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Subscribe to RSSHerman Cain’s 9-9-9 economic plan got lots of attention at last night’s debate. It was said, in fact, 24 times, by NBC’s count.
Despite Jon Huntsman’s quip, it is not the “price of a pizza.”
So what is it, and what does it do? It would completely change the tax structure in the country and replace it with a:
- 9% income tax,
- 9% national sales tax, and
- 9% corporate income tax
Deductions, including the popular mortgage deduction, would be eliminated. There would be an exception, however, for charities.
It eliminates the capital-gains tax, which benefits those who make money in the stock market. And it eliminates the payroll tax, which funds Social Security.
Because of the current progressive tax system, the poor, working class, and many considered middle class pay zero (or close to zero) in income tax. They account for about 40% of the country.
The non-partisan Tax Policy Center is readying a report on Cain’s plan, though it is waiting for more details from the campaign. But it has come to some conclusions already.
Cain’s plan "cuts taxes for the rich and raises taxes on the poor,” Roberton Williams, a senior fellow at the center, tells First Read. He added that it would create a "much more regressive tax system.”
The plan would represent a “major tax cut” for the rich and raise taxes “substantially” on the poor and middle class, Williams said. "Given that a big chunk doesn’t pay any income tax, this would be a big tax increase on people at bottom end. At the top end, the opposite happens."
The top end would go from about a 35% income tax rate to 9%. "That's a big, big drop," Williams said, adding that the capital-gains tax would be another added benefit for the wealthiest. "People at the top would see far and away the largest share of the gains. Those people are going to see a huge tax cut."
Currently, there is no federal sales tax. There are state sales taxes, however, and Cain’s plan would add 9% to those. So, in Iowa, for example, where there is a 6% sales tax, that would mean a 15% sales tax.
On MSNBC’s The Daily Rundown with Chuck Todd this morning, Cain defended his plan, saying there has been a lot of “misinformation” and “misperceptions” about it. He noted that with the payroll tax being eliminated, that would be something of a built-in cushion to deal with the sales tax.
He also said a family of four with a household income of $50,000 a year would pay $10,000 in income taxes and have enough left over to pay for goods, despite the sales tax increase.
“Today under the current system, they will pay over $10,000 in taxes assuming standard deductions and standard exemptions,” Cain claimed. “I’ve gone through the math -- $10,000. Now, with 9-9-9, they’re going to pay that 9% personal tax on their income, so that’s only $4,500. They still have $5,500 left over to apply to the sales tax piece, and if you go and look at how much of it they would probably spend on sales taxes for new goods, not used, used goods they don’t pay a sales tax. They are still going to have money left over, Chuck.”
But that is not exactly the case.
In fact, a family making $50,000 a year with two children would only pay about $776 in income taxes when standard deductions are factored in, based on 2010 Internal Revenue Service levels. (In fact, not factoring in deductions, a married couple filing jointly making $50,000 a year would pay $6,666 in income tax, not $10,000. But what’s important for tax purposes is “taxable” income.)
Here’s the math:
- Gross Income: $50,000
- Subtract the 2010 standard deduction: $11,400 (2011 is $11,600)
- Subtract the personal exemption (essentially the number of people in the house): $14,600 ($3,650 x 4)
- That brings us to a taxable income of $24,000
- The tax on a married couple filing jointly at $24,000: $2,766
- Then, deduct an additional $2,000 ($1,000 child tax credit x 2)
That comes out to just $766. And that doesn’t include other potential exemptions, like educator credits, moving costs, student-loan interest, health-savings accounts, etc.
Conservatives are also not thrilled with the plan, specifically because of the sales-tax piece. The sales tax without income taxes being zeroed out is something Williams says makes conservatives nervous, because they see that as a potential "spigot" the government could use when budgets get tight.
It’s unclear what this would mean for revenue yet, Williams said, adding that he would need more detail from the campaign.
It’s also unclear what exactly the sales tax would apply to. Cain this morning on The Daily Rundown said it would not apply to used items. If it applied to houses, food, and other items, that could be a significant change.
An email to the Cain campaign this afternoon has so far gone unreturned. First Read will update when we hear back.
