You could almost hear the Herman Cain bubble bursting in last night’s debate, when literally all of the other Republican presidential candidates decided it was time to cut to the chase: Cain’s “9-9-9” tax plan is ridiculous.
Rick Santorum, for example, said, “Herman’s well-meaning, and I love his boldness, and it’s great. But the fact of the matter is, I mean, reports are now out that 84 percent of Americans would pay more taxes under his plan.” Ron Paul called the Cain plan “very, very dangerous.” Mitt Romney said, “I like your chutzpah on this, Herman, but I have to tell you, the analysis I did, person by person, return by return, is that middle income people see higher taxes under your plan.”
COOPER: Speaker Gingrich, you have said in recent days that Mr. Cain’s 9-9-9 plan would be a harder sell than he lets on. How so?
GINGRICH: Well, you just watched it.
Cain made an effort to defend himself — he kept making strange references to apples and oranges, which, re-reading the transcript this morning, I still don’t understand — and referred voters to his website to read an analysis (pdf) from something called Fiscal Associates, which appears to be a financial-planning firm* in a small town in Michigan, which, for some reason, published a draft analysis of Cain’s proposal. Ezra Klein noted, “[E]ven the draft analysis doesn’t tell us much.”
Far more illuminating was actual research from the non-partisan Tax Policy Center, published yesterday. The TPC measured the tax implications of the Cain plan for every income group and came to some striking conclusions: every American making $200,000 or less would see his or her tax burden go up, with the most severe increases coming at the lower end of the income spectrum. From there, the regressive curve gets more intense, with millionaires and billionaires set to receive a windfall as their tax burden is slashed dramatically.
Howard Gleckman put it this way:
A middle income household making between about $64,000 and $110,000 would get hit with an average tax increase of about $4,300, lowering its after-tax income by more than 6 percent and increasing its average federal tax rate (including income, payroll, estate and its share of the corporate income tax) from 18.8 percent to 23.7 percent. By contrast, a taxpayer in the top 0.1% (who makes more than $2.7 million) would enjoy an average tax cut of nearly$1.4 million, increasing his after-tax income by nearly 27 percent. His average effective tax rate would be cut almost in half to 17.9 percent. In Cain’s world, a typical household making more than $2.7 million would pay a smaller share of its income in federal taxes than one making less than $18,000. This would give Warren Buffet severe heartburn.
How do you like them apples, Herman?
* Correction: I’d originally used the phrase “family-planning firm,” rather than “financial-planning firm,” which, I admit, makes this one of the funnier slip-ups in a while. Thanks to Nanuq in comments for flagging this.