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Cain’s ‘9-9-9’ tax plan hits poor, helps wealthy, experts say
The Bangor Daily News ^ | Oct. 13, 2011 | JODI ANN FERRIS,Michael A. Fletcher,The Washington Post

Posted on 10/13/2011 6:16:07 PM PDT by mdittmar

The “9-9-9” plan that has helped propel businessman Herman Cain to the front of the GOP presidential field would stick many poor and middle-class people with a hefty tax increase while cutting taxes for those at the top, tax analysts say.

The plan would do away with much of the current tax code and impose a 9 percent personal income tax, a 9 percent business tax and a 9 percent national sales tax, which tax experts say would mean that low- and middle-income Americans would pay more.

“Right now, we have a strongly progressive income tax. High-income people are paying a higher share of income in taxes than lower-income people,” said Alan Viard, a former Federal Reserve Bank economist and a resident scholar at the right-leaning American Enterprise Institute. “That is a pattern that would be disrupted by adoption of the Cain plan.”

The 9-9-9 plan has helped define Cain’s candidacy. Coupled with his buoyant, plain-spoken style, it has helped transform the former long shot into a front-runner. Cain has touted the proposal’s apparent simplicity and fairness, but he rarely delves into details in person. His campaign website shows that the plan is only a step toward achieving his ultimate goal: to eliminate the Internal Revenue Service after replacing all federal taxes with a national sales tax.

Meanwhile, analysts said the 9-9-9 part of Cain’s vision would place a further burden on those hit hardest by the nation’s economic problems.

Roberton Williams, a senior fellow at the nonpartisan Tax Policy Center, is working on an analysis of Cain’s signature policy proposal. Although the plan’s details remain sketchy, Williams said that it would increase taxes for the poor and middle class, despite Cain’s statements to the contrary.

For starters, about 30 million of the poorest households pay neither income taxes nor Social Security or Medicare levies. “So for them, doing away with the payroll tax doesn’t save anything. And you are adding both a 9 percent sales tax and 9 percent income tax. So we know they will be worse off,” Williams said.

At the top end of the income scale, meanwhile, the opposite would occur, he said. The top 1 percent of earners would get a tax cut under Cain’s plan, Williams said.

The nation’s top income earners have reaped the vast majority of the nation’s income growth over the past quarter century, pushing income inequality in the country to levels not seen since the Depression. The tax plan would exacerbate that gap, Williams said.

“People at the top end pay 20 or 21 percent in income and payroll taxes now,” he said. “This plan zeroes out their payroll tax and suddenly their tax is down to 9 percent. Then, like everyone else, they pay 9 percent on what they spend. But the rich don’t spend everything they earn.”

Many conservatives are leery of creating a national sales tax that could be increased in the future.

“I am extremely uncomfortable with the idea of letting the crowd in Washington have an extra source of revenue,” wrote Dan Mitchell, a senior fellow at the Cato Institute, a libertarian think tank.

Rich Lowrie, an Ohio money manager who is an economic adviser to Cain, said analysts who call the 9-9-9 plan regressive are not privy to details of its provisions to soften the impact of the tax plan on the poor. The critics are “ignoring the empowerment zone piece that we are rolling out next,” Lowrie said in an email. Lowrie did not explain how the empowerment zones would work, but h e said details would be forthcoming.

Cain, a one-time director of the Federal Reserve Bank of Kansas City and former chief executive of Godfather’s Pizza, has said his plan has the twin virtues of fairness and simplicity while creating incentives to boost economic growth and personal wealth.

“It basically empowers the poor rather than being regressive on the poor,” Cain told reporters earlier this week. “I don’t care about rich people. They’re already rich. I want to make it possible for people who are not rich to get rich.”

Cain said his plan would promote increased saving, investment and growth. When the increased growth is factored in, Cain says, the plan would be able to bring in as much money to the federal coffers as the current tax system. Tax analysts have mostly agreed with that assertion, although they cautioned that projections about the plan’s revenue potential are imprecise.

“I cannot promise that the plan is wholly revenue neutral compared to current law,” wrote Edward Kleinbard, a University of Southern California tax expert. “But in fact it should raise a great deal of revenue.”

The tax plan, which Cain has gleefully touted in GOP debates and his public appearances, has helped catapult the former executive to the front of the Republican presidential field, according to a new NBC News/Wall Street Journal poll, as well as a separate survey by the firm Public Policy Polling.

Experts say that adoption of 9-9-9 would mark the most radical federal tax change since the expansion of the income tax in the 1940s. It would upset the vast array of social policy that has been built into the tax code for years by, for example, removing tax breaks that subsidize home purchases and college tuition.

