Presidential candidate Herman Cain recently proposed his 9-9-9 tax reform plan which enforces a 9% sales tax, 9% income tax, and a 9% business tax. This plan is intended to give a fair flat tax and eliminate class discrimination by a varied tax rate, but studies have shown that the flat tax could actually cause more problems than it would solve.
According to the Los Angeles Times the richest 1% in the United States currently pay about 35% in taxes. With the 9-9-9 plan this would equate to a $200,000 tax break for this 1% while on the other end of the spectrum, 60% of the poorest would see, on average, an increase of more than $2,000.
A study by Professor Edward D. Kleinbard of the University of Southern California found that under Cain’s plan a family with an annual income of $50,000 will see a tax increase of $5,000, whereas a family who pulls in $120,000 would receive a $500 tax break.
Cain argues that the lower class will actually see a tax break due to the abolishment of payroll tax, but the 9% business tax would effectively tax the income, as the tax will be applied after investments and the purchase of capital. Thus the business tax will become the new payroll tax.
Not only is the suggested tax plan a tax increase for the lower class, but a crippling act for the US Government as, according to the Citizens for Tax Justice, the 9-9-9 plan would collect $300 billion less in total revenue.
This plan may have the right idea to move toward a nondiscriminatory tax scheme, but for now, the 9-9-9 plan has the wrong audience and the wrong outcome. Rather than helping the many in need, the plan would help the few who can sustain, which in the end is adding to the discrimination by tax.
'Herman Cain 999 to give tax breaks to the few' has no comments
Be the first to comment this post!