My job requires review of potential tax changes and how they will affect my clients. One of the most radical proposals to change the tax code is Herman Cain's 9-9-9 plan. Much has been said in the news about the plan, but nowhere is it mentioned which class of taxpayer will be affected.
Herman Cain's tax plan is almost the complete opposite of President Obama's plan. Obama proposed a tax increase on all taxpayers making more than $250,000 per year. The American people and Congress gave a loud, resounding NO to this idea.
Cain's plan will give a tax cut to the people Obama wanted to tax more. Under Cain, people under $250,000 per year will pay more. A lot more. Half of all households pay no federal income tax. Cain's plan will introduce a 9% national sales tax that everyone will pay regardless of income. The second 9 is for the personal income tax rate. Since over half of all taxpayers pay less than 9%, most taxpayers will get a tax increase. Corporations will do well, however. Most regular corporations that pay at a 35% tax rate will now only pay 9%, the last of the three 9s. The idea is that the tax savings by businesses will get reinvested into the business to create jobs. That is why people start a business. To create jobs. Right?
Maybe we should be careful what we wish for.
I wonder what "Joe the Plumber" thinks about Cain's plan? He did say he would pay more taxes under Obama's plan. He should love the tax cut.