Republican presidential candidate Herman Cain speaks at the office of… (Eric Thayer / Reuters )
If Herman Cain’s 9-9-9 tax plan were in effect today, the poorest 60% of taxpayers would pay an extra $2,000 while the richest 1% would get a $210,000 break, according to an analysis by Citizens for Tax Justice, a left-leaning think tank.
Cain’s plan would replace much of the existing tax code with a 9% individual income tax, a 9% business tax and a 9% national sales tax.
According to the analysis, all three of the tax types included in Cain’s plan would disproportionately impact lower-income Americans.
The 9% individual income tax would give the richest Americans -- who currently pay a tax rate of about 35% -- a break of almost $210,000 a year. But for the poorest 20% of taxpayers, Cain's proposed income tax change would mean an increase of $418 a year, the analysis found.
Another analysis by Edward D. Kleinbard, a USC law professor, estimated that a family with wage income of $120,000 in 2010 would have paid about $541 less under Cain’s plan, while a family that earned $50,000 would have paid about $4,800 more.
“That’s an extraordinarily large tax increase as a percentage of income,” Kleinbard wrote.
Cain has argued that the tax on income would be offset by the tax break that wage-earners would receive from abolishing the payroll tax.
But Citizens for Tax Justice suggests that the 9% business tax would effectively become a new form of payroll tax. The business tax would apply only to a company’s revenue after investments, purchases and dividends paid to shareholders.
“As a result, it appears there would be nothing left of a business’s revenue to tax other than the revenue going towards wages,” the group wrote in a summary of its findings. “In other words, the 9% ‘business flat tax’ under Cain’s plan actually seems to be a payroll tax.”
According to the analysis, the business tax portion of Cain’s plan would mean a $7,663 break for the richest 1% of Americans. It would cost the poorest 60% about $1,376.
The 9% national sales tax would again cost poorer Americans more, the analysis said, because the poor tend to spend all their money while the rich save much of theirs.