How Herman Cain's 9-9-9 Plan Would Change Your Taxes

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Hours before tonight's Republican debate in Las Vegas, the Tax Policy Center has just released their first complete analysis of Herman Cain 9-9-9 tax plan. It doesn't change the federal government's tax diet much. In fact, it raises about the same revenue as current policy (i.e.: Bush tax cuts minus the payroll tax break). But it does dramatically change tax burden on a family-by-family basis. Under his plan, 84 percent of the country will pay higher taxes, and 91 percent of the top percentile will pay lower taxes.

Here's another TV-ready statistic for tonight's moderators: For a family making between $40,000 and $50,000, Cain's plan would raise their tax bill by $4,000. For the group of Americans earning more than $1 million a year, it would lower their tax bill by an average of $580,000. Note: there are a few billionaires in this group throwing off the average (hey, I said it was TV-ready!).

I've got two graphs to show you, both based on TPC analysis. The first shows how much more income (or how much less) the typical family would keep under the 9-9-9 plan. The Y-axis is in percent and the X-axis is in "thousands of dollars." What's being measured is percent change in income. Most families under $50,000 are getting a 10 percent "haircut" with Cain's proposal, and the tax burden is shifting downward.
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For a typical family making less than $200,000, Cain's tax plan makes you poorer after taxes. For a typical family making more than $200,00, it makes you richer.

Another way to look at this picture is to focus on effective tax rates. For a typical family making less than $50,000, their taxes will increase by 10 percentage points or more. For a typical family making more than $500,000, their taxes will fall by 10 percentage points or more. Again, the Y-axis is in percent and the X-axis is in "thousands of dollars."


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Update: Kevin Drum posts a graph comparing current rates across income level to the 9-9-9 plan. Whether or not TPC's analysis has holes, if you create a flat tax and exempt a major source of income for rich people (like capital gains), what you've done is create a regressive tax system that punishes the poor. Cain can pick quibbles with this and that, but he can't get around the fact that his tax scheme isn't flat -- it slopes down. And it's meant to.



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Derek Thompson is a senior editor at The Atlantic, where he oversees business coverage for TheAtlantic.com. More

Thompson has written for Slate, BusinessWeek, and the Daily Beast. He has also appeared as a guest on radio and television networks, including NPR, the BBC, CNBC, and MSNBC.

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