For that reason, many say that its adoption would be highly unlikely, even if Cain were elected president.

Although Cain talks about 9-9-9 as a concise, easy-to-understand plan to reform the sprawling federal tax code, it actually is envisioned as the middle step in moving the nation to a “fair tax” or national sales tax.

The fair tax, which former Arkansas Gov. Mike Huckabee, R, advocated during his 2008 presidential campaign, is viewed by supporters as efficient and transparent and as a way to encourage investment and broaden the tax base while eliminating the need for the IRS.

Opponents say the “fair tax” would discourage consumer spending, the biggest driver of the nation’s economy.

And the 9-9-9 plan that Cain envisions preceding it would be no better, critics said.

“The absence of current law’s package of a standard deduction, personal exemptions, child credit, child care credit and the earned-income tax credit means a huge tax hike for the working poor and a substantial tax increase on the labor income of the middle class,” Kleinbard said.

Staff writers Amy Gardner and Glenn Kessler contributed to this report.


TOPICS: Business/Economy; News/Current Events; Politics/Elections
KEYWORDS: 999; cain; fairtax; hermancain; salestaxmoralabyss; seniorcitizenripoff
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1 posted on 10/13/2011 6:16:11 PM PDT by mdittmar
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To: mdittmar

Meaning they actually have to pay taxes, instead of having taxes paid to them.


2 posted on 10/13/2011 6:17:02 PM PDT by E. Pluribus Unum ("Government does not solve problems; it subsidizes them." --Ronald Reagan)
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To: mdittmar

“Experts” is that somebody from out of town, or a drip under pressure?


3 posted on 10/13/2011 6:17:37 PM PDT by West Texas Chuck (Alcohol, Tobacco and Firearms. That should be a convenience store, not a Government Agency.)
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To: mdittmar

It took 4 people to write this drivel for the Washington Compost?


4 posted on 10/13/2011 6:19:19 PM PDT by jimbo123
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To: mdittmar
"Right now, we have a strongly progressive income tax. High-income people are paying a higher share of income in taxes than lower-income people,”

I thought the rich were getting out of paying taxes. Which is it?

5 posted on 10/13/2011 6:20:48 PM PDT by Kenny
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To: mdittmar

I thought the rich didn’t pay their fair share. Now they argue that the rich pay more than the poor. LOL!


6 posted on 10/13/2011 6:21:35 PM PDT by nhwingut (Draft Palin '12...)
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To: mdittmar
Somebody finally did a little homework and realizes that 999 is just the old salesman's gimmick.

Catchy isn't it!! You see it in every ad every day!!!

7 posted on 10/13/2011 6:22:16 PM PDT by Sacajaweau
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To: mdittmar

If a person is an American citizen, then they have to have skin in the game. Everyone pays or no one pays......Just the way it is.


8 posted on 10/13/2011 6:22:43 PM PDT by RC2
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To: jimbo123

contributed $99 to Herman Cain today. Conservatives should contribute in droves.


9 posted on 10/13/2011 6:23:35 PM PDT by LALALAW (one of the asses whose sick of our "ruling" classes)
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To: mdittmar
low- and middle-income Americans would pay more.

Low income people now pay NOTHING. I would have no problem if they had some skin in the game.

10 posted on 10/13/2011 6:23:39 PM PDT by Blood of Tyrants (Islam is the religion of Satan and Mohammed was his minion.)
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To: mdittmar

Does being unemployed hurt the poor?

Sorry. Dumb question.


11 posted on 10/13/2011 6:24:06 PM PDT by Steely Tom (Obama goes on long after the thrill of Obama is gone)
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To: E. Pluribus Unum

Cain on the Hannity show:

“If you’re poor, blame yourself”

I love this guy.


12 posted on 10/13/2011 6:24:23 PM PDT by nascarnation (DEFEAT BARAQ 2012 DEPORT BARAQ 2013)
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To: mdittmar
"For starters, about 30 million of the poorest households pay neither income taxes nor Social Security or Medicare levies....And you are adding both a 9 percent sales tax and 9 percent income tax. So we know they will be worse off”

That makes no flippin' sense. They don't pay income tax but adding a 9% income tax makes them worse off. Huh?

13 posted on 10/13/2011 6:26:43 PM PDT by Bloody Sam Roberts (Attacking Wall Street because you're jobless is like burning down Whole Foods because you're hungry.)
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To: West Texas Chuck

An “ex” is a HAS BEEN. And a *”spert” is a drip under pressure. *(Literary license unabashedly taken).


