Facing South

Cain revamps 9-9-9 tax plan, but it still hurts the poor

Republican presidential candidate and Georgia businessman Herman Cain has revised his controversial 9-9-9 tax plan in response to criticism that it would dramatically increase the tax burden on the poorest Americans while dramatically reducing taxes for millionaires.

But independent tax policy analysts say Cain's revised plan would still hit poor Americans hard.

The 9-9-9 tax plan that Cain has made a centerpiece of his campaign would have simplified the current complex but progressive U.S. tax code into three flat taxes: a 9 percent tax on business gross income (minus purchases from U.S.-located businesses, capital investment and net exports), a 9 percent tax on individuals' gross income (minus charitable deductions) and a 9 percent national sales tax.

An analysis by the Tax Policy Center, a joint venture of the Urban Institute and Brookings Institution, found that Cain's plan would raise taxes for 84 percent of U.S. households -- while reducing taxes for 95 percent of millionaires. It also found that Cain's plan would reduce after-tax income for households earning less than $10,000 per year by 18.2 percent while increasing after-tax income for households earning over $1 million by 30.5 percent.

In response to the storm of criticism over the proposal's unfairness, Cain revised the plan so that poor families would be exempt from the 9 percent flat individual income tax. Cain announced the tweak in a Friday speech in Detroit, the Wall Street Journal reported:

"Say amen, y'all. If you are at or below the poverty line…then you don't pay that middle 9."

But Roberton Williams of the Tax Policy Center says that Cain's "9-0-9" plan would still raise taxes for the poorest Americans, according to the Washington Post:

Currently the bottom 20 percent of Americans actually pay a negative tax rate, receiving credits from the federal government, says Williams. So even if poor Americans were to pay zero federal income taxes, they would still experience what is in effect a tax hike.

What’s more, Williams adds, "those folks are still going to be left with a sales tax" under Cain's plan, which would disproportionately affect the poor who often [have] to consume most of their income instead of saving it. So even with the "9-0-9" tweaks, "you still have the fact that poor people will bear a higher tax liability, and rich people will bear a much, much lower one," he concludes.

In addition, while Cain's original 9-9-9 plan was basically revenue-neutral, meaning it would raise as much revenue as the existing tax system, the revised 9-0-9 plan would raise less revenue for the federal government.

(Photo of 9-9-9 mug via Zazzle.)

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Clarification of my 9-0-9 retired, and vet comment

Working middle class, and upper working class, who are paying taxes, forget that they will eventually get old & or sick, and if not on a secondary pension, they will fall off the income tax liability wagon...like me. I'm a vet of the early part of the Vietnam era. I worked my butt off, and sometimes employed 125 or more folks, as a small airline owner, and later owned half of a local cable TV channel. But at 59 I almost died with a severe heart condition. After all my funds were eaten up, I've have to turn to the VA for medical services. I live on $974 a month, have no kids or family, and I get $16 in the widely hated FOOD STAMPS...That's it! I don't owe fed taxes in this situation.
I think by VET status should automatically give me the
required "SKIN IN THE GAME". Lean on the 20 million illegal aliens, if you want to strike out against poor folks, but not America's vets, or the nation's poorest seniors who lack any family support. Illness can take anybody down... including brave patriotic vets!


Explaining the "9-9-9 Plan"
The Essentials

9% Business Flat Tax
Gross income less all purchases from other U.S. located businesses, all capital investment, and net exports.
Opportunity Zones will offer deductions for the payroll of those employed in the zone
9% Individual Flat Tax.
Gross income less charitable deductions.
Opportunity Zones will offer additional deductions for those living and/or working in the zone.
9% National Sales Tax.
Unlike a state sales tax, which is an add-on tax that increases the price of goods and services, this is a replacement tax. It replaces taxes that are already embedded in selling prices. By replacing higher marginal rates in the production process with lower marginal rates, marginal production costs actually decline, which will lead to prices being the same or lower, not higher.

