Thursday, October 13, 2011

Analyzing the 9-9-9 Plan

Lots of people are starting to analyze (and hate) the 9-9-9 plan from Herman Cain and I'm here to jump on the pile.  Following graph is total tax outlay for the 5 categories of earners.  Current is the burden for the current tax code in 2007 dollars.  9-9-9 plan is the burden under the Cain plan:

And here are the taxes as a percentage of income:

You are reading that right - that's a tax burden increase of 18% for the lowest quintile.  That's like a 20% pay cut right off the bat.  Unless you are in the top 40% (or you know, care about stuff and stuff)  I would hope this has dulled your enthusiasm.

(Method:  This is a gross approximation of tax burden based on published effective tax rates from 
http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=456 and spending habits from ftp://ftp.bls.gov/pub/special.requests/ce/standard/2007/higherincome.txt.  Current tax code values derived from summing average income tax with average payload taxes.  9-9-9 values derived from a raw 9% of earnings plus 9% on total expenditures.  The actual Cain plan will likely have exceptions and caveats that would affect these numbers).