Leave a Comment:
Twiga how are you going to collect taxes on the drug dealers when they only deal in cash. With no paper trail how can you charge taxes. Twiga the national sales tax would create a even bigger Black Market in the U.S. Just ask other countries who employ a VAT tax on goods.
This guys math must have come from the same place as the economists who said we are not in a rescission. IT ALL looks GOOD on paper but in reality IT DOES NOT WORK.
There is NO grantee that they would spend that money and not just put it into stocks and bonds and that is NOT spending, it is investing. Investing is not putting money into the economy it is taking it OUT.
This guy is no better at math and being able to run the country than Obama. The GOP better look else where if they want my vote. With a plan like that we will all be supporting two welfare families with our taxes.
That's it Hermie, keep right on bowing and groveling to the oppressors, it's what made you what you a rich man, after all. And the poor people who stood up and fought for the rights you wouldn't fight for, without which you would never have realized your success, well to hell them, lazy bums!
Well said!
yah, that's what we need-more tax cuts for the rich! Are people really this stupid?
Well they reelected Bush after he sent their kids of to fight a war for false purposes and went along with a smear of a decorated vet...so yes I do think the people are this dumb...
Here's H. Cain forecasting skills..................
“Coverage of the Bush economy reads like a collection of Democratic Party press releases, calling a strong economy everything from struggling to volatile or dicey. ...That kind of ignorance makes homeowners fear that their most expensive possession could turn worthless overnight. That won’t happen,” Cain wrote in an article for Media Research Center’s Business and Media Institute on Aug. 17, 2005. At the time, Cain was the group’s national chairman. Three years after publication, the housing market collapsed.
firstread.msnbc.msn.com/_news/2011/10/12/8291436-cain-admits-he-missed-housing-bubble-economic-meltdown
If Cain's 9-9-9 plan also included Capital Gains, enforced the 9% on corporations gross income as it does for individuals, exempted buying a primary residence and food purchases from the sales tax, allowed people below the poverty line to not pay the full 9% or any at all, allowed specific restrictive tax deductions for child care, education, and healthcare, and allowed people to exclude all savings (401k, IRAs, MUNYs, personal savings, etc...), then it might be worth considering.
Without those changes this idea is way too regressive and bottom heavy on the poor. Adding these in levels the playing field to where we can actually consider it and run some real numbers through the model.
Interesting election philosophy, drastically cut taxes on the top 1% and drastically increase taxes on the bottom 50%, with somewhat lesser increases on the other 49%. How did this guy ever survive in business?
He is a republican! Cheat and lie!
Of course the 9-9-9 plan reduces taxes for the wealthy. If it did not, it would not be presented by a Republican. Their ideas are essentially all the same.
Once again the Republicans are trying to change the social contract that has worked reasonbly well over the last 80 or so years. Their mantra of less government, more personal responsibility means nothing more than wealth flowing to the top 1% while the bottom 99% pay more and get less.
It is no different that the Ryan road to prosperity. Prosperity for whom? Certainly not the vast majority of Americans who would pay more for everything and get less.
When will the Republicans realilze that there is a positive role for government in many aspcts of our lives. The regulations that we have are not always perfect, but they are there for a reason, that reason being the attempt to correct some past abuse or failure on the part of the private sector. If you do not realize this you do not know history, and should take the time to educate yourself.
Cain is not his brother's keeper. Only his rich brother.
Back in 1964, approximately, Barry Goldwater the Republican nominee said "people who are poor are either stupid or lazy" Reagan opposed Medicare and said if it was passed people would spend their senior years "telling others what it was like to be free in America"
Conservatives have opposed child labor laws, social security,. medicare, minimum wage laws, food and drug inspections, clear water and air legislation, equal rights for women and blacks and protections for working people.. in fact they have opposed just about every single piece of legislation that has helped benefit the middle class..calling them all "anti American or communist inspired"
The only thing they have consistently done is advocate more war and military spending all while wrapping themselves in a flag and shouting "God Bless America!"
Let's just consider the 9% national sales tax by itself.
A 9% sales tax on top of state and local sales taxes will drive more and more of our goods into a black market or via the internet in search of companies overseas or only in states with no sales taxes.
