The entire U.S. tax code is 3.4 million words and 7,500 pages long. The egregious size has enabled numerous careers and professions just based off the tax code. Of the Republican primary candidates, one politician has a major plan to change our entire tax system. This plan, titled "9-9-9," has enabled Herman Cain, a no-name contender with about 35 staffers and less than $2 million in the bank, to lead the entire Republican field.
Cain has an impressive background outside of politics. Cain worked on ballistics for the Navy before going into business. He is a former executive with Coca-Cola, Burger King and most notably Godfather’s Pizza. He chaired the National Restaurant Association and served as a director for the Federal Reserve of Kansas City.
He has plenty of executive experience. Given the voter discontent with politics, every time one of Cain’s rivals attack his lack of political experience, they are only helping him in the polls.
Cain’s plan is very simple. Everyone pays a nine percent income tax, all businesses pay a nine percent corporate tax and the country adds on a nine percent national sales tax on new goods.
That is it.
Cain’s plan removes capital gains taxes on investments and payroll taxes that all American citizens and businesses must pay. It encourages savings and investment and will give banks more money to lend — a boon to entrepreneurship. To lend, the citizenry has to save, and Cain incentivizes saving.
Despite the rhetoric that the plan targets the poor, Cain’s plan has deductions for people living and working in low income areas. Cain’s plan also keeps charitable deductions. Clearly, those criticizing Cain’s plan have not read the details because he specifically protects poor regions in it.
Perhaps the most important thing Cain’s plan removes is the hiring penalty. When companies hire employees, they have to not only pay that employee, but the government also, via payroll taxes. This reduces the incentive to hire a new employee because their output must be greater than their salary, benefits package and taxes.
Other parts of the plan have tradeoffs. Every $10,000 spent on a new car will have a $900 tax. Every $100,000 spent on a new house will carry a $9,000 tax. In the case of the former, the plan will harm car companies, although his tax scheme may also reduce their tax expenses. For the latter, fewer new homes will be built, therefore increasing the value of existing homes but reducing the demand for construction.
Cain's plan carries major advantages over the current system and reduces the amount of waste spent on tax accounting. Most importantly, it does not take an advanced degree to understand the plan.
Despite the complaints about "9-9-9" from Republican competitors, GOP budget guru Congressman Paul Ryan (R-WI) mentioned his interest in the idea as a start for other reforms, which may make other party members consider Cain and "9-9-9." This has become a serious plan for a serious candidate.
Although most are considering the nomination of Mitt Romney almost assured, the latest polling says otherwise. Cain has taken the lead in the past week in the key primary states of Iowa and Florida. He still remains an enigma to the casual voter, but upcoming debates and increased media coverage will change that.
Cain lacks the large name backing and the electoral history of the major candidates. But even with these issues, Cain is leading Romney in the polls — and his tax plan has a lot to do with it.
On Tuesday, CNN will host yet another Republican presidential debate. Cain and "9-9-9" will be the main focus. If Cain has another strong performance defending "9-9-9," this election, and our tax system, will be turned on its head.