But will his 9-9-9 plan propel him to the bottom?
It’s great to be Herman Cain these days. The self-professed only “nonpolitician” in the Republican presidential field soared to the top of an NBC News/Wall Street Journal poll released Oct. 12, with 27 percent, followed by Mitt Romney at 23 percent and Rick Perry at 16 percent. He’s also been getting significantly more media attention, which provides the kind of free advertising an underfunded campaign can only dream of.
The reason for Cain’s sudden surge, the Associated Press reports, is his catchy sounding 9-9-9 tax plan, which would replace the current tax system with a flat nine percent rate for individual and corporate taxes and a national sales tax.
“Here's why I believe that I can get the 9-9-9 passed. The American public understands it. They have picked up on the idea. They love the idea of throwing out the current tax code, because we have all been abused by this existing tax code and abused by the bureaucrats for decades. So that attracts their attention,” Cain said in a Wednesday interview on CNBC’s Squawk Box. “Secondly, 9-9-9 is easy to understand. I can be walking through the airport going through security and a TSA agent will say, hello, Mr. Cain — 9-9-9. If the public understands it, they will support it and they will demand it. That's going to be the difference.”
Rival Rick Santorum said in an MSNBC interview on Wednesday that when he hears 9-9-9 he wants to call 911. Jon Huntsman mocked the plan during Tuesday’s GOP primary debate, joking that when he first heard about it he thought it was the price of a pizza. And as Minnesota Rep. Michele Bachmann noted that same night, the devil is in the details.
Cain says that more Americans would contribute to the nation’s tax base and he’s right. The problem, however, is that the wealthy would be paying far less than the current 35 percent and most low-income families that currently pay less than nine percent or in some cases nothing in federal taxes would be forced to pay more. The plan also would eliminate the capital gains tax and the payroll taxes that fund Social Security and Medicare.
Economist Bruce Bartlett, who worked in the administrations of Ronald Reagan and George H.W. Bush, wrote in the New York Times this week that Cain’s proposed national sales also would have a disparate effect on low- and middle-income households.
“[Everyone] would now pay a nine percent sales tax on all purchases. No mention is made of any exemptions from this tax, so we may assume that it will apply to food, medical care, rent, home and auto purchases and a wide variety of other expenditures now exempt from state sales taxes. This would increase their cost of living by nine percent while, at the same time, the poor would pay income taxes,” Bartlett wrote.
Kevin Hassett, an economist and senior fellow at the conservative American Enterprise Institute, told the AP that the plan complies with the “conservative orthodoxy” of “taxing consumption rather than success.” But some conservatives have expressed concern that the national sales tax would provide Congress with a stream of revenues to apply to a tight federal budget.
(Photo: Andrew Harrer-Pool/Getty Images)