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Herman Cain has offered what he calls a simple tax plan to take the place of the current tax code, which he says is too complicated. Cain, a Republican candidate for president, touts a 9-9-9 plan: a 9 percent income tax, a 9 percent sales tax and a 9 percent business tax.
Cain’s plan has gotten more attention in recent days -- and more criticism.
At the debate for the Republican nomination in Las Vegas on Oct. 18, 2011, moderator Anderson Cooper of CNN summarized those concerns. "Mr. Cain, a lot of prominent conservatives now are coming forward saying that your 9-9-9 plan would actually raise taxes on middle-class voters, on lower-income voters," Cooper said.
"The thing that I would encourage people to do before they engage in this knee-jerk reaction is read our analysis. It is available at HerrmanCain.com," Cain said. "It was performed by Fiscal Associates. And all of the claims that are made against it, it is a jobs plan, it is revenue-neutral, it does not raise taxes on those that are making the least. All of those are simply not true."
Here, we wanted to check Cain’s answer to Cooper’s question, that the plan "does not raise taxes on those that are making the least."
We’ve been looking at Cain’s plan as part of our ongoing work fact-checking the Republican nomination contest. Based on what Cain and his campaign have said about the plan, the only exemptions on the income tax will be for charitable deductions and for undefined "empowerment" zones that would encourage development in inner cities. The 9 percent sales tax would apply to all new goods but not to used goods. Payroll taxes on workers would go away.
If you pay no income tax currently -- and about half the country doesn’t -- Cain’s plan means you would pay more income tax.
The day of the debate, a new analysis was published examining Cain’s tax plan. The analysis was published by the Tax Policy Center, an independent policy analysis group that includes tax analysts who have worked in both Democratic and Republican administrations.
The Tax Policy Center analyzed Cain’s plan using the same type of models it has used to examine other national tax proposals.
The analysis found that Cain’s tax plan would result in tax cuts for many of the wealthiest tax payers and tax increases for the poorest tax payers.
The center found that 83.8 percent of tax filers would get a tax increase under Cain’s plan, compared with current tax policy.
On the other hand, most of the tax filers who make more than $1 million would get a tax cut under the Cain plan, about 95.4 percent of this high income group. And the average tax cut for millionaires would be $487,300.
The center also offered analysis of Cain’s plan by income level compared with current tax policy. Most people earning lower incomes would see a tax increase.
|Cash income||Percentage of filers with a tax increase|
|Less than $10,000||84.1|
|$10,000 to $20,000||97.8|
|$20,000 to $30,000||97.3|
|$30,000 to $40,000||94.9|
|$40,000 to $50,000||92.1|
|$50,000 to $75,000||83.7|
We should note that the Tax Policy Center said it had to make a few assumptions about Cain’s plan in order to analyze the plan according to its standard economic model. So it’s possible Cain may release more details that could cause these estimates to change.
Cain said the 9-9-9 plan "does not raise taxes on those that are making the least." But it would raise income taxes on people who now have low tax burdens due to exemptions and deductions. The Tax Policy Center analysis adds more detail and found that high percentages of lower-income tax filers would see tax increases. It’s true that Cain’s campaign may release more details on his plan that could change this picture. But knowing what we know now about the plan, we rate Cain’s statement False.
CNN, Republican debate in Las Vegas, Oct. 18, 2011
PolitiFact, Herman Cain says someone earning $50,000 will save under his 9-9-9 tax plan, Oct. 13, 2011
PolitiFact, The facts about Herman Cain's 9-9-9 tax plan, Sept. 26, 2011
The Tax Policy Center, Herman Cain’s 9-9-9 Tax Plan, Oct. 18, 2011
The Tax Policy Center, Herman Cain's "9-9-9" Tax Reform Plan; Baseline: Current Policy; Fully Phased in Distribution of Federal Tax Change by Cash Income Level, Oct. 18, 2011
The Tax Policy Center, TaxVox: Cain’s 9-9-9 Plan Would Cut Taxes for the Rich, Raise Taxes for Almost Everyone Else, Oct. 18, 2011
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