\/div>\n\n

The attractiveness and simplicity, of Herman Cain’s\u00a09-9-9\u00a0plan<\/a>\u00a0— a nine percent federal income, corporate and sales tax — has catapulted the Georgia businessman to the head of the Republican presidential field.\u00a0\u00a0But for some states, 9-9-9 wouldn\u2019t be simple at all.\u00a0 A handful of states\u2014including\u00a0the first-in-the-nation\u00a0primary state\u00a0of New Hampshire\u2014don\u2019t have a sales tax.\u00a0 So what would a federal sales tax do to\u00a0the New Hampshire economy?<\/p>\n

Pitching 9-9-9 In The “Live Free Or Die” State
\n<\/strong><\/h3>\n

Here’s a key point to remember: People in New Hampshire, to put it mildly,\u00a0dislike taxes.\u00a0 Just ask\u00a0Andy Smith, the director of the Survey Center at the University of New Hampshire<\/a>, and\u2014among other things\u2014he studies how the state\u2019s residents feel about taxes.<\/p>\n

\u201cNew Hampshire is definitely an anti-tax state.\u201d<\/p>\n

That\u2019s because New Hampshire is one of two states in the country that doesn\u2019t have a broad-based income tax or <\/em>a sales tax.\u00a0 (The other one\u2019s Alaska.)\u00a0 And his polling shows a lot of people here like it that way.<\/p>\n

\u201cNew Hampshire is a state that prides itself on having limited government and independence of individual people.\u00a0 And I think a sales tax is seen then as a way to grow government, and it\u2019s something that will inevitably grow,\u201d Smith said.<\/p>\n

In fact, if you\u2019re\u00a0running for\u00a0office here,\u00a0you can expect to be asked if you support a general income or sales tax.\u00a0Your\u00a0answer could make or break your candidacy.\u00a0 So when a Republican presidential candidate like Herman Cain comes\u00a0into New Hampshire for a debate and starts talking taxes …\u00a0it\u2019s a big deal.<\/p>\n

\u201cContinuing to pivot off the current tax code is not going to boost this economy,” Cain said at the Dartmouth College debate earlier this month.\u00a0 “This is why we developed 9-9-9\u20149 percent corporate business flat tax, 9 percent personal income flat tax, and a 9 percent national sales tax.\u201d<\/p>\n

This plan has helped move Cain from\u00a0long shot\u00a0to top-tier candidate.\u00a0 But\u00a0while he now leads many surveys, including a\u00a0New York Times\/CBS News poll out this week<\/a>, he has also made himself a target.\u00a0 At a recent\u00a0debate held in Las Vegas, one of his rivals, Texas Governor Rick Perry, suggested that his plan might not sell so well in the Granite State.<\/p>\n

\u201cGo to New Hampshire, where they don\u2019t have a sales tax, and you\u2019re fixing to give them one,” he said.<\/p>\n

For decades, the New Hampshire economy has relied on its tax-free status to draw retail sales from out-of-staters, people from Maine and Vermont and Massachusetts — all living in states with a sales tax.\u00a0\u00a0For example,\u00a0the state Liquor Commission<\/a> estimates about half <\/em>of all sales are to people\u00a0outside New Hampshire.<\/p>\n

What Could A Federal Sales Tax Mean?\u00a0 Depends On Whom You Ask<\/strong><\/h3>\n
\"\"<\/a>

Amanda Loder\/StateImpact New Hampshire<\/p>

Michelle Lienhart, owner of The Just Be Boutique in Concord, says she still has some reading to do about the 9-9-9 plan...but it's intriguing.<\/p><\/div>\n

So what would happen if\u00a0retailers\u00a0here suddenly had to deal with a federal sales tax?<\/p>\n

Julie\u00a0 — she only wanted to give her first name —\u00a0works at a downtown Concord gallery and frame shop, \u201cI don\u2019t think it\u2019s a good idea, as far as we\u2019re concerned, anyways.\u00a0 It seems like we\u2019ll be getting taxed a lot extra.\u201d<\/p>\n

