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Oct. 19 (Bloomberg) -- Republican presidential candidate Herman Cain’s so-called 9-9-9 plan will face renewed scrutiny after an independent analysis found it would cut taxes for higher earners while raising them for middle-income Americans.
The proposal would reduce the tax bill for almost 95 percent of Americans with cash income exceeding $1 million, according to the analysis released yesterday by the nonpartisan Tax Policy Center in Washington.
Almost 70 percent of taxpayers with cash income between $200,000 and $500,000 would pay less in taxes, the analysis said. Meanwhile, about 95 percent of Americans with cash income between $30,000 and $40,000 would pay more in taxes.
This analysis presumes the 2001 and 2003 tax cuts would be permanently extended.
The 9-9-9 plan “substantially increases the tax burden on low- and middle-income families and it substantially cuts the tax burden on the highest-income taxpayers,” said Eric Toder, the Tax Policy Center’s co-director. “Most taxpayers would experience an increase under this plan.”
Cain’s plan, which has helped propel his candidacy, would replace the tax system with 9 percent business and individual taxes and a 9 percent sales tax. He has fought back against charges that his plan would have a disproportionate impact on lower-income tax brackets.
More and Less
“Some people will pay more but most will pay less,” he said during an Oct. 16 appearance on NBC’s “Meet the Press.”
He said that his plan would reduce the tax burden on many Americans by eliminating taxes, such as those on payroll, that are “embedded” in the cost of goods.
Cain’s campaign released a revenue analysis on Oct. 12 that projected the 9-9-9 plan would collect more than $2 trillion during a single year. His analysis didn’t discuss the distributional impact of the proposal.
Representatives for Cain’s campaign didn’t respond to a requests for comment yesterday on the Tax Policy Center’s findings.
The center’s analysis painted a stark picture of how different income brackets would fare under the 9-9-9 proposal if the so-called Bush tax cuts are extended. The 95 percent of millionaires who would pay lower taxes would receive an average tax cut of $487,300. Taxes would increase an average of $4,492 on those with cash income between $30,000 and $40,000.
Cain’s fellow Republican presidential candidates haven’t embraced the proposal. Former Senator Rick Santorum of Pennsylvania told CNN yesterday that the creation of a sales tax isn’t a “conservative proposal.”
“That’s giving more tools for Washington to take more money from the American public,” he said.
Senate Minority Leader Mitch McConnell, a Kentucky Republican, was also dismissive of the proposal.
“The presidential campaign is one thing,” he told reporters yesterday. “We’re pursuing our own interests here” in Congress.
--With assistance from Andrew Zajac in Washington. Editors: Jodi Schneider, Jim Rubin.
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