14 posted on 10/13/2011 6:26:53 PM PDT by Tucker39
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To: West Texas Chuck

An “ex” is a HAS BEEN. And a *”spert” is a drip under pressure. *(Literary license unabashedly taken).


15 posted on 10/13/2011 6:26:58 PM PDT by Tucker39
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To: mdittmar
“Right now, we have a strongly progressive income tax. High-income people are paying a higher share of income in taxes than lower-income people,”

And the greedy bastards still aren't paying their fair share. /s

16 posted on 10/13/2011 6:28:10 PM PDT by umgud
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To: West Texas Chuck

Many years ago when I was an avionics tech, I was asked to go to NAS Millington (TN) to repair the auto-pilot on an aircraft. When they asked if we were “experts” (we WERE from out of town), we looked at each other and said, “No, we were just a couple of dumba$$e$ sitting in the shop when they asked us to go. For the record we did fix the autopilot when their guys couldn’t.


17 posted on 10/13/2011 6:28:55 PM PDT by Blood of Tyrants (Islam is the religion of Satan and Mohammed was his minion.)
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To: LALALAW

yes!

we gave a couple weeks ago and will give more.


18 posted on 10/13/2011 6:29:45 PM PDT by ken21
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To: Bloody Sam Roberts

Allow a deduction for everyone for an amount equivalent to the poverty level.


19 posted on 10/13/2011 6:32:32 PM PDT by Blood of Tyrants (Islam is the religion of Satan and Mohammed was his minion.)
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To: E. Pluribus Unum
Exactly! Everyone would have to pay something. If the "filthy" rich had to pay 9% on just their earnings,they would be about like now. They put everything under foundations, companies,--their apartments for vacations, vehicles, etc.

The present strain falls mainly on middle and upper middle class. This is the Wa-Po, giving sustenance to the Dems as usual.

Even their goofball professors of economics haven't done anything outside academia, and most of the economic gurus use the PFA theory--Plucked From Air.

The only country where i read state health care was working was Austria. At that time they had about 9-10 million people, and the reason it worked was that EVERYBODY, even those on unemployment had to pay something for their health care. That is probably the reason Arnold liked Obamacare. He and others don't understand that administering health care for 10 mil is a tad different from administering for over 300 mil.

Only imagine if a Repub comes up with a plan (Cain) that would actually make everyone responsible for the govt. goodies they get. You could hear the P-witch howling without aid of TV.

vaudine

20 posted on 10/13/2011 6:32:40 PM PDT by vaudine
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To: Sacajaweau

999 simply rectifies an injustice — that approximately 50% of Americans pay all federal income taxes while the other 50% pay none (or even a negative income tax). How is that a gimmick? Unless you think 50% paying everything and 50% paying nothing is equitable....


21 posted on 10/13/2011 6:33:23 PM PDT by kevao
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To: Steely Tom

“...Does being unemployed hurt the poor?...”

And Cain’s plan would without any shadow of a doubting Thomas would stimulate business and job creation. But the poor would have to pay Fed taxes on their purchases of all those wide-screen televisions and power-booster car stereos.

When my wife came to this country I told her that our TV was smaller (19 inches at the time) than most “poor” people in the projects had. She finally learned how right I was.


22 posted on 10/13/2011 6:33:29 PM PDT by Monterrosa-24 (...even more American that a French bikini and a Russian AK-47.)
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To: Blood of Tyrants

Forget deduction. Just allow the first $25K to be free from the flat tax.


23 posted on 10/13/2011 6:34:56 PM PDT by casablanca
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To: mdittmar

The liberals will hammer Cain on 999 as hurting the poor.

The conservatives don’t like 999 because it implements a new Federal Sales Tax and conservatives don’t trust govt.

Cain needs to tone down his 999 plan and instead focus on reducing the cost of govt.


24 posted on 10/13/2011 6:36:27 PM PDT by Presbyterian Reporter
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To: kevao

“...the other 50% pay none...”

Ha! But of course they will still pay less because those under-the-table purchases of drugs will not be taxed.


25 posted on 10/13/2011 6:36:27 PM PDT by Monterrosa-24 (...even more American that a French bikini and a Russian AK-47.)
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To: mdittmar

I have only one thing to say.

We will never again be a truly FREE people for so long as we continue to abide the communist inspired, class warfare inducing, income tax and the IRS!


26 posted on 10/13/2011 6:36:29 PM PDT by Bigun ("The most fearsome words in the English language are I'm from the government and I'm here to help!")
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To: Bloody Sam Roberts

Lots of reitired people don’t pay payroll tax because they aren’t working, they are living off Soicial Security, investments, maybe withdrawling from IRAs and 401Ks. A lot don’t have enough income to owe much in taxes after deductions. Under Cain’s plan they pay 18%, including 9% on money they already paid income tax on.


