Herman Cain's 9-9-9 plan: boon for rich, bust for rest
On average, the only Americans who would see their taxes fall under Herman Cain's "9-9-9" tax reform plan are those making $200,000 a year or more, according to a new study out Tuesday by the Brooking Institution's Tax Policy Center.
The 9-9-9 plan, which has been Cain's primary talking point for weeks, would replace the current tax code with a nine percent flat income tax, a nine percent corporate tax and a nine percent national sales tax.
The reality of the proposal is a bit more complicated than that, though Cain has not fully explained the details. (Here's the summary posted on Cain's website.)
Cain touts the plan as "fair, simple, efficient, neutral, and transparent" and features "pro-growth, pro-job, pro-export economic policies."
But according to the Los Angeles Times, Cain has provided no economic basis for his claim that the 9-9-9 plan would "expand GDP by $2 trillion, create 6 million new jobs, increase business investment by one third, and increase wages by 10%."
According to the Tax Policy Center's analysis, which compares the taxes Americans currently pay (minus the payroll tax cut) to those that they would pay under Cain's plan, most Americans would see their after-tax incomes fall under the plan. (The Tax Policy Center is a joint venture of the Brookings Institution and the Urban Institute.)
Only 3.8 percent of Americans making less than $10,000 a year would receive a tax cut, according to the analysis. The average such cut would amount to about $450. Meanwhile, 70.1 percent of Americans making $200-500,000 a year would see their taxes fall, with those Americans seeing an average savings of $19,746.
Americans are more likely to benefit from Cain's plan the higher their income, according to the analysis: 88.2 percent of Americans making between $500,000 and $1 million would see an average tax cut of $70,807 under the plan, and 95.4 percent of those making more than $1 million would see cuts averaging nearly $500,000.
Conversely, more than 90 percent of Americans making between $10,000 and $50,000 a year would see tax increases of between $2,785 and $4870 on average.
The end game, according to the study, is that many wealthy Americans would see huge tax reductions under Cain's proposal, while lower earners would see the opposite. The average tax change for Americans making less than $10,000 a year would be an increase of 19.5 percent; the average tax change for those making more than a million would be a reduction of 15 percent.
In a Tuesday interview with ABC's Jake Tapper, President Obama Cain's plan doesn't amount to a new idea.
"Essentially what it says is that we're going to make sure that the wealthiest among us pay less," he said.
