ATLANTA (AP) — If there's a policy
star in the Republican presidential primary it may be Herman Cain's 9-9-9 tax
overhaul plan.
It has helped fuel the Georgia
businessman's sudden surge in the GOP race. But behind the catchy slogan is a
reality: Experts say it will raise taxes on some Americans.
"The 9-9-9 plan that I have
proposed is simple, transparent, efficient, fair and neutral," Cain, the
former Godfather's Pizza chief executive, declared at Tuesday night's Republican
presidential debate in New Hampshire, where his newfound higher status in the
Republican primary race was on full display
Better-known Republicans seeking the
White House relentlessly assailed both Cain and the centerpiece of his unlikely
presidential bid, mocking it as simplistic and politically unworkable.
"I thought it was the price of a
pizza when I first heard about it," joked former Utah Gov. Jon Huntsman.
Minnesota Rep. Michele Bachmann
dismissed it as a jobs plan, not a tax plan.
"When you take the 9-9-9 plan
and turn it upside down, I think the devil's in the details," she quipped.
Still, 9-9-9 has placed the
charismatic Cain in the thick of the primary battle. Now the trick will be
staying there. On Wednesday, Cain pledged to ramp up his ground game in the
early primary states of New Hampshire and Iowa, an effort to capitalize on his
momentum.
The plan would scrap the current tax
code and replace it with a 9 percent tax on personal income and corporations as
well as a new 9 percent national sales tax.
Cain argues the 9-9-9 proposal would
expand the tax base so more Americans are contributing to government coffers
while at the same time getting government out of the business of picking
winners and losers through the tax code.
The final phase of Cain's plan would
move to a so-called fair tax, eliminating the income and corporate income taxes
in favor of a national sales tax.
"It's bold," Jeanne Seaver,
co-founder of the Savannah, Ga., tea party. "I like that you know where
you stand with his plan."
But while some are swayed by the
plan's simplicity — it can fit on a bumper sticker compared with Mitt Romney's
160-page plan — critics on the left say it would place a greater tax burden on
middle- and low-income Americans by stripping away deductions that currently
complicate the federal tax code.
Most low-income families currently
pay less than 9 percent of their income in federal taxes. Nearly half of all
U.S. households — mostly low-and middle-income families — pay no federal income
taxes, according to the Joint Committee on Taxation.
Roberton Williams, senior fellow at
the nonpartisan Urban-Brookings Tax Policy Center, said under Cain's plan taxes
would rise on the elderly and the poorest Americans who earn less than $20,000
a year.
"The top end earners would see a
big tax cut and the bottom end would see a big tax increase," Williams
said. "Where in the middle it would break even we don't know because we
don't have the details of the plan."
The proposal would eliminate the
capital gains as well as payroll taxes that fund Social Security and Medicare.
Corporations wouldn't pay a tax on dividends and the 9-9-9 plan would lower the
corporate income tax from 35 percent to 9 percent.
Cain argued Tuesday night that
low-income workers would pay less because he would eliminate payroll taxes,
which total 15.3 percent of wages.
Kevin Hassett, an economist and
senior fellow at the conservative American Enterprise Institute, praised Cain's
plan as moving toward a flat tax.
"If someone's going to attack
the 9-9-9 plan I would say they should be careful because you are talking about
the Republican holy grail," Hassett said,
The plan, Hassett said, hews to the
conservative orthodoxy of "taxing consumption rather than success."
But conservative economists are not
unanimous in their support.
But some say they're troubled by the
creation of a national sales tax that would give politicians in Washington a
new stream of money to meddle with.
"It's very good in theory but
very troubling in practice," said Daniel Mitchell, an economist and senior
fellow at the Cato Institute. "I don't trust politicians with a new source
of revenue."
Still, politically, Cain seems to
have struck gold.
The 9-9-9 plan is seemingly easy to
understand, with a memorable slogan. It reinforces his image as a political
outsider willing to brush aside the Washington bureaucracy and start fresh. And
its red meat to the anti-tax tea party crowd where Cain has drawn strong
support.
"The best politicians are those
that are able to discuss complex policy matters in fairly direct terms,"
said former Republican strategist Dan Schnur, who now runs a political think
tank at the University of Southern California.
In the past, the 65-year-old Cain has
compared the tax code to the "21st century version of slavery," a
particularly powerful analogy from the lone African-American in the Republican
contest.
Still, there are also political
trouble spots.
Cain has been fixated on the 9-9-9
plan and to be a viable contender for the GOP nomination he must show a mastery
of other issues.
The plan would also implement a new
national sales tax, which draws little enthusiasm among the GOP's conservative
base.
Former Pennsylvania Sen. Rick
Santorum scored points at Wednesday's debate when he noted that the proposal
would raise the cost of many things citizens purchase every day.
"How many people here are for a
sales tax in New Hampshire?" Santorum asked the audience.
Receiving almost no response he
turned back to Cain, "there you go, Herman. That's how many votes you'll
get in New Hampshire."
Maybe a few more than that. A Wall
Street Journal/NBC News poll of Republican primary voters released Wednesday
found Romney and Cain in a dead heat, while Perry dropped to 16 percent. Cain
was the first choice of 27 percent of those surveyed, while Romney held firm at
23 percent. The poll, which was taken Oct. 6-10, had a margin of error of 5.35
percent.
Steve Peoples contributed to this
report from Concord, N.H.
Copyright 2011 The Associated Press.
(AP Photo/Daniel Acker, Pool)
