9-9-9 Plan

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Table of Contents
1. Half of Taxpayers dont pay taxes right now, they would under Cains 999
plan3
2. The poor would be faced with a 27% tax on their income..3
3. 999 is a tax raise on low income earners..3
4. 999 is not fair.4
5. 999 plan raises tax on low and middle income earners4
6. The 999 plan is not family friendly5

7. 84% pay more taxes under Herman Cains 9-9-9 plan5
8. Poor pay 16-20% more tax under Cains 999 plan6
9. Cain plan has no exemptions for families, or poor6
10. Not as much revenue raised as in the current system.6
11. Most tax-payers would have their taxes increased by 950 percent.7
12. Disadvantage: Tax Accountants, tax Attorneys out of work..7
13. Quantification: 1.2 Million Tax preparers, 6 times more people than soldiers in
Iraq..7
Impact: At least 1.2 Million people will be unemployed.8
14. 999 plan unconstitutional.8
15. All three Taxes can grow..8
16. The 999 plan wont grow the economy8
17. Taxes in the 999 plan have a very dangerous history of growing.8
18. Highly credible expert, and one of the smartest MBAs in the world, Grover
Norquist, doesnt think 999 should be passed..9
19. The Corporate tax is like a VAT.9
20. Rich Lowery, the economist who created the 999 plan doesnt even understand
its implications..10
21. The 999 plan radically shifts the tax burden to the poor and middle
class10
22. A household that makes 50 thousand will pay 5,000 dollars more under
999..10
23. Tariffs would be eliminated (look at Davids brief for impacts to this)11
24. There is no empirical evidence that the economy will grow11
25. the Bush tax cuts had no effect on economic growth, how do we know the 999
plan will...11
26. The 9 percent sales tax is on everything, crippling the poor12
27. The poor will pay more, with no guarantee of economic growth, and the budget
deficit rising (this might be a good conclusion to a speech)12
28. Costumers would stop their buying habits lowering the sales tax
consumption..12
29. 999 would raise the deficit by 200 billion dollars13
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30. In 1913 the top rate for the income tax was 7% by 1980 the income tax was 70%,
how do we know the 999 plan wont rise dramatically too......................................13
31. Low Income earners would have their wages drop14
32. Either wages will fall, or we will have increased unemployment.14
33. Because of the state sales tax, people would pay more than just 9
percent.15
34. The Corporate tax in 999 is actually a Value-Added Tax15
35. 999 is actually a 9 percent income tax and an 18 percent consumption
tax.15
Half of Taxpayers dont pay taxes right now, they would under Cains 999 plan
Glenn Kessler, The Washington Post, October 13, 2011 Hermain Cains 999 plan: A
misleading Pitch
http://www.washingtonpost.com/blogs/fact-checker/post/herman-cains-misleading-pitchfor-the-999-plan/2011/10/12/gIQAHszPgL_blog.html?hpid=z2
Right now, nearly half of taxpayers dont pay income taxes, but they do pay their share
of payroll taxes, which amounts to 7.65 percent of wage income (though much of it is
capped at $107,000). Cain would also eliminate the earned-income tax credit, which is
intended to lift working Americans out of poverty. Many of these workers currently
receive tax refunds.
The poor would be faced with a 27% tax on their income
misleading Pitch
On top of that, Cain would introduce the new sales tax, which would affect lower and
moderate-income people who spend most of their income on purchases, not savings
and investments. Depending on how you do the math, people now paying zero or
negative taxes might be faced with a 27 percent tax on income.
999 is a tax raise on low income earners
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misleading Pitch
In other words, while on paper Cain is promising a tax cut, in reality tens of millions of
lower-income Americans would face tax increases. People in high tax brackets 28
percent and higher would likely see big tax cuts. (As part of his plan, Cain would also
eliminate estate taxes and capital gains taxes, which, again, mostly affect higher-income
people with stock and real estate investments.)
999 is not fair
misleading Pitch
In other words, while on paper Cain is promising a tax cut; in reality tens of millions of
lower-income Americans would face tax increases. People in high tax brackets 28
percent and higher would likely see big tax cuts. (As part of his plan, Cain would also
eliminate estate taxes and capital gains taxes, which, again, mostly affect higher-income
people with stock and real estate investments.)
999 plan raises tax on low and middle income earners
Professor Edward Klienbard [Edward D. Kleinbards expertise focuses on tax matters,
including the taxation of capital income, international tax issues, and the political
economy of taxation. He joined USC Law in 2009 as professor of law. Professor
Kleinbard previously served as chief of staff of the U.S. Congresss Joint Committee on
Taxation. Kleinbard graduated with a B.A. in Medieval and Renaissance Studies and an
M.A in History from Brown University. He received his J.D. from Yale Law School,
where he was an articles editor of the Yale Law Journal.] October 24, 2011 Herman
Cains 999 plan
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1941800##
The 9-9-9 Plan functions as an effective 27 percent payroll tax on wage income. By
imposing an effective 27 percent flat tax on wage income, the 9-9-9 Plan would
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materially raise the tax burden on many low- and middle-income taxpayers, who today
face little or no tax under the income tax, and a 15.3 percent effective payroll tax burden.
The Plan apparently offers lower tax rates (17.2 percent) for labor income attributable to
owner-employees of firms, because they can extract their labor earnings as returns to
capital.
The 999 plan is not family friendly

