Sunday, October 16, 2011
"Do the math!," Herman Cain incredulously replies when challenged by skeptical critics to explain how his mantra-like "9-9-9" tax overhaul plan doesn't lower taxes for the rich while increasing taxes on the poor and middle class.
But that's just the problem. Cain's math is so fuzzy it would make George W. Bush proud. As Cain explains it, he'd do away with the current tax code and replace it with a 9% personal tax, a 9% corporate tax and a 9% national sales tax. Through this overhaul, he says, most people will pay less taxes than they currently do. But his calculations simply make no sense to many experts including economists, the Wall Street Journal and even Grover Norquist, president of Americans for Tax Reform.
For example, there are 30-million Americans whose incomes are low enough that they don't pay any income or payroll taxes. So for them 9% is 100% more than they currently pay. Add a 9% national sales tax on top of the average 8% state sales tax they pay now and that's another 100%+ increase. So an individual earning and taking home $26,000 who pays about $2100 in state sales tax will, under 9-9-9, end up paying about $2400 in new income tax and a total of approximately $4800 in total sales taxes. That's a total tax bite of more than $7000 vs $2400. How can Cain with any degree of credibility claim that his plan won't increase taxes for the poor and middle classes?
Now take the rich, who currently pay the maximum 36% personal tax rate and 15% in capital gains taxes. In eliminating the cap gains tax and lowering the personal rate to 9% you don't need an economics degree from Wharton to recognize the enormous windfall 9-9-9 lavishes on the wealthy.
So one of two things is happening here: either Cain is stupid or he thinks we are. Let me assure you, Herman Cain is not a stupid man. 9-9-9 is nothing more than a plan in search of logic.