Herman Cain's 9-9-9 Plan: The Pro and Con

There has been a lot of spin and talk about Herman Cain's 9-9-9 tax reform plan for the USA. It has put some interest in the Republican presidential candidate. His popularity in the polls have equaled or passed Mitt Romney.

As Cain suggested, everyone should do their own research of it. That is what the Tax Policy Center and the Brookings Institute just did. Its current director is also republican who worked under President Bush.

The study's sum indicated that the 9-9-9 plan would raise taxes for low and moderate income levels while cutting taxes for the upper income levels. The 9-9-9 plan would remove the current tax code, high corporate 35% tax rates, then, have 9% income tax, 9% on businesses and a 9% national sales tax (on top of the State sales tax). If your State sales tax is say, 8%, it would become 17% on top of the cost of the item. Under the 9-9-9 plan, if you earn more than $111,000 a year, your taxes would drop by $14,400. If you earned only $17,000, your taxes would rise by $1,854! Huh??????????

In the past, tax revenues have averaged a total of $2.3 trillion. In Cain's 9-9-9 plan, tax revenue come to around $33 trillion and anyone below the poverty line is exempt. Cain's plan would raise $7.7 trillion in income tax, $8.3 trillion in sales tax and $9.5 trillion in business tax. It is likely because of the lower marginal tax rates, the labor supply and business captial will increase significantly as would tax revenues. All this will eventually lead to more jobs and industry would begin to surge again, so it is hoped.

But, change is difficult for everyone, whether you are a Aries or a Taurus or Virgo. Unless Cain can sell his concept to the mass of Americans and his own Republicans, like other plans before it, it will be brushed aside.

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Comments 15 comments

JT Walters profile image

JT Walters 4 years ago from Florida

Hi Perrya,

I don't think you could ever justify taxing food when people have to feed their children in all tax brackets. Food in not currently taxed openly for the exact reason that people need to feed their children. Herman Cain's plan is nothing more then a plan for straving American children in middle class and poor families. And the exemption which you refer to doesn't address removing the flat regressive tax on the poor.

It will also kill our seniors as they can't buy used drugs. And for the first time in the history of this country, if Herman Cain is elected, he will be taxing Grandma's and Grandpa's heart medicine which they can only afford to take 3 days of the seven days of the weeks.

999 disportionately and lethally will effect children and elderly people as well as the poor and middle class in this country.

I personally like the Brookings Institute. Did they not provide details about this part of Cain's 999 plan and how it will adversely effect the majority of Americans?

JT


perrya profile image

perrya 4 years ago Author

The Brookings institute was one involved in the study, but I agree with you. I think in the end, it will not happen.


vrajavala profile image

vrajavala 4 years ago from Port St. Lucie

"According to former Reagan Treasury official Gary Robbins, of Fiscal Associates, the 9-9-9 Plan will expand GDP by $2 trillion, create 6 million new jobs, increase business investment by one third, and increase wages by 10%."

Cain talks about "empowerment Zones, which, I believe, is inner-city :"Empowerment Zones will offer additional deductions for those living and/or working in the zone."

Furthermore, 'Recognizing that relief for

low income taxpayers will inevitably be part of any tax reform, we also estimate tax rates

assuming that each plan will provide a refundable credit equal to the tax rate times the poverty

level."http://www.hermancain.com/docs/999_Scoring_Report....

These are just a few examples to contradict some of your assertions. I am no actuarian, but I know Mr. Cain is a brilliant mathematician, and, given where he comes from, I highly doubt that he would do an injustice to the middle and lower income classes. Just my opinion.


perrya profile image

perrya 4 years ago Author

Well, he will have to convince the democrats and his own republicans, which from last night's debate, seems highly improbable.


vrajavala profile image

vrajavala 4 years ago from Port St. Lucie

First of all, the Brookings Institute is the "liberal" think tank. http://www.fair.org/index.php?page=1436

Now, I am not an economist, however, that being said, I did read the support documents for the 9-9-9 plan on http://www.hermancain.com/999plan and I have to tell you that whatever is in that is Greek to me. However, Mr. Cain was Chairman of the Kansas Federal Reserve and has a master's degree in computer science. So, he's a very brilliant person.

I don't pretend to understand all of the plan, and, the only one of the candidates, Michele Bachman, who was a tax lawyer, still doesn't come up to the level of being able to assess the impact of his plan.

Could he be a wolf in sheep's clothing?

I doubt it, but that's just my opinion.


perrya profile image

perrya 4 years ago Author

I guess we will have to "stay tuned".


perrya profile image

perrya 4 years ago Author

I guess we will have to "stay tuned".


vrajavala profile image

vrajavala 4 years ago from Port St. Lucie

Thanks for writing this. I am studying it a bit, and maybe you are right. Maybe Mr. Cain does have it all wrong. I have read a couple of reviews (Edward Kleinbard, Bloomberg) and maybe it's totally off the wall. So, my advice to the candidates is to crunch the numbers, and get something that makes the environment friendly for businesses, is GDP neutral and isn't full of loopholes.


vrajavala profile image

vrajavala 4 years ago from Port St. Lucie

I just received this from the American Spectator (signed by Cain)

"And let me be clear, the 9-9-9 Plan is a jobs plan, it is revenue neutral, it does not raise taxes on those that are making the least."


perrya profile image

perrya 4 years ago Author

This is going be the center of debate.


vrajavala profile image

vrajavala 4 years ago from Port St. Lucie

guess what, Perry is going to release his tax proposal, called the "flat tax". http://www.fontcraft.com/liberty/?p=43754


perrya profile image

perrya 4 years ago Author

I know, like I said, stay tuned..........


vrajavala profile image

vrajavala 4 years ago from Port St. Lucie


American View profile image

American View 4 years ago from Plano, Texas

Just to show how unrealistic the nubers are you cite, in 1 year of 999 the 33 trillion dollars you claim to raise will pay the national debt 100% off and still have enough money left over to fund the budget in full for the next 5 years without collecting another penny of tax.


swordsbane profile image

swordsbane 4 years ago from Wisconsin

I don't buy any study that says that the rise in taxes automatically raises the amount paid in taxes and vice verse. The Republicans are all over the current tax code, saying that the rich pay MORE than their fair share, when the truth is when it comes down to the bottom line, the routinely pay LESS of a percentage of their income in taxes, despite what the code SAYS they will pay. Under these circumstances ANYTHING that lowers the current taxes that the over $200K people pay is a BAD IDEA.

You can see it in their language. When Obama asks for an increase on those making $200K or more, the Republicans say that it is a "tax increase" and try to scare everyone into thinking that it is going to raise their taxes, when it clearly wont. Worse than that, they are never called to account for their misleading statements by the press.

The Democrats on the other hand, say that we need to tax the rich anytime some extra money is required for something. They play on the heart strings of the public and tell them what a raw deal they've gotten at the hands of the rich fat-cats. The conveniently leave out the part about how they are MEMBERS of the rich fat-cats and they also want to bleed the public, only their "tax increases" are disguised as "fees" and "compensation programs" for spending bills.

They are both trying to screw us. The only difference is which direction they want us to face while doing it.

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