27 posted on 10/13/2011 6:36:55 PM PDT by Hugin ("A man'll usually tell you his bad intentions if you listen and let yourself hear it"--- Open Range)
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To: mdittmar
As an SS recipentwith very little outside income and very little chance of any, the 999 plan does disturb me somewhat.

With my income, 9% would make it my largest expense outside rent and food. Then, adding 9% sales tax on all purchases would mean an effective increase of more than 14%.

Where is the savings for the millions of people just like me?

28 posted on 10/13/2011 6:37:28 PM PDT by fantail 1952 (When in the course of human events, it becomes necessary to seperate Americans from thin tormentor)
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To: nhwingut

It must be Thursday!


29 posted on 10/13/2011 6:37:49 PM PDT by griswold3 (Character is Destiny)
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To: mdittmar

“High-income people are paying a higher share of income in taxes than lower-income people”

Somebody should tell the idiot in the white house


30 posted on 10/13/2011 6:37:58 PM PDT by italianquaker ( Mr Obama inherited an AAA rating and made it AA, thnx Resident Zero)
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To: mdittmar

When did terms like fair share and everyone having skin in the game become achievers pay while parasites live off the achievers?


31 posted on 10/13/2011 6:39:22 PM PDT by Proud2BeRight
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To: fantail 1952

>> “Where is the savings for the millions of people just like me?” <<

.
None!

A sales tax in grossly unfair to the elderly, and the disabled.

A national sales tax would be a moral abyss.


32 posted on 10/13/2011 6:40:55 PM PDT by editor-surveyor (No Federal Sales Tax - No Way!)
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To: mdittmar

Folks, have you seen the so called poor!!! TVs, I-Pods, fancy cars, $200.00 sneakers, expensive clothing of all sorts, and....they should not pay a sales tax??? And......and what about the vast underground that skates free of any taxation. Mr. Cain, I do not say that your 9-9-9 plan is the end all, but it is a start. This screwed up present tax system must go!!! And....with it the destruction of a good part of the IRS which alone would save billions!!! Onward, Cain!!! The people are behind you!!!! You are indeed a true Profile in Courage!!!


33 posted on 10/13/2011 6:41:24 PM PDT by JLAGRAYFOX
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To: mdittmar

Cain’s ‘9-9-9’ tax plan hits poor, helps wealthy, experts say

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Bonus!

Yet another reason why 999 is good for America.


34 posted on 10/13/2011 6:42:10 PM PDT by Responsibility2nd (NO LIBS! This means liberals AND libertarians (same thing) NO LIBS!)
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To: Blood of Tyrants
Low income people now pay NOTHING.

And many that pay nothing get a cash reward for it (Earned Income Tax Credit).

Democrats and the left fear the 999 plan or anything similar to it because their constituencies, the takers, will be forced to join the rest of us who are the payers. A truly equal tax system, where a tax increase affects everyone, will destroy many of the left's redistributionist dreams.
35 posted on 10/13/2011 6:45:00 PM PDT by LostInBayport (When there are more people riding in the cart than there are pulling it, the cart stops moving...)
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To: Sacajaweau

Someone said the current CEO of Godfathers is a fool if he doesn’t use the moment to come up with a $9.99 Pizza offer.


36 posted on 10/13/2011 6:45:00 PM PDT by mylife (The Roar Of The Masses Could Be Farts)
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To: mdittmar

“The poor” aren’t paying their fair share...TAX THE POOR!

If the lowest earners paid the highest percentage of their income and it started decreasing around $25,000, it would be a good incentive for improving their skill set and value in the market place.

You could make workers under 25 exempt.


37 posted on 10/13/2011 6:45:09 PM PDT by ROCKLOBSTER ( Celebrate Republicans Freed the Slaves Month.)
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To: mdittmar

Someone needs to convince Cain to shitcan his 999.


38 posted on 10/13/2011 6:46:23 PM PDT by editor-surveyor (No Federal Sales Tax - No Way!)
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To: mdittmar

This new sales tax really screws current retirees living on fixed incomes, most of which ma be from their pre-999 after-tax savings. It will hand a large senior voting block to the current piece of sh!t in WH.


39 posted on 10/13/2011 6:47:10 PM PDT by balls (0 lies like a Muslim (Google "taqiyya"))
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To: vaudine
The only country where i read state health care was working was Austria. At that time they had about 9-10 million people, and the reason it worked was that EVERYBODY, even those on unemployment had to pay something for their health care.

