• The Numbers Don't Lie.

    The Urban Brookings Tax Policy Center crunched the numbers from Herman Cain's "9-9-9" tax plan. Once you get past the glossy exterior and tricked-out trim, things don't look so good under the hood:

    A middle income household making between about $64,000 and $110,000 would get hit with an average tax increase of about $4,300, lowering its after-tax income by more than 6 percent and increasing its average federal tax rate (including income, payroll, estate and its share of the corporate income tax) from 18.8 percent to 23.7 percent. By contrast, a taxpayer in the top 0.1% (who makes more than $2.7 million) would enjoy an average tax cut of nearly$1.4 million, increasing his after-tax income by nearly 27 percent. His average effective tax rate would be cut almost in half to 17.9 percent. In Cain’s world, a typical household making more than $2.7 million would pay a smaller share of its income in federal taxes than one making less than $18,000. This would give Warren Buffet severe heartburn.
    As Howard Gleckman explains, Cain's "9-9-9" plan is actually "a 25 percent flat-rate consumption tax—not all that different from the FAIR tax that he says is his ultimate goal." Hmm...a flat tax doesn't seem all that bad, does it? Well, let's put those figures on an easy-to-understand graph.

    Don't like what you see? That's probably because your income comes nowhere near the $200k-$500k threshold where the pain of Cain's plan turns into a bountiful bonanza of tax cuts. After all, someone's gotta pay for this stuff.

    Cain’s triple tax would replace payroll and estate taxes as well as the corporate and individual income taxes as we know them. All deductions, exemptions, and credits (except for charitable gifts) would be eliminated from the individual tax. Because businesses could deduct all their capital purchases, capital income would be tax free. But wages would be taxed—again and again and again. First, directly through the individual flat tax and then, because firms can’t deduct wages as an expense, twice more through the business tax and the sales tax.

    Because employers would be taxed on wages they pay, economists figure the levy would result in lower salaries. Not only would the combination of lower incomes and higher taxes reduce the current standard of living for many middle-class households, those lower wages would also result in lower Social Security benefits down the road.

    Damn. Those working-class folk just can't catch a break, can they?