Cain's 9-9-9 plan doesn't add up

Republican presidential contender Herman Cain is now leading the Republican presidential pack. That's partly because of his engaging and passionate personality, but it's also due to 9-9-9: his plan to overhaul the federal tax code.

Voters relate to the 9-9-9 plan of Cain, who came out on top of an NBC/Wall Street Journal poll of likely Republican voters yesterday, because they can understand it. They're further enamored of it because it promises to blow up, rather than tweak, a system so complex even the head of the IRS can't do his own taxes.

Americans want a holistic change that will simplify our tax system, bringing easier compliance and strong economic growth. For presenting such an idea, Cain, should be congratulated and emulated.

That makes it unfortunate that his tax plan, according to the few details he has made available, would be a disaster: short on revenue, unfair to the poor and middle class, and a windfall to the wealthy.

Cain's plan would create a 9 percent national sales tax and a 9 percent income tax (the only deduction or exemption would be for charitable donations), and impose a 9 percent corporate income tax on gross receipts. Corporations could deduct money spent to provide their goods, such as for raw materials, but not money spent on wages.

The capital gains tax, the estate tax, the gift tax and Social Security and Medicare taxes would end.

So very wealthy people would see their rate reduced from 35 percent to 9 percent on most of their earned income, cut from 15 percent to zero on investment income.

Low income workers would see the tax on their wages increased from zero to 9 percent, and lose their earned income tax credits. And since poor people spend nearly everything they earn, the new 9 percent sales tax -- which would include food and other necessities -- would make their rate 18 percent. Since those with higher incomes spend a lower percentage of what they earn, they'd be less affected.

It's true that payroll taxes, about 9 percent, would go back in poor workers' pockets. But for pretty much any family bringing in less than $50,000 per year the addition of the federal sales tax and loss of the earned income credit in return for breaking even on paycheck deductions would be a major blow.

And 9-9-9 would cost the government. According to a Bloomberg News analysis, if Cain's plan were in place last year, the federal government would have brought in about $200 billion less than it did.

Yet Cain's is a real and bold idea on taxation. It's not worthy of implementation, but it is worthy of discussion. The other Republican candidates have largely offered up platitudes about cutting regulations, slashing spending, lowering tax rates and "getting America back to work" as their plan to deal with taxes and make federal revenue match federal spending. What they need to do is follow Cain in proposing a coherent idea. They should offer strategies that radically simplify and reinvent our tax system, stimulate growth, garner revenue and level out the playing field for those who can least afford to pay.

Like Cain, they need to present a real plan. They just don't need to present a plan like Cain's.