Published October 14, 2011
Herman Cain has made the his 9-9-9 plan the cornerstone of his economic policy pitch on the campaign trail, saying he would wipe out all federal taxes and start over with a simple mix of income, business and sales taxes, all at 9 percent.
But under such a plan, sales taxes wouldn't necessarily be as low as 9 percent. People in most states would pay more, when state and local sales taxes are included, and in some cases, customers could even end up paying twice as much in sales tax, according to a new analysis by the Tax Foundation.
The study, which was done at the request of FoxNews.com, found that the combined sales tax in all but four states would rise to at least doubt digits. The analysis doesn't address whether the average taxpayer would pay more or less in taxes overall under Cain's plan, but it suggests some shoppers could suffer sticker shock from the federal sales tax.
In Delaware, Montana, New Hampshire and Oregon -- the only four states that do not collect sales taxes at the state or local level – residents would only have to pay the 9 percent national sales tax. In Alaska, where there’s only local sales taxes, at an average of 1.1 percent, the combined rate would add up to 10.1 percent.
The five states that would have the highest combined sales tax rates would be Tennessee at 18.4 percent, Arizona and California at 18 percent and Louisiana and Washington state at 17.6 percent.
Among the other key states, the sales tax rates would be 17.5 percent in New York, 15.9 percent in Florida and 15.8 percent in Iowa. The nation's capital would have a combined rate of 15 percent.
The Tax Foundation’s study is based on the assumption that Cain’s sales tax would be applied in the same way as the other sales taxes in each state and jurisdiction.
“But that certainly won’t be the case. That would be considered unfair,” William McBride, an economist at the Tax Foundation, said, noting that states vary greatly in how they collect their sales taxes.
Cain has not released all the details on his plan yet, making it impossible for a comprehensive analysis. But his plan would scrap the current tax system for a 9 percent tax rate on income, businesses and sales that would apply to all purchases. In turn, there would be no more payroll tax, no more estate tax and potentially no more IRS.
It's hard to tell how this new tax code would benefit or hurt taxpayers in the long run. But without more specifics, the Tax Foundation's analysis seems to confirm what some critics have been saying about the plan, which has helped propel the former pizza chain executive to the top of the GOP presidential field: the 9-9-9 plan amounts to a double or even triple whammy of taxation when local and state sales taxes are included.
“When I hear 9-9-9, I want to call 9-1-1 because it will raise the taxes,” said Anita Perry, wife of Texas Gov. Rick Perry, whom recent polls show Cain has supplanted in the top tier.
Grover Norquist, president of the influential Americans for Tax Reform, has also criticized the plan.
“If you have with the income tax one needle in your arm drawing out blood, why would you take three needles, stick 'em in on the promise that they’ll only take as much as they used to take?” he told Fox News. “I think the danger is they drain you three times as fast.”
Cain’s campaign did not respond to a request for comment for this story. But Cain has vigorously defended the plan as it has come under fierce attack from his rivals.
"It is not regressive and to the people who say it's regressive on the poor, I simply say do the math," he told Fox News on Friday. "Most of the criticism of 9-9-9 are unfounded and untrue but they won't give you their proof as to why they're saying these things."
"Here's the other thing they hate most about 9-9-9: the people get it!"
The plan has its supporters. Art Laffer, former Reagan economist told Fox News on Thursday that 9-9-9 is a “wonderful plan” and a “great first step.”
Rep. Paul Ryan, R-Wis., known as the party’s financial wizard, told the Daily Caller that he “loves” Cain’s plan, saying, “We need more bold ideas like this because it is specific and credible.”