I heard a different story from a friend of mine about Austria. I can't guarantee it's true, but he was talking to a wealthy Austrian business associate. What he said was that there was an explicitly two-tiered system. If you took the public route, there was definite rationing. If you paid an additional amount for private insurance, the care was much better. The example he gave was of someone getting a cancer diagnosis. In the lower tier, he'd be told that a bed might be available in a month or so, several hundred miles away. If he paid for the extra insurance, there'd be one nearby open in a few days.

I may have it wrong, but there's the germ of an idea here. Why not recognize that resources for medical delivery aren't infinite? Let's agree to provide a basic level of care, and if you want more, you pay for it. Face it, not everyone can afford a liver like Steve Jobs (although unfortunately it didn't save him).

40 posted on 10/13/2011 6:47:25 PM PDT by Pearls Before Swine
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To: LostInBayport

>> “A truly equal tax system, where a tax increase affects everyone, will destroy many of the left’s redistributionist dreams.” <<

.
That is why Margaret Thatcher favored a head tax on working age people.


41 posted on 10/13/2011 6:49:40 PM PDT by editor-surveyor (No Federal Sales Tax - No Way!)
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To: mdittmar

It’s about time that the poor worry more about economics other than where the freebies come from.

If they are going to vote, they need some real skin in the game!


42 posted on 10/13/2011 6:49:40 PM PDT by Randy Larsen (I Stand With Cain!)
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To: mdittmar

those “experts” wouldn’t be liberals and democrats, would they?

Hey, I know - let’s have the Congressional Budget Office score it! Yeah, that’ll work...


43 posted on 10/13/2011 6:51:10 PM PDT by bigbob
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To: fantail 1952
Where is the savings for the millions of people just like me?

It's in the saving of the Republic. You realize what will soon happen unless the trend of the current tax code is stopped cold?

It used to be just 35% who didn't pay any federal income tax. Then 40%, then 45%. Now it's 49%.

Guess what happens when it becomes 51%? That's right, a tyrannical free-loading majority will start winning every single election, and we taxpaying suckers in the minority won't be able to stem the massive growth in federal spending and taxation demanded by the freeloaders.

Ask the retired fixed-income folks in Greece whether they're looking forward to the $hit storm that's heading their way. That's your future under this currently bankrupt tax code.

Under 999, everyone will have to pay some federal income tax. Everyone will have skin in the game. And everyone will think twice about voting for the pol that promises all these great new federal spending programs.

44 posted on 10/13/2011 6:51:41 PM PDT by kevao
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To: Hugin

And what about ROTH IRA’s? in which you have paid the tax on the front end?

Now you get nailed again?


45 posted on 10/13/2011 6:53:14 PM PDT by mylife (The Roar Of The Masses Could Be Farts)
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To: E. Pluribus Unum

With all due respect about the poor:

My sister and I were both pushed to achieve economic success. I made it, she became mentally disabled. It’s not aways their fault.


46 posted on 10/13/2011 6:54:00 PM PDT by independent in tx
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To: mdittmar
For starters, about 30 million of the poorest households pay neither income taxes nor Social Security or Medicare levies. “So for them, doing away with the payroll tax doesn’t save anything. And you are adding both a 9 percent sales tax and 9 percent income tax. So we know they will be worse off,” Williams said.

Yes! They might even be forced to look for a job to pay their "fair share".

47 posted on 10/13/2011 6:56:17 PM PDT by Rightwing Conspiratr1
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To: kevao

How can anyone be on this forum as a conservative and not understand that a single rule for EVERYBODY is the way to starve the beast, eliminate the power to pick winners and losers and begin to put the Federal Government back in the Constitutional box originally designed for it?


48 posted on 10/13/2011 6:58:31 PM PDT by LALALAW (one of the asses whose sick of our "ruling" classes)
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To: Bloody Sam Roberts
That makes no flippin' sense.

You are right. Anybody who is working legally is paying Social Security and Medicare taxes, as is their employer. Whoever wrote the article is either clue-free, or is admitting that nobody in the poorest 30 million households works, or rather works legally.

And even the self employed poor should be paying FICA and Medicare at like 15%, although some probably don't.

I think it is wise to have a yearly income limit below which no taxes are due. Otherwise you end up with kids having to file a tax return because they made $200 shoveling snow for the neighbors.

49 posted on 10/13/2011 6:59:35 PM PDT by freeandfreezing
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To: editor-surveyor

Why??

Because you read some liberal clap-trap and believed it?

Or because you like the existing tax code much better?


50 posted on 10/13/2011 7:01:10 PM PDT by Responsibility2nd (NO LIBS! This means liberals AND libertarians (same thing) NO LIBS!)
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