With a Wall Street Journal/NBC News poll out today showing Herman Cain leading the Republican field and a Rasmussen Poll out today showing Mr. Cain tied with Governor Romney for the lead, Mr. Cain's 9-9-9 tax plan is getting more scrutiny. It would replace the payroll tax, the estate tax, the capital gains tax, and the current individual and business income taxes with a 9% corporate income tax, a 9% personal income tax, and a 9% national sales tax.
I got an email from a television news producer the other morning asking whether I'd come on for a segment to discuss the 9-9-9 plan. They were looking for one person for it and one person against. I emailed back: I like the plan because of the flatness of it, the way it treats everyone equally, and the way it fundamentally reforms the tax code by broadening the base and lowering the rate, which is the direction we should be heading in. I like that it's revenue-neutral rather than a tax increase disguised as tax reform. I like the sales tax because people will be able to see the cost of government when they buy things. I do share the concern of the plan's critics that once a national sales tax is instituted, it will just open the door to future increases."
Herman Cain's campaign Web site has a page with details about the plan. I find it a bit confusing. It claims "Zero capital gains tax" and "Eliminates double taxation of dividends" but it also says the 9% individual flat tax would be "Gross income less charitable deductions." Would capital gains or dividends received not count as gross income? In the section on individual income tax, it also says, "Empowerment Zones will offer additional deductions for those living and/or working in the zone." If you think there are a lot of homeowners under water right now, imagine what would happen once Herman Cain eliminates the home mortgage interest deduction while at the same time adds a 9% federal tax on home sales. On the other hand, maybe the way to fix the housing market is to allow the prices to sink to the point at which the market clears.
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