Herman Cain has a plan for America’s tax system: junk the federal income tax and payroll tax, and substitute his 999 system, in which everybody pays 9% federal income tax and 9% federal sales tax, and corporations pay a 9% income tax.
Elegant in its simplicity. But a crusher for the working poor, who now pay 8% in payroll (Social Security and Medicare) taxes, but get a substantial credit via the earned income tax credit, or EITC.
Here’s how a single mother of two earning the California minimum wage of $8 an hour would fare under the 2011 tax structure and under Cain’s 999 plan.
2011 actual Cain 999
Earned income $16,000 $16,000
Less taxes:
Federal payroll tax 900 -0-
Federal income tax -0- 1,440
Federal sales tax -0- 1,440
State/local taxes 1,600 1,600
Subtotal taxes paid 2,520 4,480
Net income before EITC* $13,480 $11,520
EITC 4,800 -0-
Net income 18,280 11,520
So under Cain’s plan her actual taxes paid increase by 77% ($2520 to $4,480), and she loses the EITC of $4,800. Her net income is slashed by 37% ($18,280 to $11,520).
What does it say about the media and about Cain’s competitors for the Republican nomination that they let this barbarism go unremarked?
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*Earned Income Tax Credit. Cain’s plan abolishes (“simplifies”) it.
Tags: 999, earned income tax credit, EITC, ethics, federal income tax, federal sales tax, Herman Cain, media, minimum wage, payroll tax, Social Security and Medicare tax, tax plan, working poor
October 17, 2011 at 9:53 pm |
I’m not sure the 999 will work for the poor, and a lot of us are poor.
October 17, 2011 at 9:59 pm |
I think it works only for people who earn well over $100,000. It works like magic for the very rich.
October 25, 2011 at 12:26 pm |
Well I think it screws the small business man!!! I gross 600000 from business but I pay 75% of money to employees in terms of wages, plus I pay taxes, work comp and other business expenses and turn on average over the years a 9k profit or less. So this joker is telling me that I better have 70K ready to pay even before I have to pay 9% on my personal income which comes from my LLC income / profit pass through???? Oh hell nah!!!!! 999 tax plan will put me in poor house after my business goes belly up!! IF he allowed business expenses with this plan then I would take less of a hit!!