Republican presidential contender Herman Cain’s tax plan would raise about the same amount of money as under our current system but significantly shift the burden from the wealthiest Americans to the poorest, according to a study released Tuesday by the Tax Policy centre.
The research centre found a whopping 84 per cent of American households would pay more in taxes, and those groups making under $30,000 annually would see a 16-20 per cent income drop after taxes. Those making over $200,00 a year, however, would enjoy a nice 5-20 per cent income surge.
Herman Cain’s now famous 9-9-9 plan calls to make a federal 9 per cent income tax, 9 per cent sales tax, and 9 per cent corporate tax across the board, while eliminating essentially everything else. He prides himself on the simplicity.
One of the reasons for the huge burden shift is Cain’s strategy eliminates capital gains, and slashes the wealthiest income tax bracket from 35 per cent to 9 per cent. Up to 95 per cent of those households making over $1 million annually would save an average of $500,000 a year.
At the same time, the system ends federal exemptions provided to the poorest Americans that are not made up for by the fact payroll taxes end, especially because most do not pay federal income taxes at all.
Cain has suggested he would consider a rebate for the poorest Americans, but so far has not made adjustments to his strategy. If he did decide to exempt those in the lowest income bracket, the 9-9-9 plan would no longer raise as much revenue has the government currently collects.
Supporters of the 9-9-9 plan believe giving a break to the wealthiest households will be a good thing for the economy, especially because they invest the most into the economy and the stock market. It could help flood the economy with investment.