Herman Cain’s 9-9-9 tax plan may sound straightforward, but an analysis of the plan by former George W. Bush economic policy adviser Bruce Bartlett suggests it is anything but simple.
The Cain campaign has not released the nitty-gritty details of his plan, but according to his website, it is actually a three-step process. The 9-9-9 part of the plan is merely an intermediate second step in instituting a Fair Tax, which would replace all federal taxes with a 30 percent national sales tax.
“Whatever one thinks of the Fair Tax, it makes not the slightest bit of sense to have a plan that requires fundamental changes to the federal tax system twice to achieve its objective,” Bartlett wrote in a Tuesday New York Times op-ed . “One of the prime selling points of the Fair Tax is its simplicity, and the 9-9-9 plan is far from that.”
Cain’s plan would do away with the complex system of deductions and loopholes that currently plague the tax code, but it would also redistribute the tax burden from the wealthy to middle and low income Americans, Bartlett states.
Bartlett said that under the 9-9-9 phase of Cain’s plan, the only phase the GOP presidential candidate usually mentions, the poor and middle classes will “unquestionably pay more,” while the rich, who pay most of their taxes though the capital gains tax that Cain would eliminate, will pay “almost nothing.”
“At a minimum, the Cain plan is a distributional monstrosity,” Bartlett wrote. “Even allowing for the poorly thought through promises routinely made on the campaign trail, Mr. Cain’s tax plan stands out as exceptionally ill conceived.”
The Cain campaign could not immediately be reached for comment.
In phase one of Cain’s plan, both personal and business income taxes are capped at 25 percent. This tax break would only affect the wealthiest 4 percent of filers, who currently pay between 28 percent and 35 percent income tax.
The second phase, or the 9-9-9 phase, would drop personal and businesses income tax rates to 9 percent and institute a 9 percent national sales tax. Bartlett points out that because 47 percent of tax filers earn a low enough income that they do not currently pay income tax, Cain’s plan would raise taxes on the poor by 9 percent.
Low-income earners would be disproportionately burdened by Cain’s 9 percent sales tax as well, Bartlett said, because they spend a larger percentage of their income. With sales taxes, the more you buy, the more taxes you pay.
Cain’s 9-9-9 plan would eliminate payroll taxes, which currently fund Social Security, Medicare and Medicaid, along with the estate and gift taxes. Taken together these three taxes brought in about $883 billion in 2010, or about 41 percent of the $2.16 trillion collected by the federal government last year.
“Mr. Cain says these three proposals, which he would put into effect immediately without offsetting the lost revenue, will jump-start economic growth,” Bartlett said in his op-ed. “He offers no evidence for this assertion; it is simply put forward as self-evident.”
The last step in Cain’s tax plan is to abolish all federal taxes and institute a 30 percent sales tax on all products, known as the Fair Tax.
“Veterans of tax reform attempts in the United States know reform is very difficult and time-consuming even once,” Bartlet said. “If the Fair Tax is a good idea, Mr. Cain ought to just do it, without confusing the issue with his unnecessary and highly complicated 9-9-9 plan.”