Image by Gage Skidmore via FlickrI first heard of Herman Cain in 2007 when Neal Boortz's book "Somebody's Gotta Say It" came out. I read Boort's book and started listening to his radio show on the internet in my office. Cain was a frequent guest and substitute host on Boortz's show.
Herman Cain has been a big proponent of the FairTax as advocated by Boortz. In the past, I have generally been a supporter of the FairTax plan, though I do have some questions regarding some of the assumptions and the transition to the FairTax. Cain's support of the FairTax is one of the reasons he intrigues me as a potential Presidential candidate.
Under the FairTax, all payroll (FICA) and federal income tax withholding is eliminated, along with eliminating the IRS. You get to keep your entire paycheck. You also get a prebate each month based on the size of your household. Taxes are collected through a national consumption tax of 23% embedded in the cost of all goods. It is designed to be revenue neutral.
During the recent GOP Presidential debates, Herman Cain has introduced his 999 plan to help the economy. The plan imposes a 9% income tax on everybody, a 9% tax on business, and a 9% national sales tax. It eliminates the payroll tax for everybody. Cain's 999 plan is designed to be a transition to the FairTax by, as he put it, bringing the supporters of the FairTax together with the supporters of the Flat Tax.
I heard Cain yesterday on the Sean Hannity radio program discussing the meat of his plan. On the surface, I liked the general premise, however, the more I think about it, the more questions that I have. I would like to see some sort of calculator similar to the FairTax calculator to ascertain whether or not the plan would negatively impact me financially. I always do a little better under the FairTax than under the current system.
With the elimination of the payroll tax and the flat 9% rate on income, I would lower my combined tax burden considerably. The remaining question would be whether or not the new 9% sales tax would in the end cause my total tax burden to increase or not. It could be close. Still, Cain is one of the few people out there with specific plans and proposals as opposed to making general statements of "we need to reform the tax code."