COMMENTARY | If you thought presidential hopeful Herman Cain's tax plan was a simple flat tax system that would impose a 9 percent corporate tax on businesses, a 9 percent tax on personal income, and a 9 percent consumption tax on purchased goods, think again.
Offered initially as a broad plan with few specifics, the "9-9-9 Tax Plan" has come under fire in recent weeks by partisan and nonpartisan actors alike as a wealth enhancer for the rich, a massive tax cut engine for businesses, and crushing tax burden to be assumed by the poor. To allay critics and detractors, Cain has offered more details in the past few days, with some of the taxes in the corporate and personal income categories edging more toward zero with each detail -- and some actually getting there.
Of course, that does not mean everyone would pay nothing in income taxes. Anyone making above $22,314 (2010 poverty level) would still pay 9 percent on their income. (It is as yet not clear if Cain intends to make the poverty level indicator a standard deduction for all, but in the interest of fairness, it most likely would be considered.) With 46.2 million people living in poverty in the United States, rough mathematics would put the number of households not paying income taxes under the Cain 9-9-9 tax plan at just over 11.5 million (although when adjusted for single-parent households, individuals filing separate tax returns, etc., the actual number would most likely be somewhat higher).
And the poor, along with everyone making a purchase in the U. S., would still have to pay the 9 percent national consumer tax...
But the poor and those living poverty (which Cain equates as the same thing, apparently, even though the working class poor demographic creeps further up into the income wage scale than what the "official" poverty level reflects) have joined corporations and businesses with regard to getting a break under his 9-9-9 taxation plan. Although he has broached the idea before, in Detroit Cain reiterated that corporations would be eligible for certain deductions in their 9 percent tax. In other words, businesses that reinvest and make purchases for expansion could deduct expenditures from their taxes. In addition, Cain unveiled an "opportunity zone" deduction for businesses moving into high unemployment areas, where deductions could be made on such thing as payroll.
In short the first two nines of the "9-9-9 Tax Plan" triad could potentially become the "0-0-9 Tax Plan" for the eligible. Although, relatively speaking, most would still pay at least some percentage. Again, under the Cain plan, everybody and every entity that engaged in purchasing something would pay a national consumption tax.
But the more exemptions and deductions placed within the workings of the tax plan, the less flat it becomes.
Given that millions of businesses would pay less or no taxes and millions of individuals would pay no income taxes (it should also be noted that Cain's plan eliminates payroll taxes), and given that CNN found that Cain's tax plan would collect nearly $400 billion less in taxes than the current tax system (before subtracting for the business deductions and the poverty level exemptions), some might think that the "9-9-9 Tax Plan," in addition to raising taxes across the board on 84 percent of Americans and making the rich richer, would also seriously restrict revenue going into the federal treasury. And given the conservative mantra of less government, what better way to have a smaller government than one that is forced to cut back, defund, and eliminate vast portions of itself?
And just how would that impact those in poverty, the working class poor, and small businesses?
"Some of my opponents in this race have said 'Why do you want to give government another mechanism to tax us?' My response is: I want to take away the 10 million other ways they have now," Cain told his Detroit audience. "I'm not worried about one, I'm worried about the 10 million in the current tax code."
Before Congress gets around to revamping the tax code in favor of a "very, very regressive" system (as the nonpartisan Tax Policy Center labeled it) that disproportionately benefits the wealthy and corporate businesses, legislators might want to worry about all the people they represent and take into consideration that simpler sometimes is not always better, and sometimes less -- whether in word count or revenue intake -- does not mean more efficient.
- poverty level