What would Herman Cain’s ‘9-9-9' tax plan really do?

Presidential candidate Herman Cain has made a splash with his “9-9-9" tax plan, which drew the focus of much of this week’s Republican debate on the strength of its catchy simplicity.

The plan — were it to surmount dead-on-arrival predictions — would amount to a dramatic benefit to wealthy Americans and a greater burden on the poor and middle class, according to one analysis.

But it is proving a hit with voters who say they’re fed up with loopholes and tax breaks for corporations, and with many tea party activists who want government out of their affairs. The allure of Cain’s plan is similar to that of previous proposals like the flat tax, which appeals to people like John Nolte.

“The tax system, as it is, is so byzantine, so intentionally complicated,” said Nolte, a conservative blogger in North Carolina. “Americans understand that the simplest solutions are usually the best solutions.”


Cain’s plan would scrap the current tax system and levy a flat 9% tax on businesses, income and sales. It would eliminate the capital gains tax and the inheritance tax and require some lower-income people who pay minimal — if any — income taxes to fork over 9%, the same rate that would be paid by the richest Americans, whose incomes are currently taxed at 35%.

“9-9-9 is bold, and the American people want a bold solution, not just what’s going to kick the can down … the road,” Cain said during the debate.

Though they also advocate tax reform — a popular topic this campaign season — many GOP presidential hopefuls ridicule Cain’s plan as another way to levy more taxes on Americans.

During Tuesday’s GOP debate, Rep. Michele Bachmann of Minnesota warned that a flat sales tax could give Congress another way to take money from taxpayers. Former Sen. Rick Santorum of Pennsylvania accused Cain of “giving Washington a huge new tax burden.”


“We need something that’s doable, doable, doable,” said former Utah Gov. Jon Huntsman Jr., who has put forward a proposal to lower the income tax rate on the top bracket of earners to 25% from 35% and phase out corporate subsidies. “And what I have put forward is a tax program that is doable.”

Other candidates have tried to simplify the tax code before, most notably businessman Steve Forbes in two presidential campaigns in 1996 and 2000. His solution — a flat tax on income — ultimately fizzled. No one has been able to achieve extensive tax reform on the national level since President Reagan in 1986.

But some analysts say that current discontent with the economy is making Cain’s plan more popular among voters — even if isn’t likely to pass.

“The difference between now and 1996 is that we are in horrible economic shape,” said K.B. Forbes, a GOP strategist who worked on the Steve Forbes campaign. “Bush at the tail end of his presidency and Obama bailed out Wall Street, and the American people feel that they have gotten the short end of the stick.”


Nearly three-fourths of people surveyed in a recent Wall Street Journal/NBC News poll said that the country was headed in the wrong direction, up from about 50% in 2009. In the same poll, 27% of likely Republican voters picked Cain as their top candidate, up from 5% six weeks ago.

“There’s more interest in going to a lower, flatter, simpler tax code now than in recent history,” said Grover Norquist, president of Americans for Tax Reform, who is nonetheless concerned about Cain’s plan because he thinks it could make it easier for the government to raise taxes.

There’s an economic argument for simplicity too, said Alan Auerbach, director of the Robert D. Burch Center for Tax Policy and Public Finance at UC Berkeley. Scrapping the current tax system would make it easier for taxpayers to comply with the Internal Revenue Service, and harder for them to avoid paying taxes.

By lowering the tax burden on the wealthy, the plan would encourage more investment and spending, and ultimately boost the economy in the long term, Auerbach said.


Still, Americans might ultimately find that simplicity is misleading, said Edward Kleinbard, a professor of law at USC, who calls the plan “a terrific example of fiscal hocus pocus.”

Cain’s plan would shift the tax burden from the wealthy to the poor and middle class, according to Kleinbard’s analysis. A family of four making $120,000, for example, would pay $800 more in taxes under the plan. Lower-income taxpayers would be even worse off.

“Everyone with income below $120,000 will pay a lot more under the Cain system,” Kleinbard said.

Kleinbard, who served as the chief of staff of Congress’ Joint Committee on Taxation, said he understood the appeal of simplicity. But Congress has historically used the tax code to give subsidies to struggling industries, and to try to mete out fairness in the economy.


“We could make things simpler, except that when people look at what that means, they don’t actually want it,” he said. “They like the idea of simplicity; they don’t like losing their tax subsidies.”