The question for Mr. Cain is does he plan to be the Republican who finally snubs Norquist? Looking at his current "9-9-9" plan you would think so. After all it would raise taxes on most Americans. The first thing to consider is that while this plan-a proposed flat individual tax, business tax and sales tax all at 9 percent-is claimed by Cain to be revenue neutral he like all Republicans is supposed to be opposed to all taxes of any kind. Now for all the talk Republicans do about tax cuts what needs to be understood is that if a tax cut is revenue neutral it isn't really a tax cut. It's more a tax restructuring. There is no possible way to lower taxes on some people and not raise it on others and yet be revenue neutral. So by definition his plan contains tax hikes to offset the tax cuts if he's right about it being revenue neutral.
So he has already displeased Norquist-or Grover should be displeased. In fact, I doubt he is for reasons that will become clear. So whose taxes go up? One clue is to remember that most Americans-4 out of 5-pay most of their taxes not on income-so the 9 percent individual tax doesn't necessarily benefit them as much as you'd think; and the lowest income level of course has a 10 percent current rate anyway so this would not be much of a cut. This is true even of many fairly comfortable upper middle class income earners.
Please see Edward Kleinhard's analysis, he does a good job of elucidating this point. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1941800##
For example he shows that a family of 4 who earned $120,000 of wage income would pay roughly $14,900 in income tax but $16,700 in income. Again such a family is pretty comfortable with income considerably above the median. It's also significant to bear in mind that one resounding theme of conservative rhetoric in recent years has been lamenting the fact that far from having it too easy the wealthy are in fact greatly overtaxed, after all they are the "job creators" and it is repeated verbatim that 50 percent of Americans pay no tax. It is true, that many low and lower middle income earners pay little or no income tax; however what is never added is that they do pay hefty payroll taxes.
It isn't hard then to figure out where the new taxes are going to be to make this ":tax cut" revenue neutral. It's on this "unproductive" 50 percent. Maybe this is why Norquist is not up in arms. His no new taxes pledge only applies to certain types of tax payers. One is the rich of course. Yet what is clear it that Cain's plan will hurt many Americans- even this family of 4 with $120,000 we mentioned above. Under Cain's plan they will pay a higher amount of tax than under current law.
There are certain clear biases on the part of these alleged tax cutters. And really what gives it away more than this phrase "broaden the base?" That means raising taxes on many who currently pay little or no (income) tax. The sales tax indicates another kind of bias: a bias against consumption as opposed to savings. Which considering the current Great Recession we're in what can be more welcome than yet another disincentive to consume in favor of saving(hoarding)?
In Kleinard's piece he suggests that unlike- I and other analysts had thought at first glance- Cain's plan does raise more revenue than you would initially think. This is because it eliminates many of the credits and deductions most wage earners count on-the Earned Income Tax, the Child Tax Credit, etc-as well as the new Federal sales tax that is added to the State sales tax we already pay: what we effectively have here is a new higher payroll tax with no cap. Currently most Americans pay a 16.5 percent payroll tax-as the employer side of the payroll tax in reality comes out of the worker's pocket. Cain's plan ends the old payroll tax but in reality adds a new higher payroll tax at 27 percent.
So Cain's tax plan is the most regressive tax plan yet. I'm sure the other Republican candidates are all working furtively to see if they can't top it. Mr. Cain has already show signs of his contempt for average Americans. His attack on the Occupy Wall Street protesters, calling them un-American and saying that if you're not rich it's your own fault. He also has a very irksome way of trying to use his own blackness by attacking liberal anti-racists when they criticize him on grounds that are clearly not racial. This is what black candidates do for the GOP-gives them some dubious credibility and enables the black-or female-candidate to be able to both attack blacks-or women-and on the other hand try to claim that they as blacks-or women-have been mistreated because of their race-or gender-by the liberals who claim to be opposed to these things. But Mr. Cain's tax proposal has codified his true contempt for the average American. His feeling that they should just eat cake.