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The 9–9–9 Plan, a centerpiece of Herman Cain's 2012 campaign for the Republican Party's nomination for president of the United States, was introduced in August 2011. The 9–9–9 Plan would replace all current taxes (including the payroll tax, capital gains tax, and the estate tax) with 9% business transaction tax, 9% personal income tax, and a 9% federal sales tax.
Contents
History
In July 2011, an advisor suggested that his campaign's tax policy plan be called "the Optimal Tax", but Cain rejected the name, saying "[w]e're just going to call it what it is: 9–9–9 Plan." The plan would replace the current tax code with a 9-percent business transactions tax, a 9-percent personal income tax, and a 9-percent federal sales tax. During a debate on October 12, Cain said his plan "expands the base," arguing that "[w]hen you expand the base, we can arrive at the lowest possible rate, which is 9–9–9."
Summary
Cain stated the following summary about the 9–9–9 Plan:
Our current economic crisis calls for bold action to truly stimulate the economy and Renew America back to its greatness. The 9–9–9 Plan gets Washington D.C. out of the business of picking winners and losers, using the tax code to dole out favors, and dividing the country with class warfare. It is fair, simple, transparent and efficient. It taxes everything once and nothing twice. It taxes the broadest possible base at the lowest possible rates. It is neutral with respect to savings and consumption, capital and labor, imports and exports and whether companies pay dividends or retain earnings.
According to Cain, corporations would be able to deduct costs of goods sold (provided the inputs were made in America) and capital expenditures, but not wages, salaries and benefits to employees. Deductions, except charitable giving, would be eliminated. The federal sales tax would not apply to used goods. Cain also said that the 9–9–9 Plan would lift a $430 billion dead-weight burden on the economy.
Reception
According to the analysis of Howard Gleckman the Tax Policy Center,
When you get right down to it, Cain’s [9–9–9] plan is a 25 percent flat-rate consumption tax — not all that different from the FAIR tax that he says is his ultimate goal. This tax would be paid three times: first on wage income, again at the cash register as a sales tax, and yet again by businesses on their sales minus their cost of goods and services. For tax junkies, the first is a flat tax. The second is a retail sales tax and the third a business transfer tax. But they are all consumption taxes.
Although Cain has spoken about having designated 'empowerment zones' wherein a lower percentage, such as 3%, is paid instead, apart from this consideration, some have called Cain's plan more regressive than current policy, thinking it would raise taxes for most households, but cut them for those with the highest income.
An analysis released to Bloomberg News by the campaign claimed that the rate for each of the three taxes could in fact be as low as 7.3%, but "poverty grants" — which Cain has described as a lower rate in targeted "empowerment zones" — necessitated a national rate of 9%. Paul Krugman has criticized the plan, saying it shifts much of the current tax burden from the rich to the poor. Arthur Laffer, Lawrence Kudlow, the Club for Growth, and Congressman Paul Ryan have spoken favorably of "9–9–9". On October 21, Cain told a crowd in Detroit that the plan would be 9–0–9 for the poor, saying that "if you are at or below the poverty level ... then you don't pay that middle 9 on your income." Cain's 9–9–9 plan attracted skepticism from his fellow candidates at numerous Republican debates.
In an October 18, 2011 debate several of the other contenders for the GOP nomination attacked the plan, with candidate Rick Santorum referencing the Tax Policy Center's claim that 84% of Americans would pay more and that the plan would entail "major increases in taxes on people," a charge Cain has denied.
Some economists support the 9–9–9 Plan. The former Reagan Treasury official Gary Robbins stated that the 9–9–9 Plan will expand the GDP by $2 trillion, create 6 million new jobs, increase business investment by 33%, and increase wages by 10%. Also, Art Laffer, a supply-side economist, told Human Events that "Herman Cain's 9–9–9 plan would be a vast improvement over the current tax system and boom the U.S. economy".
Conversely, other economists feel that the 9–9–9 plan would not stimulate demand. Bruce Bartlett of the Reagan and George H.W. Bush administrations has written that Cain's plan "would increase the budget deficit without doing anything to stimulate demand".
The Economist criticized the 9–9–9 Plan stating that the Cain plan is not a reduction in the current corporate tax, but instead a new value added tax (VAT). The article also stated that Cain's final tax would be a 30% VAT, as compared to the 15% European Union value added tax. The Cain plan would change the 35% corporate tax to a 9% transaction tax, which would be flat except for payroll deductions for employees in empowerment zones.
Cain said the following about the 9% sales tax:
Unlike a state sales tax, which is an add-on tax that increases the price of goods and services, this is a replacement tax. It replaces taxes that are already embedded in selling prices. By replacing higher marginal rates in the production process with lower marginal rates, marginal production costs actually decline, which will lead to prices being the same or lower, not higher.
9–9–9 the Movie – Slaying the Tax Monster
During the campaign, Cain released a six-minute movie that explained his 9–9–9 Plan. The Daily Caller stated that the film "depicts the IRS as a giant robot a la Wild Wild West and invites supporters to help 'slay the tax monster.'"
CBS News reported that "in '9–9–9 the Movie – Slaying the Tax Monster,' the Cain campaign continues to hammer home the idea that a simple plan is the best one. The 9–9–9 Plan is simple enough to vanquish the ineffective bureaucrats that lurk in the dark crannies of complexity; transparent enough to deter cronyism, and fair enough—fair being the dictionary definition, not the president's class warfare definition—to level the playing field and keep the government from picking winners and losers, the video's narrator says."
Cain's Solutions Revolution
On January 4, 2012, Cain announced the "Cain's Solutions Revolution." Cain's stated goal was to get commitments from members of Congress to support the 9–9–9 Plan before the 2012 elections. Cain stated that he started a new movement because the "biggest comment I got when I ended my candidacy was to keep 9–9–9 alive. That's what this is about, and I’m going to keep it alive with what I'm calling Cain's Solutions Revolution." In order to promote this movement, Cain is using both a bus tour and a new website. New York Magazine stated that "it's Cain's earnest effort to keep 9–9–9 alive and focus on solutions." On January 20, 2012, Cain spoke at Stephen Colbert's "Rock Me Like a Herman Cain: South Cain-Olina Primary Rally". The Huffington Post reported that the crowd size was between 3,000–5,000 people. It has been called "the largest campaign rally so far during this GOP presidential primary season", and "the biggest political rally of the primary season."
Supporters
9–9–9 Fund
The 9–9–9 Fund is a Political Action Committee set up by supporters of Herman Cain. The PAC spent more than $468,000 in November supporting Cain’s presidential campaign. In December 2011, the 9–9–9 Fund director, Jordan Gehrke, stated that the 9–9–9 Fund had decided not to endorse a candidate for president. The Christian Post reported that the 9–9–9 Fund may decide to follow Cain in his upcoming ventures.
Revolution on the Hill
On April 16, 2012, Cain held his Revolution on the Hill event in Washington D.C. in support of his 9–9–9 tax plan.