Herman Cain has made the 9-9-9 tax the center plank of his platform. While many/most conservatives have been arguing for a flat tax, the Republican Party Establishment and others such as Michelle Bachman now seem to criticize it and embrace the current tax structure.
To reiterate, Cain’s 9-9-9 tax provides the following:
- Ends nearly all deductions and special interest favors
- Ends payroll taxes
- Ends the Death Tax
- Features zero tax on capital gains and repatriated profits
- Lowest marginal rates on production
- Allows immediate expensing of business investments
- Eliminates double taxation of dividends
- Maintains charitable deductions
Major criticisms include:
- Adds new taxes that can be increased
- Unfairly taxes the poor
- Comes up 10% short on the current tax needs
Let’s take these one-by-one:
- Adds new taxes that can be increased – All taxes can be increased, and if the legislative power is in place to increase these, it can also increase just the current Federal tax.
- Unfairly taxes the poor – Not true! Currently a working individual pays 15.6% in payroll taxes PLUS a possible 10% rate on their AGI which are eliminated and replaced by the 9% individual flat tax.
- Comes up 10% short on the current tax needs – perhaps. BUT the stimulus effect of this tax model should more than make up for the difference.
Additional benefits are the taxing of the shadow economy and cash/unreported income via the 9% National Sales Tax.