Where I am, the sales tax now is 8.5%. A 17.5% tax would make me look elsewhere for goods I buy locally causing more local income losses, local job losses, and buying a lot more at flea markets and online that I now buy locally. There are some places where the combined state and local sales taxes are already around 10%. How many people are going to pay a 19% sales tax, when they can cross the state line or take any number of evasive measures to save 5-10% on all their purchases?
The national sales tax provision of this plan hurts Metropolitan areas and states with already high sales taxes. Rural areas, where bartering is a hidden part of our economy, and who have lower state sales taxes don't get hit as hard. It isn't a coincidence that this not only puts more burden on lower income people who spend a much larger percentage of their income as the wealthy, but also targets geographic areas and blue states where the vote tends to be more liberal to pay more.
In theory, if corporate taxes go down prices will go down thus creating demand which will create jobs which will increase tax revenues. Cain's the only one that has that figured out. The fact that some people who currently pay no taxes will have to pay something; isn't that what the president says about everyone paying their fair share? And while we're at it, the raened income credit has to go - if you don't pay taxes why get a tax refund?
But with people at the poverty level and lower middle class who paid no taxes as they can't put food in their mouths now must come up with 9%. The work of the devil and the republicans!
In THEORY, perhaps, in reality, the corporations will KEEP all the new money, outsource their jobs further, and American citizens end up even POORER. Cain figured it out all right, how to enrich the rich and corps even more!
Corporations ARE NOT hurting for money right now! They are sitting on $2,000,000,000,000 in capital, they CAN hire, but they don't want to. Giving them MORE money is NOT an incentive to hire, it is NOT an incentive to the economy. They HAVE the capital to spur the economy, they are NOT spending it!
why is anyone taking this guy seriously.....if allen west is a tool, this guy is should be renamed CRAFTSMAN!!!
Middle America will again be abandoned by the Republicans if the Cain 9-9-9 tax plan is adopted. The Republicans take care of the wealthy with the rest of America being cast aside to bear the tax burden of sustaining the infrastructure.
While I can't stand Michell Bachmann I agree with her thoughts that the 9-9-9 is really 666 and Cain is working for the Rich! (I mean the Devil) To me they are both the same!
This 9-9-9 plan will eliminate social security, medicare and medicade. All social programs would be gone.
IRESPOND, while I don't support this plan, if it means, as you said, "They will pay the SAME tax than you and me..." then wealthy currently pay MORE. Why has Obama been running around preaching about millionaires paying less than their secretaries? All the criticism that the 9-9-9 plan is a tax break for wealthy and increase for middle class inherently proves that wealthy pay more right now. I think Democrats needs to pick arguments that don't completely contradict each other.
He's refering to Warren Buffet's comments about his situation. Buffet is for more taxes on the wealthy. Under the current system, Money made from stocks is taxed at a lower rate. So investors who have a lot of money in the stock market actually pay a lower rate than people who earn their cash through actual work.
It is true that the rich pay more in taxes than everyone else by volume, but not always by percentage. Because of all the loopholes that exist, the rich can significantly lower their tax rate. In other other words, Sally Secretary pays 25%. While Tycoon Tim only pays 21%. Even though Tim pays more cash overall than 10 Sallies(volume), His effective rate is actually less. Look at it this way, Sally needs the cash way more than Tim does, but she only receives 75% of her pay. Where as Tim, who has plenty of cash, receives 79% of his dough.
Read "Rich Dad Poor Dad" to gain insight on "Rich" mentality. The rich mentality is based on what good for oneself personally. Which is good to some degree, But it does not take into account of the big picture, What benefits society, the country, and everyone as a whole which effects the rich too, but they don't seem to see it.
Amazing how the GOP will not back down from wanting to protect and reward the wealthy. While I am not an Obama supporter, it seriously looks like he's going to win by a landslide.
Well now listen to the crying and the nashing of the teeth! It's perfactly acceptable with the 50% not paying taxes to raise taxes on the rest of us who do. With a battle cry of "make them pay their fair share", they proclaim the correctness of it.