Cains 999 plan
By way of a quick example, a family of four that in 2010 had $120,000 in wage income,
and that claimed the standard deduction plus four exemptions and the child credit (and no
other deductions), would have paid roughly $14,900 in income tax and suffered $16,700
in payroll taxes (including the 2.9% Medicare tax and the employers half of the OADSI
tax).2 The sum of the two would have been about $31,600. By contrast, the 9-9-9 Plan
would have imposed federal taxes on that family having a present value of $32,400
some $800 more.3
Self-Employed individuals wont even have to pay tax (talk about unfair)
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Cains 999 plan
In summary, the labor (wage) income part of the 9-9-9 Plan claims to repeal the payroll
tax and roll back the personal income tax, but what the Plan really does is substitute for
current law's payroll taxes (12.4 percent OASDI payroll tax, capped at about $107,000 of
wage income, and the uncapped 2.9 percent Medicare payroll tax), a new 18.9 percent
uncapped payroll tax, plus a 9 percent sales tax on an employees after-tax income. The
combination of the three actually operates as the economic equivalent of a 27 percent
uncapped payroll tax.4 In the case of self-employed taxpayers, however, the plan seems
to countenance a discounted tax rate of 17.2 percent that is, self-employed individuals
can avoid the 9 percent employer tax (the business flat tax) by just paying themselves
no salary and taking their profits out as dividends.5
84% pay more taxes under Herman Cains 9-9-9 plan

CNN news, October 20, 2011 84% would Pay More under Cains 999 Plan
http://money.cnn.com/2011/10/18/news/economy/cain_999_plan/
Under Herman Cain's 9-9-9 tax reform plan, 84% of U.S. households would pay more
than they do under current tax policies, according to a report released Tuesday by a
nonpartisan research group.
Poor pay 16-20% more tax under Cains 999 plan
According to the Tax Policy Center, households with incomes below $30,000 would
have, on average, between 16% and 20% less in after-tax income than they do today.
Cain plan has no exemptions for families, or poor
Under the current system, most of the lowest income households end up owing no federal
income tax. That's because their incomes are so low that they're exempt, or because their
tax liability is canceled out by the standard deduction and tax breaks, such as the Earned
Income Tax Credit. The Cain plan doesn't exempt very low incomes from taxation. And
while it would eliminate the payroll tax, which is the heaviest tax for low-income
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families, that tax relief would be offset for many by the elimination of the EITC and other
tax breaks they qualify for now.
Not as much revenue raised as in the current system
Cain has said his plan would raise the same amount of revenue as the current system. The
Tax Policy Center generally concurs with that assertion. In 2013, the group estimates that
Cain's plan could raise about $2.55 trillion. That represents 15.4% of expected GDP, well
below the historical average for tax receipts.
Most tax-payers would have their taxes increased by 950 percent

