Middle Class Would Pay More Under Herman Cain’s 9-9-9 Tax Plan

By Justin Gardner | Related entries in Money, Taxes

Not that this is any surprise. Usually when flat tax proposals are put out there, this is the common thread. The rich get a massive tax break and the middle class get the shaft.

Here are the numbers…

The old system would be replaced by the nines:
- A flat 9 percent income tax for everyone – no more, no less
- A 9 percent tax on corporations
- A 9 percent national sales tax [...]

If you have a family of four with an income of just under $50,000, they could end up paying more under the Cain plan. Currently, they are taxed around $3,850 in income tax. Under Cain’s plan, they would be taxed at 9 percent or pay $4,500.

That’s $650 more.

Although the family would save almost $4,000 in Social Security taxes, it would have to give up the child tax credit worth the same amount. Furthermore, it would pay an additional national sales tax of 9 percent on everything purchased, including groceries and clothes, which totals about $2,000.

That means under the Cain plan that family could end up paying $2,725 more.

So that family would have a 5.5% tax rate hike. And the folks at the top? Their taxes would be cut in half. And what about those at the bottom, roughly 18% of the population, who don’t pay income taxes because they make so little that they can’t afford to? They’re getting an 18% tax hike? Seriously?

And, by the way, how does Cain fund Social Security or Medicare if those rates are cut? The answer…he doesn’t. They’re defunded. So the middle class and the poor will be paying even more to maintain their current lifestyle.

Long story short, this plan is a joke. Or based on fantasy. Either way, it’s a no go.


This entry was posted on Thursday, October 13th, 2011 and is filed under Money, Taxes. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

9 Responses to “Middle Class Would Pay More Under Herman Cain’s 9-9-9 Tax Plan”

  1. Jon D. Says:

    That’s a good analysis. Actually, I’ve often wondered if a flat tax system would benefit the middle class. Clearly your analysis shows it doesn’t. I’m in Canada so the analysis may be a little different, but the result would likely be the same.

    I’m surprised that under the existing tax regime that a family of 4 with household income only pays $3,850. That seems low, but like I said, I’m in Canada.

    One aspect I think is interesting is the 9% corporate tax, which low … but would be interesting to see the analysis if companies could NOT deduct expenses. In other words, the 9% is applied to gross revenue. That would probably change the outcome a lot.

  2. Amy Says:

    “Although the family would save almost $4,000 in Social Security taxes, it would have to give up the child tax credit worth the same amount. ”

    I’m not sure this is a fair analysis. The child tax credit (depending on the number of children) is money off of the taxable amount. You don’t get back 4000.00 cash. You lower your taxable income by 4,000. Actually, I don’t even think it’s that much,but since those are the numbers quoted in the article, that’s what I used.

    My husband does the taxes, but from my brief overlooking, it seems like we get back 400 per child.

    In either scenario, we’re not “giving up” 4,000.00 if we were to go the 9-9-9 plan.

  3. Tully Says:

    I don’t think that analysis is phrased well enough for good assessment. Indeed, I don’t think Cain has actually released enough detail on particulars to say much of anything about it.

    That said, I doubt particulars would make me a fan of the 9-9-9 plan. It would almost certainly slam the hell out of the poor and lower-income earners, who currently have zero to negative effective rates. And in any case I think it’s a throwaway campaign proposal, not anything to take seriously.

  4. cranky critter Says:

    Yup, in my mind it’s a throwaway, a gimmick, a pizza marketing strategy. But do we think Cain really thinks that?

  5. Tully Says:

    I doubt it. He’s too smart not to know that simplistic “solutions” are for simpletons. Of course, voters as a herd are not known for critically nuanced analytical thinking, and he IS trying to herd voters his way.

    The 800-lb gorilla in the room in taxation/budget schemes right now is that no matter how you slice it, closing our budget gap and getting back on the path of fiscal sanity in the long run is going to require some hefty spending restraint AND higher net taxes on the middle class, period. The left can scream about eating the rich all they like, but the fact is that the revenue just isn’t there and choking down on capital with taxes will choke growth as well. And the right can scream about no new taxes all they like, but the public is unlikely to put up with the level of cuts required to get us back down to debt-reducing revenue flows. The bulk of revenue availability in new taxation is where it always has been, in the middle class.