Economic Impact
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%.

Key Points of the "9-9-9 Plan"

Removes all payroll taxes and unites all tax payers
Provides the least incentive to evade taxes and the fewest opportunities to do so
Lifts a $430 billion dead-weight burden on the economy due to compliance, enforcement, collection, etc…
Is fair, simple, efficient, neutral, and transparent
Ends nearly all deductions and special interest favors
Features zero tax on capital gains and repatriated profits
Exports leave our shores without the Business Tax or the Sales Tax embedded in their cost, making them world class competitive. Imports are subject to the same taxation as domestically produced goods, leveling the playing field.
Lowest marginal rates on production
Kills the Death Tax
Allows immediate expensing of business investments
Eliminates double taxation of dividends
Increases capital formation which aids capital availability for small businesses
Increased capital per worker drives productivity and wage growth
Features a platform to launch properly structured Opportunity Zones to renew our inner cities
The pro-growth, pro-job, pro-export economic policies of the "9-9-9 PLAN" equals a strong dollar policy

What would YOU do?

I am tired of the continuous refrain, "It will hurt the poor and only help the rich." If that's true, then the proposal - whatever it is - should be revamped. But where are the constructive part of these knee-jerk responses? Are we really saying that we'd rather continue to live with our ridiculously complicated, needlessly obtuse, unbelievably convoluted tax system? Really? I applaud each and every effort to bring TRUE reform to the tax code and not just the hot air blown around by anyone seeking favors for office. Again, I am not in favor of a tax system that's too unbalanced in favor of any group over another - we've got one of those now. But absolutely every plan put forth gets literally the same response. Can we not just seek the best of a proposal and evolve toward a truly reformed system? Pitch in with something useful, shall we?

I pay well more than 9% right now. I am barely at the upper end of lower class, so don't get the wrong idea about where I'm coming from. But exactly how would a flat 9% tax hurt vets disproportionately? Let's zero in on that and make SOME kind of a proposal that will result in throwing out the current system.

By the way, how many vets have been hit hard and unrelenting by the IRS? Tons, I can personally tell you. Cain's may not be the answer, but it's an attempt at removing the current "guilty-before-proven-innocent" system of taxes we have now. Heck, how many of our very own elected have recently claimed the tax code was too complicated to get a filing right, when explaining "mistakes" in filings of their own?

How would these vets feel about a flat sales tax on consumption? Would that equally hit rich and poor?

Cain tax 9-0-9 plan for retired poor seniors

Good, that his planners now own up to the huge mistake with a his flat 9% income tax on millions of poor, retired workers, and retired or disabled vets, who are under the filing and tax assessment threshold. I was going to re-register outside the GOP for first time in my life, and never look back. I asked about a hundred vets at the VA outpatient clinic, and all said they would have to vote against Cain actively, as the proposed new tax bite would make them homeless within months...a possible "DEATH SENTENCE" for sick oldsters. It is sad that so many middle-class UBER-conservatives have a deep and abiding hate of thepoor. It doesn't matter to them that millions are former combat vets. They mouth SNIDELY that old "white trash" phrase "EVERYBODY NEEDS SKIN IN THE GAME". Most of these same middle-class folks were in fact DRAFT-DODGERS back when G.I.s were dying in Korea and Vietnam. Since I have been hearing this "skin crap", I has changed my faith in my fellow GOP voters. If vets don't automatically have skin in "game" of America, when they are retired in poverty. Then I'll smile when M-class lose their cheesy homes, savings, and health, and their kids and "grandkids" are displaced, by millions of illegals who they ought to be aiming their frustration at, insteadof a few millions of poor vets, and their old women folk.Focus your problems toward the poor, on the interlopers, if you must but give Vets, and poor retired legit American people of all races, a little respect or appreciation. We, poor can't pay a second level of sales tax, either, so and exemption would have to be devised by Cain's people, to win over the "deserving retired poor!

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