Here’s an innovative idea from Herman Cain: 999, or crush the working poor

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?

_______________

*Earned Income Tax Credit. Cain’s plan abolishes (“simplifies”) it.

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3 Responses to “Here’s an innovative idea from Herman Cain: 999, or crush the working poor”

  1. smithearl Says:

    I’m not sure the 999 will work for the poor, and a lot of us are poor.

  2. Dwayne Says:

    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!!

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