By Adam Rohrer –
Herman Cain has been leading in national polls much due to his 9-9-9 tax plan but experts say the new tax code will hit middle and low income families hard.
Cain’s 9-9-9 tax plan would usher in “A huge tax increase on lower-income and middle-class Americans,” says New York University tax law expert Daniel Shaviro. “With no tax on capital gains, the rich would pay almost nothing” in taxes. Shaviro went on to describe the plan as a “a distributional monstrosity.”
The new tax plan scraps the old tax code and replaces it with a 9 percent national income tax, a 9 percent business transaction tax and a 9 percent national sales tax. A plan that presidential candidate John Huntsmen first thought “was the price for a pizza.”
Despite criticism of his plan Herman Cain has continued to strongly support his plan saying the money saved by big business will trickle down to the employees but as has been the case in the future, that is never certain.
For an example of how this plan would effect you, consider that a family of four earning $50,000 a year now pays $3,850 a year in income tax. With Cain’s new plan they would pay $4,500, $650 more.
Cain boasts that families will save $4,000 on social security taxes, but under the new plan they will lose child tax credit worth the same amount. In addition, they will have to pay for a new national sales tax, which gets added onto your state’s sales tax, which would make the sales tax here in Pa. 15 percent. Sales tax increases primaryily effect the middle class as they are the people who spend a larger percentage of their income on consumer goods.
Rick Perry also proposed his plan which is a 20 percent flat tax on income but experts say it will shift the burden over to lower income families.
“Its more regressive then the current system,” said Ted Gayer, a tax policy expert with the Brookings Institution who served on President George W. Bush’s Council of Economic Advisers “The burden would fall more on lower-income people.”