More pleasing to the Cain campaign was this response from\u00a0Michelle Lienhart, owner of The Just Be Boutique<\/a> in Concord, \u201cI\u2019m not sure how I feel about the nationwide sales tax\u2026but I\u2019ve heard that we pay a portion of that in the other taxes we pay, so if we\u2019re not paying certain other taxes, it would kind of all wash itself out.\u201d<\/p>\n

Lienhart might even want to contact the Cain campaign here and let them know how she feels … if she could find them.<\/p>\n

Herman Cain’s Near-Invisible Campaign<\/strong><\/h3>\n
\"\"<\/a>

Herman Cain For President<\/p>

If you want to contact the Cain campaign...his website's not the way to do it.<\/p><\/div>\n

There\u2019s no\u00a0New Hampshire phone number listed on Cain\u2019s website<\/a>.There\u2019s an online form for media to send email inquiries.\u00a0 But it\u2019s broken.There\u2019s also a general voter inquiry form.\u00a0 It works\u2014but we haven\u2019t heard back.\u00a0 We sent a Twitter message to @Cain Press\u2014an active Tweeter\u2014and\u00a0got no response. On the face of it, this seems like an unusual situation for a leading presidential candidate to be in, given the primary is just two and a half months away.\u00a0\u00a0Former state GOP chair\u00a0Steve Duprey is philosophical about it.<\/p>\n

\u201cI think what you\u2019re finding,” Duprey says, “when you look at his website and you try to get in touch is, he has a very miniscule organization.\u00a0 He\u2019s running, basically, as a one-man band.\u00a0 If the surge he\u2019s experienced in popularity, recently, in the national polls translates into money, he\u2019ll quickly grow an organization.\u201d<\/p>\n

And when can voters here expect to see him?<\/p>\n

\u201cHe had the bad luck to have his book come out right during this cycle right when he sort of caught a wave, if you will, in popularity.\u00a0 And he\u2019s on book tours all over the country, which do help his national name recognition, but probably don\u2019t help him right here in New Hampshire.\u201d<\/p>\n

Charlie Spano, a political operative from Pennsylvania, is heading up\u00a0Cain\u2019s New Hampshire operation, which at this point\u00a0consists of\u00a0a small handful of staffers, about 60 volunteers,\u00a0working out of an office in Manchester.\u00a0\u00a0Spano\u00a0insists\u00a0the 9-9-9 plan wouldn\u2019t impose a tax on New Hampshire, because it would lower various federal taxes manufacturers, distributors, and retailers.\u00a0\u00a0<\/strong><\/p>\n

\u201cAll those taxes that are federally imposed will go away.” Spano says, “They will be replaced by the nine percent tax, which will be levied at the point of sale, and will be invisible to the consumer.\u00a0 It is not, will not be, and was never designed to be, an add-on the in the classic sense, of a sales tax.\u201d<\/p>\n

Why Cain Says You Wouldn’t Notice A Sales Tax<\/strong><\/h3>\n
\"\"<\/a>

Michael Randall \/ Flickr<\/p>

Cain's arguing that the price you pay for everyday items--like pens--has a higher tax built-in to their cost than the nine percent federal sales tax he's proposing.<\/p><\/div>\n

You know how when you buy an item, like a pack of pens, there\u2019s something printed on it, like \u201cMSRP $1.00?\u201d\u00a0 That\u2019s the Manufacturer\u2019s Suggested Retail Price.\u00a0 And the taxes the manufacturer pays to the federal government right now?\u00a0 They\u2019re embedded in that MSRP.\u00a0 You pay the tax when you spend the dollar for the pens.\u00a0 It doesn\u2019t matter if you live in New Hampshire or Massachusetts.\u00a0 You\u2019re paying that tax.\u00a0 What Cain\u2019s arguing is that if you lower a manufacturer\u2019s tax to nine percent from where it currently is\u2014let\u2019s say 22 percent\u2014that one dollar MSRP?\u00a0 You pay 13 cents less, because the manufacturer only has to pass on a nine cent tax to you, instead of 22 cents.\u00a0 Your dollar pack of pens is now 87 cents.<\/p>\n

