This analysis from the Urban Center/Brookings Institution Tax Policy Center is troublesome for Cain if accurate. But that’s a big “if” because, frankly, I’m not even sure if I’m reading the tables right, much less whether the assumptions behind them are correct. I’ll leave sorting that out to our tax wonks.
But in any case the key column seems to be “Percent Change in After-Tax Income” which shows that the average earner making less thank two hundred grand would see a net loss in post-tax income, with the poorest suffering the most (-20 percent). Meanwhile, the average million-dollar filer would see a 22.4 percent increase in after-tax income under 9-9-9.
One big caveat is that the analysis doesn’t score what Cain has suggested would be a sort of tax coupon that low-end earners could use to exempt basic necessities from the consumption tax piece. TThat would presumably mitigate the impact of 9-9-9 on the poor. (Though in their interpretation of the Cain plan, the TPC points out that including such a mechanism would likely mean the plan would no longer be revenue neutral compared to current law:
The Cain campaign documents also contain some discussion of deductions for empowerment zones that might relieve some of the tax burden on low wage workers. We have not received any details of these provisions and thus cannot estimate them. If such relief were to be provided, it could relieve some of the burden at the low end of the income distribution, but would reduce the net revenue raised by the proposal.
The Tax Policy Center estimates that, if fully phased in, the plan would raise about $2.55 trillion of revenues at 2013 levels of income and consumption, virtually the same amount that would be collected if current tax policy were in place that year (that is, if 2011 tax law, other than the payroll tax reduction, were extended). However, the plan would raise about $300 billion less revenue than would be raised by current tax law, under which most 2001-2010 tax cuts would have expired by 2013.3