The Man Behind Cain's 9-9-9 Plan

During the 10/12/11 GOP debate on the economy, when Herman Cain was asked who he turned to for political advice, he replied, "One of my experts that helped me to develop this was a gentleman by the name of Rich Lowrie out of Cleveland, Ohio. He is an economist and he has worked in the business of wealth creation most of his career."

What kind of economist is Rich Lowrie?

According to his Linkedin page he has a BS in Accountancy from Case Western Reserve University.

How did Rich Lowrie create wealth?

He is currently a wealth management adviser at the Pepper Pike, Ohio branch of Wells Fargo.

"We offer comprehensive wealth management solutions for business owners, executives, professionals, families and fiduciaries."

Is a background in economics important?

Here's an exchange from the debate.

JULIANA GOLDMAN (Bloomberg TV): Mr. Cain, you say that your plan is revenue-neutral. And last year, the U.S. collected $2.2 trillion dollars in tax revenue, but Bloomberg Government has run the numbers, and your plan would have raised no more than $2 trillion. And even with that shortfall, you'd still be slapping a 9 percent sales tax on food and medicine.

CAIN: The problem with that analysis is that it is incorrect. The reason it is incorrect is because they start with the assumptions that we don't make. Remember, 9-9-9 plan throws out the current tax code.

Cain uses this statement as a means of getting back to his talking points. I don't believe that Bloomberg Government would "forget" that 9-9-9 throws out the current tax code because analyzing the alternative tax code was the purpose of their calculation.

CAIN: We have had an outside firm, independent firm dynamically score it. And so our numbers will make it revenue neutral.

Now we have a comparison of one named independent firm Bloomberg Government using existing numbers to evaluate Herman Cain's "simple, transparent, efficient, fair, and neutral" plan refuted by an unnamed independent firm's "dynamic scoring." Dynamic scoring is not an accounting principle but an economic one.

GOLDMAN: But then explain why under your plan all Americans should be paying more for milk, for a loaf of bread, and beer?

CAIN: You have to start with the biggest tax cut a lot of Americans pay, which is the payroll tax, 15.3 percent. That goes to 9 percent. That is a 6 percentage point difference. And the prices will not go up. So they have got a 6 percentage point difference to apply to the national sales tax piece of that, and in doing so, they have the flexibility to decide on how much they want to spend it on new goods, how much they want to spend it on used goods. Because there is no tax on used goods.

Here we get a look at Cain's assumptions.

Fact: Americans who pay only a payroll tax will have 6.3 percent more cash in their pocket to pay the new 9 percent sales tax.

Assumption: Prices will never go up.

Assumption: Purchasing used goods will mitigate any net tax increase from the new 9 percent tax.

Here is another fact not questioned during the debate about categories of income exempted from the 9 percent tax.

Fact: Taxes for capital gains and dividends and the estate tax go away completely.

For an independent voter it is often as important to know who advocates a proposal as the nuts and bolts of the proposal itself.

In terms of 9-9-9, how would a wealth management advisor and his clients fare under the new tax code?