But what\u2019s to keep a manufacturer from just pocketing that 13 cent difference, keeping the MSRP for your pens at one-dollar, and making retailers in New Hampshire tack on a nine-percent federal sales tax?<\/p>\n

Charlie Spano is not worried.<\/p>\n

\u201cWhat is far more likely to occur based on the analysis done for the 9-9-9 plan, is that competitive market pressure will drive down the price.\u00a0 Other pen manufacturers may say, we could sell more ink pens if we cut our price.\u00a0 Because we\u2019re not paying 22 percent on average, we\u2019re now only paying nine.\u00a0 Let\u2019s cut our price 10 percent.\u00a0 Suddenly, they\u2019re underselling other pen manufacturers.\u201d<\/p>\n

Spano insists that, in the end, everyone should be trusting the market.\u00a0\u00a0But not all free marketeers agree.<\/p>\n

Dissent In The Free Market Crowd<\/strong><\/h3>\n

Charlie Arlinghaus is President of the Josiah Bartlett Center for Public Policy<\/a>, a New Hampshire-based free market think tank.\u00a0 He\u2019s skeptical of how 9-9-9 would work in the state.<\/p>\n

\u201cThe 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,” Arlinghaus says.\u00a0 “Imposing a sales tax, when so much of our retail sector is based upon the fact that we have no sales tax, and other states have some sales tax:\u00a0 There\u2019s a psychological advantage.\u00a0 If 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.\u201d<\/p>\n

Clearly, New Hampshire’s quirky tax structure is an issue for the Cain campaign in the state.<\/p>\n

Mixed News For “The Hermanator”<\/strong><\/h3>\n

But there is good news for the Cain campaign: He’s\u00a0currently\u00a0polling second\u00a0in the state to Mitt Romney.<\/p>\n

The bad news?<\/p>\n

He’s trailing by 29 points.<\/p>\n

But, as Bill Clinton and George W. Bush could tell him, you could still lose the New Hampshire primary and go on to win the nomination … and even the presidency.<\/p>\n","protected":false},"excerpt":{"rendered":"

The attractiveness and simplicity, of Herman Cain’s\u00a09-9-9\u00a0plan\u00a0— a nine percent federal income, corporate and sales tax — has catapulted the Georgia businessman to the head of the Republican presidential field.\u00a0\u00a0But for some states, 9-9-9 wouldn\u2019t be simple at all.\u00a0 A handful of states\u2014including\u00a0the first-in-the-nation\u00a0primary state\u00a0of New Hampshire\u2014don\u2019t have a sales tax.\u00a0 So what would a […]<\/p>\n","protected":false},"author":28,"featured_media":2805,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[54],"tags":[197,227,501,521],"acf":[],"_links":{"self":[{"href":"https:\/\/stateimpact.npr.org\/new-hampshire\/wp-json\/wp\/v2\/posts\/2793"}],"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=2793"}],"version-history":[{"count":24,"href":"https:\/\/stateimpact.npr.org\/new-hampshire\/wp-json\/wp\/v2\/posts\/2793\/revisions"}],"predecessor-version":[{"id":2824,"href":"https:\/\/stateimpact.npr.org\/new-hampshire\/wp-json\/wp\/v2\/posts\/2793\/revisions\/2824"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/stateimpact.npr.org\/new-hampshire\/wp-json\/wp\/v2\/media\/2805"}],"wp:attachment":[{"href":"https:\/\/stateimpact.npr.org\/new-hampshire\/wp-json\/wp\/v2\/media?parent=2793"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stateimpact.npr.org\/new-hampshire\/wp-json\/wp\/v2\/categories?post=2793"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stateimpact.npr.org\/new-hampshire\/wp-json\/wp\/v2\/tags?post=2793"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}