Herman Cain shot to the top of the polls over the past couple of weeks, powered by his 9-9-9 cure-all.
The former pizza executive would repeal all of the nation’s tax laws and replace them with one law imposing a 9 percent income tax on all earned income; a 9 percent levy on business profits and a 9 percent national sales tax.
He said his package would raise as much revenue as the current tangle of federal taxes — and would be oh-so-much simpler.
In debates with fellow Republican candidates for the presidential nomination he didn’t go into the impacts his plan would have on various sectors of the economy. He just kept chanting 9-9-9 and studio audiences loved it.
Like most simple solutions to complex problems, this one is as full of holes as Swiss cheese.
Cain said he had some unnamed outfit score 9-9-9 “dynamically,” which is where he got his revenue estimate. Dynamic scoring means that the scorers do the actual math and then add additional revenue that would be created by lowering taxes on the wealthy and on businesses. In other words, they guess what would happen and then assume it will.
Bloomberg News did an undynamic scoring and discovered that Cain’s plan would have come up about $200 billion short of 2010 revenues — and those revenues produced a huge deficit.
But that’s just problem number one with 9-9-9.
The formula would slash taxes on the rich from 35 percent to 9 percent. Quite a savings for Herman Cain and the rest of the top 1 percent. Taxing all earned revenue at 9 percent would mean that minimum wage workers would pay 67.5 cents of each $7.50 they earned as an income tax. Under today’s code, low-income workers pay a payroll tax for Social Security and Medicare but earn too little to owe income tax. Under Cain’s plan there would be no deduction for food, health care, lodging, clothes or any other necessary living expense. No deduction for dependent children.
Mow a yard. Get $10 for it. Send Uncle Sam 90 cents. Simple as that.
In addition to paying 9 percent of their wages to Washington, the nation’s workers would also be hit with a 9 percent national sales tax in addition to the sales taxes they now pay to their local and state governments, which would increase sales taxes by another hefty chunk for every American.
Conservatives are fond of saying, if you want less of something, tax it more. Tax consumer spending more, you will get less of it. Is less consumer spending in an economy based on consumer spending what the country needs?
It shoudn’t be necessary to point out that sales taxes fall heaviest on low-income young families; the families which spend the largest part of their incomes on food, clothing and other necessities.
Businesses would also see the federal tax on their profits fall from 35 percent to 9 percent. America’s businesses are largely owned by the rich. Mr. Cain knows that very well.
Nine-nine-nine would swiftly shift the burden of paying for government onto the pocketbooks of the poor.
CAIN’S 9-9-9 STRIKES a cord because the current tangle of taxes and tax exemptions begs for reform. A posse of experts could attack the mess and come up with a fairer, much less complex tax structure that would raise enough money from those most able to pay to cover the cost of government. That should happen. If they work hard enough, smart enough, the deficit reduction committee now at the task will start us on the path to that goal.
