Herman Cain's 9-9-9 Tax Plan: Winners and Losers

As GOP presidential hopeful Herman Cain touts his catchy 9-9-9 tax plan, one image comes to mind: an ad for a delicious-looking pizza, that is nothing more than an empty promise. Sure, that image is mouth-watering, but when you open the box and take one bite, you're sorely disappointed.

This is an apt metaphor for the former CEO of Godfather's Pizza, who is the flavor of the week in the GOP beauty contest. The plan is as simple as it sounds: blow up the current tax code and replace it with a 9 percent personal flat tax, a 9 percent corporate flat tax and a 9 percent national sales tax. Get it? 9-9-9! You can almost hear Ron Popeil voicing the ad "it slices, it dices, it's Herman Cain's 9-9-9 plan!"

But like with many slick ads, the product doesn't live up to the hype.

The first problem is the plan is short on details, so economists are having a tough time crunching the numbers. That said, we can identify some losers out of the gate -- the nearly 40 percent of Americans who do not pay income tax, would now pay 9 percent. Cain has said that there would his plan would protect those living below the poverty line, but he didn't say how that would happen.

How about the average worker? Cain has said these folks would make out, because "You have to start with the biggest tax cut a lot of Americans pay, which is the payroll tax, 15.3 percent," he said. "That goes to 9 percent. That's a 6 percentage point difference." Except it isn't, because workers only pay one-half of the payroll tax, or 7.65 percent. So 9 percent flat income tax rate would increase taxes by 1.35 percentage points, or more than 17 percent.

Winners under Cain's plan include higher earning taxpayers, who would see a great benefit under the 9-9-9 plan. The reason is that many of the wealthiest Americans pay the lion's share of their taxes on income from investments and capital gains. Under Cain's plan, those two taxes disappear. Small business owners would also score, because they could pay themselves with dividends (which would no longer be taxed) instead of wages.

Read More: How to Fix the Tax Code
So let's get this straight: under 9-9-9, average and poor Americans would pay more, while the rich would have their taxes cut. Andrew Fieldhouse, a budget policy analyst at the Economic Policy Institute, boiled it down this way: the 9-9-9 plan "only makes sense if you believe that the problem with the current tax code is that low- and middle-income households have it way too good, and they should give more of their income to those poor Americans making more than half a million dollars a year."

Maybe Cain's 9-9-9 plan is just a way to get Americans to eat more pizza...given the math, a slice may be all we can afford!

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