Huffington Post, October 18, 2011 Hermain Cains proposal would Raise taxes on 84%
study shows
http://www.huffingtonpost.com/2011/10/18/999-plan-herman-cain_n_1018462.html
The Tax Policy Center, a Washington think tank, says low- and middle-income families
would be hit hardest, with households making between $10,000 and $20,000 seeing their
taxes increase by nearly 950 percent.
Disadvantage: Tax Accountants, tax Attorneys out of work
Arthur Laffer [An economist and former member of Reagan's Economic Policy Advisory
Board (19811989).] October 19, 2011 Cains Stimulating 9-9-9 Reform
http://online.wsj.com/article/SB10001424052970204346104576637310315367804.html?
mod=rss_opinion_main
By making the tax codes a lot simpler, we'd allow individuals and businesses to spend a
lot less on maintaining tax records; filing taxes; hiring lawyers, accountants and taxdeferral experts; and lobbying Congress. As I wrote on this page earlier this year ("The
30-Cent Tax Premium," April 18), for every dollar of business and personal income taxes
paid, some 30 cents in out-of-pocket expenses also were paid to comply with the tax
code.
Quantification: 1.2 Million Tax preparers, 6 times more people than soldiers in Iraq
Chris Edwards, of [Chris Edwards is director of fiscal policy studies at the Cato
Institute] Explained on April 15, 2003 10 Outrageous Facts about income tax
http://www.cato.org/pub_display.php?pub_id=3063
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Income taxes are so complex that there are up to 1.2 million paid tax preparers in
the country -- six times more than the number of troops in Iraq. The tax army includes
legions of accountants, lawyers, and computer experts -- some of the best minds in the
country. Unfortunately, their brainpower is adding little to the nation's standard of living.
Impact: At least 1.2 Million people will be unemployed
999 plan unconstitutional
Ian Millhiser[Policy Analyst at the Center for American Progress Action Fund He
received a B.A. in Philosophy from Kenyon College and a J.D., magna cum laude, from
Duke University. Ian clerked for Judge Eric L. Clay of the United States Court of Appeals
for the Sixth Circuit, and has worked as an attorney with the National Senior Citizens
Law Centers Federal Rights Project, as Assistant Director for Communications with the
American Constitution Society, and as a Teach For America teacher in the Mississippi
Delta.] October 12, 2011 Herman Cain Backs Unconstitutional Plan to Effectively Lock
His 999 Plan in Place Permanently[Brackets Added for Clarification]
The Constitution forbids lawmakers from tying the hands of their successors. Lawmakers
have broad discretion to enact the laws they think are best for the country, but the voters
almost always retain the power to vote them out of office and have their newly elected
leaders implement different policies. As the Supreme Court held more than a century ago,
newly elected legislators have the same power of repeal and modification which [past
legislators] had of enactment.
All three Taxes can grow
Grover Norquist [Has a degree in Master of Business Administration and a Bachelor of
Arts from Harvard and is president of the taxpayer advocacy group, Americans for Tax
Reform.] October 18, 2011 Grover Norquist: Herman Cains 999 plan is very
dangerous http://www.huffingtonpost.com/2011/10/18/grover-norquist-herman-cain999_n_1017338.html
"I'm very concerned about three different taxes -- every one of them can grow," said
Norquist. "To put tapeworms in your tummy to try and maintain your weight -- they may
have their own idea about their growth patterns and what they want to do. Creating new
taxes is a very dangerous project," he added.
The 999 plan wont grow the economy
Norquist also said the "999" plan would not grow the economy, as Cain claims. "It
doesn't create new possibilities for growth," he said.
Taxes in the 999 plan have a very dangerous history of growing