Now along comes someone that wants ALL of us to pay a fair share and out comes the selfrightous anger, now they take to the streets with a cry of "It's unfair to me".
What this would do is, because it would no longer be profitable to them, cause these entitlement people to start paying attention to just where our taxes are REALLY spent! That would be very bad news for Obama, Pelosi and Reid! They would, finally be unable to buy votes with other peoples tax money!
I might support the 9-9-9 plan if minimum wage is increased to say $20 per hour. Thats about the minimum a person can scrap by on. Ah, but then all these cash rich comapanies would cry we can't pay people a decent wage. How we gonna pay our CEO 52,000 per hour hour if we pay people that.
It only takes one phrase to get full support from the Astro-Turf funded Tea-Baggers.
The rich get richer, and the middleclass get poorer.
The Tea-Bags would support a pizza crust for President if that could be assumed the result. Do not fall for it. They are building their entire platform on a false premice.
Herman Cain, the candidate of the lobbyist. Another Republican proving that they are for the rich and care less about everyone else. How can you expect to tax the rich and big corporations 9% and expect the middle class and the poor to pay the same or higher, this is insane, this guy shouldn't even be running for anything, in any party. How did he become the front runner of the GOP, did they just poll CEO's and billionaires, -- WHAT THE F---. American people wake up or else we are all screwed with these human vultures.
This is only a tax cut if you believe the supposed rich are actually pay the current rate which we know they aren't. Even the Democrats are complaining about all the loopholes and deductions. Since the 9% consumption tax in on everything. The rich also represent a much higher percentage of consumption in real dollars than anyone.
So, in a state like Florida, a 9% federal sales tax, on top of a 10% state tax, means a 19% total sales tax?!? ARE THEY HIGH?!?!
You want to buy that $20,000 economy car? Great, just bring an extra $3,800 with you!
Let's see....Herman Cain rises to the top of the polls in the GOP race and it takes 24 hours for Msnbc ( and the rest of MSM )to attack him in several articles , all with different titles. Another thing, these articles quote "economists" who back up this SLANDER of Herman Cain because the gentleman is a real threat to the "Democrat Plantation. "
The liberals see their "slush funds" drying up before their eyes. First , because of the Tea Party, now because there's a black man who makes more sense than everyone else and wants to put PEOPLE BACK TO WORK!!!!!!!!!!!
This makes more sense than anyone else? Are you stoned, or just math-challenged? Come back with some numbers, other than the ones that Cain sh#t the bed with!!
HEY "AUNTIE", look who's giving you your "numbers." LOL
(Answer: the state run media outlet shilling for BO is throwing you these "numbers".......too bad you and all the lemmings are "buying it!")
p.s. I have a Bachelor degree in Math and another degree in Language. No need to worry about my numbers.
"State run media", huh? There's a tinfoil hat out there with your name on it! Maybe there wouldn't be a problem with your numbers - if you HAD any!! What language is your degree in? Moonbat?!!
I didn't say I had numbers, that is left to others whose job it is. I do have a candidate, though !
BTW, I will match my education with YOURS if you care to divulge it ? lol
Romney/Cain 2012 !!!!!!
For Real jobs ( no the "fuzzy math" jobs we get from BO....."saved or created".... lol)
Just be prepared to pay 9% tax on all wages, plus 9% federal sales tax in addition to your local state sales tax on all purchases including food and another 9% on any investment income including interest on savings.
You give up 9% on all wages and then pay 18% (in california) on all goods purchased including groceries. When you prepare your tax return, there are no deductions at all not even standard deductions or exemptions.
You beter write these numbers down.
I , for one, will be saving on my income tax ! "9-9-9" baby !
Romney / Cain 2012 !!!!!!! for REAL jobs ( not the fuzzy math kind we get from BO......"saved or created.")
Dear Leona, you should sue your college for a refund. Obviously the "education" didn't stick.
fayse, What's the name of your college?????? LOL
Ummmm, I hear crickets.
Kirk is just part of the problem,,he has no solutions but to use his outdated ideology as a representation of what he sees as the other guy being wrong if they don't agree with his feeble logic!!!!!!!!!!!!!!