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Insights: The Cain Tax Plan: 9-9-9 = ?-?-?
[private]Republican presidential contender Herman Cain has jumped to frontrunner status recently. As a result, his 9-9-9 tax plan, the centerpiece of his campaign, has come under the microscope. The 9-9-9 plan is the second step in a three part reform to the tax system.
- Step 1: Reduce individual and business taxes to a maximum of 25%.
- Step 2: Establish a 9-9-9 tax plan, in which individuals pay a 9% flat tax, firms pay a 9% flat tax, and a 9% national sales tax is implemented. Virtually all spending would fall under the sales tax. The individual tax base would include very few exemptions, such as for charitable contributions. Mortgage interest paid, local sales taxes, and employer health care would no longer be exempt. Capital gain income taxes would be abolished. The business tax base would also be broad, with perhaps only investment spending deductible from corporate income. Overseas corporate income taxes would be eliminated.
- Step 3: Establish a Fair Tax of 30% sales tax on all goods and services, which would replace the existing tax system.