9-9-9 the brainchild of Wells Fargo adviser

Cleveland financial adviser Rich Lowrie's first hint that Herman Cain's campaign might catch the public's attention came last May when Mr. Lowrie was still interviewing for the role of the Republican presidential contender's economic adviser. He had traveled to Atlanta to be there when the former Godfather's Pizza chief executive officially threw his hat in the ring and watched as a crowd of 15,000 showed up in support. That surprised the 47-year-old Wells Fargo adviser, who had expected to see about a tenth the number of supporters. The next surprise had its origins a few weeks later, when Mr. Lowrie joined Mr. Cain on the campaign trail and the two men — riding in a taxicab in Nashville, Tenn. — discussed how to shape the tax system so it would be simple, transparent, efficient, fair and neutral. Accomplishing that, Mr. Lowrie realized, would require abandoning the nation's current labyrinthine, albeit familiar, tax code. But Mr. Cain gave him the green light to “go bold” and he did, creating the “9-9-9” tax plan. That plan has garnered national attention and helped propel Mr. Cain to the top of the polls. Quite simply, Mr. Lowrie's plan would replace payroll taxes, capital gains taxes, the estate tax and the graduated income tax with a 9% tax on personal income, a 9% tax on businesses and a 9% national sales tax. “We collect the same revenue but inflict the least damage on the economy in the process,” Mr. Lowrie said in an interview. “We incorporate concepts that the flat tax is built around and that the fair tax is built around.” The simplicity and marketability of the 9-9-9 plan is likely what is attracting support for Mr. Cain's campaign, economists and financial advisers said. Since first talking about his plan in mid-September, Mr. Cain achieved a surprising victory in Florida's straw poll Sept. 24. Nationally, he now runs just two points below top Republican presidential contender Mitt Romney, according to recent Gallup figures. Financial adviser Christopher Cordaro, a partner at RegentAtlantic Capital LLC, said he believes the plan's simplicity makes a lot of sense and has helped Mr. Cain gain supporters. “Simpler is better and it can lead to a fairer implementation of the tax system,” said Mr. Cordaro, whose firm manages about $2 billion in assets. “Even though I believe many of those supporting him would pay higher taxes under the plan.” It would increase the tax burden on the middle class, but that's where any tax increase meant to generate must fall because there are so many more members of the middle class than wealthy families, he said. But the plan is not without critics. RELATED ITEM Watch what Peter Schiff has to say about 9-9-9 in the video below “Everybody hates the current tax code, and this sounds like a simplification,” said Cornell University economics professor Robert H. Frank about Mr. Cain's economic plan. “But it won't be popular for long when people start to look at the numbers.” In fact, a Tax Policy Center analysis released last week said that 84% of households would see a boost in taxes under the 9-9-9 proposal, and those with low incomes would face giant increases. Households that make between $40,000 and $50,000 a year would face a $4,400 increase in taxes, while those making $50,000 to $75,000 would see their taxes increase an average of $4,326, according to the report by the center, a joint venture of the think tanks the Urban Institute and the Brookings Institution. At the same time, Mr. Cain's plan would give about 95% of Americans with annual incomes over $1 million a tax cut, the study showed. A taxpayer who makes more than $2.7 million would see an average $1.4 million cut, increasing after-tax income by almost 27%, it said. “I'm not sure that most people really understand what his plan is,” said Jim Nunns, a senior fellow with the Urban Institute. “It is clever marketing.” Mr. Lowrie said that the Tax Policy Center ignores a component of the plan designed to give special support and business incentives to cities and distressed areas, so-called opportunity zones, formerly referred to by the campaign as “empowerment zones.” The campaign is still developing the details of this part of the plan, which would offset tax increases on those with lower incomes, he said. It is unheard of for a presidential candidate to tap an investment adviser instead of a well-known economist as their economic adviser, but Mr. Cain isn't a standard candidate. The 65-year-old businessman has never held elected office. He came closest in a 2004 bid for a U.S. Senate seat, which he lost at the primary level. Mr. Cain also has no experience in foreign affairs or defense policy. But his theme of pro-growth economics attracted the support of Mr. Lowrie, who also is a friend of Mark Block, the candidate's chief of staff. Mr. Lowrie, an adviser with Wells Fargo Advisors LLC since February 2008, readily admits that he isn't an economist and doesn't “know how to do a math formula that uses every letter of the Greek alphabet.” Before joining Wells Fargo, Mr. Cain worked for UBS Financial Services Inc. and McDonald Investments Inc. He graduated from Case Western University with an accounting degree. “For the last 15 years, I've been sitting down on the same side of the table as families, explaining things clearly, directly and simply, focusing on simple truths of economics,” Mr. Lowrie said. “Perhaps if other candidates used economic advisers that have a better connection with people, we wouldn't have the problems we have now.”