Is Herman Cain's 9-9-9 Tax Plan the answer for our economy?

Republican Presidential candidate Herman Cain has recently unveiled his 9-9-9 Tax Plan which calls for a 9% flat corporate tax, a 9% flat income tax, and a 9% flat federal sales tax. Cain's campaign website states the following about the plan:

Phase One

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.

9% Business Flat Tax

Gross income less all purchases from other U.S. located businesses, all capital investment, and net exports.

Empowerment Zones will offer deductions for the payroll of those employed in the zone

9% Individual Flat Tax.

Gross income less charitable deductions.

Empowerment Zones will offer additional deductions for those living and/or working in the zone.

9% National 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.

Economic Impact

According to former Reagan Treasury official Gary Robbins, of Fiscal Associates, the 9-9-9 Plan will expand GDP by $2 trillion, create 6 million new jobs, increase business investment by one third, and increase wages by 10%.

9-9-9 Plan: Summary

• Removes all payroll taxes and unites all tax payers
• Provides the least incentive to evade taxes and the fewest opportunities to do so
• Lifts a $430 billion dead-weight burden on the economy due to compliance, enforcement, collection, etc…
• Is fair, simple, efficient, neutral, and transparent
• Ends nearly all deductions and special interest favors
• Features zero tax on capital gains and repatriated profits
• Exports leave our shores without the Business Tax or the Sales Tax embedded in their cost, making them world class competitive. Imports are subject to the same taxation as domestically produced goods, leveling the playing field.
• Lowest marginal rates on production
• Kills the Death Tax
• Allows immediate expensing of business investments
• Eliminates double taxation of dividends
• Increases capital formation which aids capital availability for small businesses
• Increased capital per worker drives productivity and wage growth
• Features a platform to launch properly structured Empowerment Zones to renew our inner cities
• The pro-growth, pro-job, pro-export economic policies of the 9-9-9 PLAN equals a strong dollar policy

Phase 2 – The Fair Tax

Amidst a backdrop of the economic renewal created by the 9-9-9 Plan, I will begin the process of educating the American people on the benefits of continuing the next step to the Fair Tax.

Ultimately replaces individual and corporate income taxes

Ends the IRS as we know it and repeals the 16th Amendment

"Cain has long rejected such criticisms, saying his plan includes 'opportunity zones,' which he formally discussed for the first time on Friday.

Under Cain’s plan, the federal government would designate for exemption from the 9-9-9 plan special areas with high unemployment and poverty. In these areas, businesses could deduct their entire payroll from their income subject that would normally be subject to the business tax. People who live or work in these zones would also get tax benefits, although Cain did not detail them.

And to address the criticism he is raising taxes on the poor, Cain would exempt people all over the country who are at or below the federal poverty line (about $22,000 for a family of four) from the tax on income.

And while Cain said the opportunity zones would create jobs in cities across the country and help the poor, his proposals were so vague it would be difficult to measure their actual impact. Cain did not define the exact criteria under which these zones would be designated, how many would be created, how large they would be and how much taxes would be reduced in them for individuals who live or work inside them"

2012 Presidential Elections