Shockingly enough, a plan built around a catchy slogan turns out to be masking yet another massive distribution of wealth upward! The Tax Policy Center put out a distributional analysis of Herman Cain’s 9-9-9 plan, and as you can see, it would raise taxes for 84% of the population, cost those in the lowest quintile 20% of their income, and save millionaires something close to $300,000 a year.
As Howard Gleckman notes, under Cain’s plan, multi-millionaires making over $2.7 million a year would pay a smaller share of income in federal taxes than someone making $18,000. Here’s the distributional analysis in number form:
Jared Bernstein put this into the world’s largest chart using raw dollars, while this chart with the percentage change in post-tax income really tells the story of what’s going on here. [click to enlarge]
In last night’s debate, Cain mumbled something about “empowerment zones,” which would rebate some level of tax if you live in a poor neighborhood. This would be a developer’s dream, to force poor people out of their own neighborhoods, suddenly desirable because of the tax benefits. There’s simply no way to make that work. The idea that “used goods” would have no sales tax does little for people trying to buy food, unless the idea is literally to have people eat shit, for the tax break.
The first thing to say is that this is the logical outcome of any flat tax. Right now our system is progressive at the federal level, and flattening it out will invariably mean that the poor pay more and the rich pay less. Flat taxers often make their appeal on the basis of fairness, but it’s a completely unfair plan relative to current law.
The second thing to say is that this is the goal of all Republican tax policy. There’s a flat-taxer in every single Republican Presidential primary, from Kemp to Forbes to Huckabee to Cain. They may always lose; the other candidates last night jumped all over Cain, with Santorum actually using the TPC numbers.
But Michele Bachmann, for example, criticized Cain’s plan because it could lead to HIGHER taxes in the future, basically arguing to Cain’s right. And the other Republican tax plans just don’t dress up the wealth redistribution with a pretty name. If anything, they’re more DIRECT. They would eliminate the corporate tax altogether or drop the top marginal tax rate way down or do any number of other things that basically lower the tax burden on the wealthy. Heck, every Republican in America would make the Bush tax cuts permanent, which doesn’t have an altogether different distributional analysis than 9-9-9. The goal is to achieve even more inequality than we have now, the most unequal period since the 1920s.
So Cain’s plan may be grossly unfair, but not much more so than that of every Republican with a plan of their own. The maldistribution is a feature, not a bug.