9-9-9: How Cain’s tax plan would work

Herman Cain’s 9-9-9 tax plan has only one thing going for it—“it’s very simple,” said John Schoen in MSNBC.com. If elected, the Republican presidential candidate has vowed to scrap the entire federal tax code in favor of a 9 percent tax each on individual and corporate income, along with a 9 percent national sales tax. Cain claims that “most people will pay less” under his scheme. But virtually every economist who has studied 9-9-9 has concluded that it would cut the taxes of the rich, while raising the tax bills of most working families. “By almost any measure,” said Timothy Egan in NYTimes​.com, Cain’s plan “is nuts, nuts, nuts.” Not only would it effectively double the taxes paid by the 47 percent of households with incomes too low to pay federal income tax, but it would impose a 9 percent national sales tax on everything and every service you buy—on top of any local or state sales taxes.

So “Cain’s 9-9-9 plan is not perfect,” said Larry Kudlow in NationalReview.com. Like many conservatives, I worry that the European-style sales tax could start low and then be raised in the future. But overall, 9-9-9 is a vast improvement on the current tax code. Slashing the top tax rate for individuals and businesses from 35 percent to 9 percent “would supply an incredibly strong economy-wide growth incentive.” Liberated from these crippling taxes, companies would create up to 6 million new jobs, Cain argues, and lift wages by 10 percent. Many Republican voters believe that 9-9-9 would be fairer than the present tax code, said John Dickerson in Slate.com. They don’t like the fact that almost half of Americans avoid paying income tax, by carefully exploiting the deductions, credits, and exemptions built into the system. Under 9-9-9, “no one can get a lawyer to weasel them a better deal.”

But as 9-9-9 gets more attention, its popularity will plummet, said John Cassidy in The New Yorker. Consider seniors—a group of voters among whom Cain is polling well, especially in states like Florida. Their tax burden is low today, but under Cain’s plan whatever income they receive would be taxed at 9 percent, and so would their expenditures. “In Florida, the sales tax on early-bird specials would jump from 6 percent,” the current state sale tax, to a combined 15 percent. “Wait until they figure that out in Sarasota and Fort Lauderdale!”

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