    As I’ve been discussing with Solomon over at RotC, a Grand Unified Package Deal is highly unlikely. It just doesn’t work that way in this polarized an electorate — if we get progress on the debt/deficit front it will be in chunks from one side at a time as the pendulum swings back and forth. Folks like me who have seen this movie and all its sequels many times over the last few decades simply do not trust the pols to follow through on spending cuts down the road for new taxes now, and establishment types and lefties will fight any meaningful spending cuts unless they’re packaged as “eat the rich today, cut spending next year.” Meaning the taxes will materialize but the spending cuts would be future promises of cuts from inflated baselines, not from current spending.

    For myself, I’d be willing to pay more in taxes to buy down the debt IF the feds FIRST showed they can get spending under control. But the only time in my working lifetime that’s happened was very briefly after the ’94 revolution. But we’re running out of other people’s money awfully fast.

  6. cranky critter Says:

    So then maybe Cain isn’t quite as refreshingly honest as he is portraying himself then. LOL.

    I agree with everything you say. I was just thinking earlier today about these perennial calls for drastic reform to our tax system, and how they never get a millimeter’s lift off the ground. What i decided is that it’s another manifestation of what I’ve been starting to call “negative consensus.” In other words, it’s easy to get everybody to agree on what they don’t like. Taxes. No sh!t, right? But when it comes to a positive consensus on how to fix it, there’s nothing there.

    Negative consensus is a potentially dangerous thing if it’s not followed by positive consensus. Just ask the leaders of Arab spring now that it’s fall heading into winter.

    I’d be willing to pay higher taxes too if it meant a verifiable return to sanity. But it’s just as you say: “we’ll gladly cut spending tuesday for a hamburger tax today.”

    What i think we will see is a hike(restoration?) of the top rate back to 38%, and a closing of corporate tax loopholes. On that, it could go either way as to whether the additional revenue goes to paying down debt or lowering the broader rate. I could see splitting the difference on that.

    If there’s one thing about our current budget issues that bothers me the most its the inflated baseline. If TARP and the Obama stimulus were supposed to be one time things, then why aren’t annual expenditures right where they would have been based on say a 2006 projection? It’s mind-boggling, almost as mind boggling as how few Americans are even aware of this.

  7. Tully Says:

    What i think we will see is a hike(restoration?) of the top rate back to 38%, and a closing of corporate tax loopholes.

    Which would pay for about six days of our current deficit borrowing. OK, I could be underestimating. Might be as much as two whole week’s worth! The bulk of revenue availability in new taxation is where it always has been, in the middle and upper-middle class. I remember when Bill Clinton told us they were only going to raise taxes on “the rich.” I was making about $40K/yr at the time. My taxes went up. It was so nice of him to make me rich!

    If TARP and the Obama stimulus were supposed to be one time things, then why aren’t annual expenditures right where they would have been based on say a 2006 projection?

    Good question. That expansion of federal spending is exctly where cuts should be coming from.

  8. Jennn Fusion Says:

    9 percent tax on beer… just think about it! ;)

  9. Tully Says:

    Already there. Federal tax on beer is $18 a barrel. Works out to about a nickel per 12 ouncer. :-) About the same as the amount of federal tax on one cigarette.

    That doesn’t include state and local taxes or sales taxes, of course.

Leave a Reply


NOTE TO COMMENTERS:


You must ALWAYS fill in the two word CAPTCHA below to submit a comment. And if this is your first time commenting on Donklephant, it will be held in a moderation queue for approval. Please don't resubmit the same comment a couple times. We'll get around to moderating it soon enough.


Also, sometimes even if you've commented before, it may still get placed in a moderation queue and/or sent to the spam folder. If it's just in moderation queue, it'll be published, but it may be deleted if it lands in the spam folder. My apologies if this happens but there are some keywords that push it into the spam folder.


One last note, we will not tolerate comments that disparage people based on age, sex, handicap, race, color, sexual orientation, national origin or ancestry. We reserve the right to delete these comments and ban the people who make them from ever commenting here again.


Thanks for understanding and have a pleasurable commenting experience.


Related Posts: