published Tuesday, October 18th, 2011

Study: Herman Cain's 9-9-9 tax plan raises taxes on 84 percent

Herman Cain
Herman Cain
Photo by Associated Press /Chattanooga Times Free Press.
Follow us on Twitter for the latest breaking news
Do you support the 9-9-9 tax plan?


WASHINGTON — Herman Cain’s 9-9-9 tax plan would raise taxes on 84 percent of U.S. households, according to an independent analysis released Tuesday, contradicting claims by the Republican presidential candidate that most Americans would see a tax cut.

The Tax Policy Center, a Washington think tank, says low- and middle-income families would be hit hardest, with households making between $10,000 and $20,000 seeing their taxes increase by nearly 950 percent.

“You’re talking a $2,700 tax increase for people with incomes between $10,000 and $20,000,” said Roberton Williams, a senior fellow at the Tax Policy Center. “That’s huge.”

Households with the highest incomes, however, would get big tax cuts. Those making more than $1 million a year would see their taxes cut nearly in half, on average, according to the analysis.

Among those in the middle, households making between $40,000 and $50,000 would see their taxes increase by an average of $4,400, the report said. Those making between $50,000 and $75,000 would see their annual tax bill go up by an average of $4,326.

“It’s very, very regressive compared to the current system, and that’s largely because we’re exempting capital gains, and we’re taxing your spending with the sales tax,” Williams said. “People at the top end don’t spend all their money and they get a lot of capital gains, so they are doing pretty well here.”

Cain disputed the analysis Tuesday evening during GOP presidential debate in Las Vegas, where the other Republican candidates heaped on criticism. Cain has acknowledged that taxes would increase for some but says taxes would decrease for most.

“It does not raise taxes on those that are making the least,” Cain said. “All of those are simply not true.”

“The reason that our plan is being attacked so much is because lobbyists, accountants, politicians, they don’t want to throw out the current tax code and put in something that’s simple and fair,” Cain said. “They want to continue to be able to manipulate the American people with a 10 million-word mess.”

Cain’s plan would scrap current taxes on income, payroll, capital gains and corporate profits. He would replace them with a 9 percent tax on income, a 9 percent business tax and a 9 percent national sales tax.

Cain’s campaign has gained momentum largely in response to his tax plan, which is popular in part because of its simplicity. Several polls have the former CEO of Godfather’s Pizza at or near the top of the Republican field, vying with former Massachusetts Gov. Mitt Romney.

President Barack Obama told ABC News that Cain’s tax plan would impose a “huge burden” on middle-class and working families. The president said Cain’s plan would make sure the wealthiest pay less — and replace the revenue with a sales tax hitting the less well-off.

Romney criticized the plan in a conference call with reporters Tuesday.

“I believe that you’re going to find with the 9-9-9 plan Herman Cain has put out that the burden shifts more to the middle class, and I think that’s the wrong direction to go,” Romney said. “A decision to completely jettison our current tax system for a new system always has some merit, but then you need to get into it, to figure out who’s this going to help and who’s this going to hurt.”

Cain’s rise in the polls has brought increased scrutiny, and his tax plan has taken hits from across the political spectrum. Some don’t like shifting the tax burden from the wealthy to the poor and middle class; others don’t like the new national sales tax.

“Anytime you give the Congress a brand-new tax, it doesn’t go away,” said Rep. Michele Bachmann, R-Minn. “If we give Congress a 9 percent sales tax, how long will it take a liberal president and a liberal Congress to run that up to maybe 90 percent?”

William McBride, an economist at the conservative Tax Foundation, said Cain’s plan to move away from taxing savings and investment “would be a very good thing for growth in the long run.”

But, McBride said, the national sales tax would be a nightmare to administer because so many state and local governments already have sales taxes, and the bases are different.

In most states, food and medicine are excluded from sales tax. Cain has said his sales tax would be applied to all new goods — only used goods would be exempt.

“It’s not as simple as having all these jurisdictions simply tack on 9 percent and send it to the federal government,” McBride said in an interview.

Cain has said his plan would initially raise as much money as the current tax system but do it more efficiently, leading to economic growth, which would produce higher tax revenues. The Tax Policy Center analysis agreed that the plan would initially raise about the same amount of money as current tax policy, about $2.55 trillion in 2013.

The Tax Policy Center compared taxes on U.S. households under current tax policy, with those imposed under the Cain plan. In using current tax policy, the analysis assumes that tax cuts enacted under former President George W. Bush — and extended through 2012 by Obama — would be extended.

The center did a separate analysis that assumed all the Bush-era tax cuts would expire at the end of 2012. Under that scenario, Cain’s plan would still impose higher taxes on 77 percent of U.S. households, the report said.

The Tax Policy Center is a research group formed by two Washington think tanks: the Urban Institute and the Brookings Institution. Researchers at the center regularly testify before Congress on tax policy. The center’s analyses during the 2008 presidential campaign were widely circulated.

The center said researchers tried to consult with Cain’s advisers to make sure they were interpreting the plan correctly, but they had not heard back.

Connect with the Times Free Press on Facebook

about Associated Press...

The Associated Press

Comments do not represent the opinions of the Chattanooga Times Free Press, nor does it review every comment. Profanities, slurs and libelous remarks are prohibited. For more information you can view our Terms & Conditions and/or Ethics policy.
patriot1 said...

I saw a study a few days ago, promoted by the main stream media of course, that said Cain's proposal would take in a lot less revenue than is taken in now....but this study shows 84 percent will be paying can that be? Both were "independent" studies of course!!

October 19, 2011 at 12:36 a.m.
ricardo said...

Typical teabagger response. If you don't like the reality, change it. Pizza delivery boy's 666 plan is regressive, redistributing the revenue source down the income scale. Let's do the math: Total revenue goes down, since the wealthy will pay less, and, since the middle and lower income taxpayers earn less, they will contribute less toward the total revenues, but each will pay more on an individual basis. Maybe the 99% are really the 84%?

October 19, 2011 at 2:22 a.m.
patriot1 said...

Ok...let's do some math....a person making 50K and paying 9% is paying 4500 in taxes while a person making 500K and paying 9% is paying 45,000 in enlighten me, who is paying more? Is that math too heavy for ya? In addition, if I am paying a sales tax I have SOME control over whether I pay tax or not....Just don't spend the money.

October 19, 2011 at 8:09 a.m.
GatorFan said...

patriot1..."Just don't spend the money" eh...doesn't sound like that will help stimulate the economy. I'm a conservative but Cain's 9-9-9 plan is ridiculous. Lets get rid of all federal income tax and just have a federal business and small sales tax. Cut all the BS spending in Washington and we should have more than enough to fund it.

October 19, 2011 at 8:17 a.m.
Shock said...

Patriot - Our taxes need to be simplified in the worst way, but I don't believe Cain's plan is a good one. To answer your question in your first post, the Cain plan could mathematically raise taxes on 84% of Americans and still generate overall less revenue. If the top 5% of earners pay over 50% of all taxes and their tax burden is cut by 50% as this study suggests, it could lower overall revenue.

October 19, 2011 at 8:23 a.m.
najones75 said...

Well, we know taxes would go up for 50%. The bottom don't pay any at all now. I can't say anything about the rest without having looked at the study other than to say this. I make less than 100k...not rich...and would gladly trade my current tax rate for flat 9% and increase in sales tax. Another thing people don't understand is the fact that all other taxes are being abolished. Gas tax, tobacco tax, you name it tax. So though there's an additional tax added by the 999, there is a good possibility it will even itself out. Again, I need to do the research, so personal attacks for my comments not necessary, but don't jump on a bandwagon because a "study" says so. Do your own research

October 19, 2011 at 8:53 a.m.
patriot1 said...

Gator..Jones, I agree with your comments..with respect to "stimulating the economy" we've had enough of that already with all these Keynesian economists...let market forces stimulate the economy. We need a lot more Adam Smith and a lot less John Keynes...we found this out in the depression but had to "relearn" it again.

October 19, 2011 at 11:17 a.m.
terrybham said...

Let's just scrap all taxes and simply "pass the hat". That makes about as much sense as Cain's plan.

October 19, 2011 at 1:16 p.m.
please login to post a comment

Other National Articles

videos »         

photos »         

e-edition »


Find a Business

400 East 11th St., Chattanooga, TN 37403
General Information (423) 756-6900
Copyright, Permissions, Terms & Conditions, Privacy Policy, Ethics policy - Copyright ©2014, Chattanooga Publishing Company, Inc. All rights reserved.
This document may not be reprinted without the express written permission of Chattanooga Publishing Company, Inc.