"Look, I applaud Herman Cain's statement that the present system is too high, it's too
redistributionist, it moves money from one side to another. Let's take rates radically
down, let's end this double- and triple-taxation of savings. But the way he does it creates
these new taxes like a VAT [value-added tax] and a retail sales tax that have a dangerous
history of growing."
Highly credible expert, and one of the smartest MBAs in the world, Grover
Norquist, doesnt think 999 should be passed
Grover Norquist [Has a degree in Master of Business Administration and a Bachler of
"If this bill was before Congress, I would say, vote 'no,'" said Norquist about the "999"
plan to "The Daily Caller," but added that he did not think the plan had a chance of
becoming law anyway.
The Corporate tax is like a VAT
Grover Norquist [Has a degree in Master of Business Administration and a Bachler of
"Look, I applaud Herman Cain's statement that the present system is too high, it's too
redistributionist, it moves money from one side to another. Let's take rates radically
down, let's end this double- and triple-taxation of savings. But the way he does it creates
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these new taxes like a VAT [value-added tax] and a retail sales tax that have a dangerous
history of growing."
Rich Lowery, the economist who created the 999 plan doesnt even understand its
implications
Jared Bernstein [is an American economist who previously served as Chief Economist
and Economic Policy Adviser to Vice President Joseph Biden in the Obama
Administration. In early 2009 Bernstein was named Executive Director of the newly
formed White House Middle Class Working Families Task Force. He was also a member
of the Presidential Task Force on the Auto Industry.] October 14, 2011 999 plan A
distributional nightmare http://www.csmonitor.com/Business/On-theEconomy/2011/1014/999-Plan-A-distributional-nightmare
A key point here is that the plan, which Bruce Barlett calls a distributional nightmare,
radically shifts the tax burden from high-income households to everyone else. I focused
on the median household, and Lowrie either doesnt understand the implications of the
plan or hes deliberately misrepresenting it.
The 999 plan radically shifts the tax burden to the poor and middle class
A key point here is that the plan, which Bruce Barlett calls a distributional nightmare,
radically shifts the tax burden from high-income households to everyone else. I focused
on the median household, and Lowrie either doesnt understand the implications of the
plan or hes deliberately misrepresenting it.
A household that makes 50 thousand will pay 5,000 dollars more under 999
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For a $50K household, married couple, two kids, all income from earnings and standard
deductions, the current tax burden is $8.3K. Under 9-9-9, that would grow to $13.5K, an
increase of over $5,000
Tariffs would be eliminated (look at Davids brief for impacts to this)
Bruce Bartlett [He was a domestic policy adviser to President Ronald Reagan and was
treasury official under President George H.W. Bush. was educated at Rutgers
University received a Bachelors of Arts in 1973 and Georgetown University Master of
arts in 1976. He originally studied American diplomatic history under Lloyd Gardner at
Rutgers and Jules Davids at Georgetown.] October 11, 2011 Inside the Cain tax plan
http://economix.blogs.nytimes.com/2011/10/11/inside-the-cain-tax-plan/
Second, Mr. Cain would eliminate all taxes on profits earned by multinational
corporations outside the United States.
There is no empirical evidence that the economy will grow

