Author: Randy Slovacek

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As Herman Cain has surged in the polls, his 9-9-9 plan is getting more and more scrutiny, and it’s not working out the way Mr. Cain says it will.  Many accounting firms have taken on the job of analyzing the plan, and in each approach – other than Mr. Cain’s – it works out as a tax increase for lower and middle income Americans.

The Tax Policy Center, for example, has a new analysis out of the distributive consequences of Herman Cain’s 9-9-9 tax plan. The Tax Policy Center models 9-9-9 as catchy new slogan for a de facto national consumption tax, and consequently constitutes a tax increase on most Americans but a tax cut for high income people who engage in a lot of savings and investment.

As you can see, you actually need two charts to illustrate this properly because the magnitude of the tax change for the highest income segments is very large. But basically you’re talking about a nice tax cut for the $200k-$500k crowd and a really big tax cut for people who earn more than that, plus mid-sized tax hikes for everyone else.
(via ThinkProgress)

According to analysis by the Citizens for Tax Justice, under presidential hopeful Herman Cain’s 9-9-9 Plan, the richest one percent of taxpayers would each pay $210,000 less in annual taxes on average, while the poorest 60 percent of taxpayers would each pay about $2,000 more in annual taxes on average, than they do now.

Moreover, under the 9-9-9 plan, the United States government would collect about $340 billion less in revenue in 2011 alone.

9% Individual Flat Tax: The nine percent individual tax would apply to “gross income less charitable deductions” and would exempt capital gains. This individual tax would:
• generate much less revenue than the existing federal income and payroll taxes
• especially benefit the richest taxpayers, who currently pay effective tax rates much higher than nine percent and receive most capital gains
• result in a big tax increase on the poorest Americans, who would lose the benefit of existing tax breaks like the Earned Income Tax Credit and the Child Tax Credit

9% Business Flat Tax: The nine percent business tax would apply to a business’s “gross income less all investments, all purchases from other businesses and all dividends paid to shareholders.” As a result, it appears that there would be nothing left of a business’s revenue to tax other than the revenue going towards wages.

9% National Sales Tax: Cain’s plan would introduce, for the first time, a broad-based national sales tax, with a rate of nine percent. Replacing the remaining federal taxes (estate and gift taxes, tobacco taxes, gas taxes) with the nine percent sales tax will result in a tax increase for all income groups. This would be a national sales tax ON TOP OF each state’s current state sales taxes. For instance, in Las Vegas, we have a sales tax of 8.1%. Added to Herman Cain’s 9% national sales tax, most purchases would then have a 17.1% sales tax.

Many in political circles feel Herman Cain began his “presidential aspirations” as a way to raise his profile and perhaps get a FOX News TV show or a political radio show or a platform to sell his book and raise his “inspirational” speaking fees.  With reports out in the media world that he does not have a staff or network to actually see a presidential bid to it’s conclusion, I’m inclined to believe that.  I think this has all taken Herman Cain off-guard that he’s being taken “seriously.”

Time will tell how the country takes him.

Read the entire analysis here.