Mr. Cain says these three proposals, which he would put into effect immediately without
offsetting the lost revenue, will jump-start economic growth. He offers no evidence for
this assertion; it is simply put forward as self-evident. But the experience of the George
W. Bush administration was that cuts in tax rates on the wealthy and on capital gains had
no effect whatsoever on growth, according to the Congressional Research Service.
The Bush tax cuts had no effect on economic growth, how do we know the 999 plan
will?
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Mr. Cain says these three proposals, which he would put into effect immediately without
offsetting the lost revenue, will jump-start economic growth. He offers no evidence for
this assertion; it is simply put forward as self-evident. But the experience of the George
W. Bush administration was that cuts in tax rates on the wealthy and on capital gains had
no effect whatsoever on growth, according to the Congressional Research Service.
The 9 percent sales tax is on everything, crippling the poor
Additionally, everyone would now pay a 9 percent sales tax on all purchases. No mention
is made of any exemptions from this tax, so we may assume that it will apply to food,
medical care, rent, home and auto purchases and a wide variety of other expenditures
now exempt from state sales taxes. This would increase their cost of living by 9 percent
while, at the same time, the poor would pay income taxes.
The poor will pay more, with no guarantee of economic growth, and the budget
deficit rising (this might be a good conclusion to a speech)
The poor would pay more while the rich would have their taxes cut, with no guarantee
that economic growth will increase and good reason to believe that the budget deficit will
increase.
Costumers would stop their buying habits lowering the sales tax consumption
Bloomberg Government, October 5, 2011, Cains 9-9-9 Arithmetic Raises Revenue
generation Questions http://www.bloomberg.com/news/2011-10-05/cain-s-9-9-9-mathraises-questions-on-generating-enough-revenue.html
Cains proposal is worded in a way that suggests nothing -- food, housing or clothing -would be exempt from the national sales tax. It is unlikely that Congress would endorse
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such a broad-based consumption tax, and even if it did, consumers might change their
buying habits. That could reduce consumption and would then lower revenue from the
national sales tax.
999 would raise the deficit by 200 billion dollars
Bloomberg Government, October 5, 2011, Cains 9-9-9 Arithmetic Raises Revenue
generation Questions http://www.bloomberg.com/news/2011-10-05/cain-s-9-9-9-mathraises-questions-on-generating-enough-revenue.html
Following the broad contours of Cains plan, the U.S. would have collected almost $2
trillion in 2010, according to a Bloomberg News calculation based on data from the
Commerce Departments Bureau of Economic Analysis. The U.S. actually collected
almost $2.2 trillion that year, according to the White House Office of Management and
Budget.
In 1913 the top rate for the income tax was 7% by 1980 the income tax was 70%,
how do we know the 999 plan wont rise dramatically too?
Politifact, St. Petersburg Times, October 18, 2011 Michelle Bachman says income tax
rate rose from 7% to 70% http://www.politifact.com/truth-ometer/statements/2011/oct/18/michele-bachmann/michele-bachmann-says-top-incometax-rate-rose-7-p/
During the Oct. 18, 2011, Republican presidential debate in Las Vegas, Rep. Michele
Bachmann, R-Minn., said, "When we got the income tax in 1913, the top rate was 7
percent. By 1980, the top rate was 70 percent." Is she correct? We turned to the website
of the Tax Foundation, which has a document that lists every tax bracket since the
imposition of the federal income tax in 1913. It turns out Bachmann is right. In 1913,
the federal tax code levied income taxes ranging from 1 percent to 7 percent, with the top
rate of 7 percent levied on incomes of $500,000 and above (or the current equivalent of
$11,332,304). At that time, there were no distinctions in filing status, such as individuals
or married filing jointly. By 1980 -- just before Ronald Reagan ascended to the
presidency -- the top rate was 70 percent for all filing categories.
Low Income earners would have their wages drop
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Bloomberg Government, Ramesh Ponnuru [a senior editor for National Review, where he
has covered national politics for 15 years. Ponnuru is the author of a book about the
sanctity of life in American politics and a monograph about Japanese industrial policy. He
has published articles in The New York Times, The Washington Post, The Wall Street
Journal and Financial Times. He has been a fellow at the Institute of Economic Affairs in
London and a media fellow at Stanford Universitys Hoover Institution. He received a
history degree from Princeton University.] October 17, 2011 Ponnuru: Bad Math Hurts
Cains Good Tax Intentions http://www.bloomberg.com/news/2011-10-18/bad-mathhurts-herman-cain-s-good-tax-intentions-ramesh-ponnuru.html
Todays corporate income tax allows companies to deduct wages. The VAT doesnt: It is
designed to be, at least partly, a tax on wages -- just one that is collected from companies
rather than earners. A portion of the VAT would also be passed on to consumers in the
form of higher prices. So in addition to paying new taxes on their purchases and losing
the personal exemption and earned-income tax credit, people at the low end of the
income scale would see their wages drop.
Either wages will fall, or we will have increased unemployment

Bloomberg Government, Ramesh Ponnuru [a senior editor for National Review, where he
has covered national politics for 15 years. Ponnuru is the author of a book about the
sanctity of life in American politics and a monograph about Japanese industrial policy. He
has published articles in The New York Times, The Washington Post, The Wall Street
Journal and Financial Times. He has been a fellow at the Institute of Economic Affairs in
London and a media fellow at Stanford Universitys Hoover Institution. He received a
history degree from Princeton University.] October 17, 2011 Ponnuru: Bad Math Hurts
Cains Good Tax Intentions http://www.bloomberg.com/news/2011-10-18/bad-mathhurts-herman-cain-s-good-tax-intentions-ramesh-ponnuru.html
If taxes are embedded in the prices of goods, they are embedded in the price of labor, too.
That means wages would have to fall. And if wages dont fall, firms will fire people to
avoid paying wages above the new market level.
Because of the state sales tax, people would pay more than just 9 percent
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Fox News, October 14, 2011 Cains 999 plan would Double sales tax for residents of
some states, study finds http://www.foxnews.com/politics/2011/10/14/cains-nationalsales-tax-would-total-twice-as-much-as-in-some-states-study/
But under such a plan, sales taxes wouldn't necessarily be as low as 9 percent. People in
most states would pay more, when state and local sales taxes are included, and in some
cases, customers could even end up paying twice as much in sales tax, according to a new
analysis by the Tax Foundation.
The Corporate tax in 999 is actually a Value-Added Tax
Alan Viard [a senior economist at the Federal Reserve Bank of Dallas and an assistant
professor of economics at Ohio State University prior to joining AEI. He has also worked
for the Treasury Department's Office of Tax Analysis, the White House's Council of
Economic Advisers, and the Joint Committee on Taxation of the U.S. Congress.] October
13, 2011 Cains 999 tax plan: The good, the bad, and the ugly
http://blog.american.com/2011/10/cains-9-9-9-tax-plan-the-good-the-bad-and-the-ugly/
The misunderstanding concerns the third component. Most media reports, taking the lead
from Cains own terminology, continue to describe it as a business or corporate tax or
even as a tax on corporate profits. Yet, the tax is actually a value added tax (VAT), a fact
confirmed by the economic analysis circulated by Cains campaign.
999 is actually a 9 percent income tax and an 18 percent consumption tax

Alan Viard [a senior economist at the Federal Reserve Bank of Dallas and an assistant
professor of economics at Ohio State University prior to joining AEI. He has also worked
for the Treasury Department's Office of Tax Analysis, the White House's Council of
Economic Advisers, and the Joint Committee on Taxation of the U.S. Congress.] October
13, 2011 Cains 999 tax plan: The good, the bad, and the ugly
http://blog.american.com/2011/10/cains-9-9-9-tax-plan-the-good-the-bad-and-the-ugly/
A VAT and a retail sales tax are conceptually equivalent consumption taxes, apart from
administrative and compliance issues. The plan is therefore better described as featuring a
9 percent income tax and an 18 percent consumption tax, with half of the latter collected
using the VAT methodology and the other half collected using the retail sales tax
methodology.
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1

6. The 999 plan is not family friendly5

999 is not fair

The 999 plan is not family friendly

84% pay more taxes under Herman Cains 9-9-9 plan

Most tax-payers would have their taxes increased by 950 percent

Taxes in the 999 plan have a very dangerous history of growing

There is no empirical evidence that the economy will grow

Either wages will fall, or we will have increased unemployment

999 is actually a 9 percent income tax and an 18 percent consumption tax

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