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The more people learn about Republican presidential candidate Herman Cain's "9-9-9" plan, the more questions they have.
One of the bigger ones is how it would affect poorer Americans. During Cain's visit to St. Petersburg this month to promote his book, PolitiFact Florida had the chance to ask him directly.
"Most people are going to pay less in taxes," Cain, a former pizza chain executive, said in an interview aboard his campaign bus. "Why? Because we're expanding the base."
Cain told us he worked out the math himself. Someone earning $50,000 a year would pay less in taxes under his 9-9-9 plan than they do under the current system. Under the current system, a person who earns $50,000 a year "pays about $10,000 in taxes," Cain said. Cain then walked us through his 9-9-9 plan and said the same person would "still have $2,000 left over."
We decided to take Cain's analysis that his plan was better for someone earning $50,000 to a trio of tax accountants.
Before we tell you the results, here's some background on Cain's plan.
Cain says 9-9-9 is the first step in creating a national flat tax. It would replace the current complicated tax system with a 9 percent personal income tax, a 9 percent national sales tax and a 9 percent tax on businesses. Unlike the current system, Cain's plan includes relatively few opportunities for people or businesses to claim deductions or write off expenses.
The personal income tax, for example, would include exemptions only for charitable donations and for living in an impoverished inner city. Cain's national sales tax would be on top of state and local sales taxes.
Cain set the parameters for the $50,000 experiment during our interview.
For calculating the tax burden under 9-9-9, Cain assumed that the hypothetical tax filer paid the full 9 percent income tax on $50,000 — or $4,500.
Cain then assumed every other dollar was spent on something subject to his 9 percent sales tax, meaning his hypothetical taxpayer contributed an additional $4,095 to the federal government.
That's a total tax paid of $8,595 or a tax rate of 17.19 percent, calculated using Cain's figures.
To see how that compared with the same earner under the current system, we reached out to three accountants and asked them to run the numbers.
The exercise showed one thing about the current system: It's more complicated than what Cain is proposing.
For a single person, 9-9-9 can be a better deal. A single person with no dependents would pay about $10,075 in combined payroll and federal income taxes, $1,480 more than that taxpayer would pay under Cain's 9-9-9. (Assuming no credits or adjustments.)
But for someone married with dependents, 9-9-9 is worse.
The current tax code treats married couples with children differently, and better, than people who are single. With dependents, the family of four will pay about $6,515 in income and payroll taxes and even less, about $4,600, if they qualify for a child income tax credit. That's $2,080 to $4,000 less than they'd pay under Cain's 9-9-9.
The disparity between 9-9-9 and the current tax code grows as a person's income shrinks.
A single person who makes $40,000 would still pay about $334 less in federal taxes under 9-9-9. But someone making $30,000 would pay about $212 more under 9-9-9.
For families at those income levels, 9-9-9 is worse, especially when you include tax credits and exemptions low-income earners are now getting that they wouldn't under Cain's plan.
"It's going to fall very, very heavily on low-income taxpayers to middle-income taxpayers," said Andy Hollander, a retired federal tax agent who studied the 9-9-9 plan.
In summary, we find two issues with Cain's claim.
First, we asked about poorer Americans, but Cain picked an income figure of $50,000 a year, which is about the median income for U.S. households.
More importantly, though, is that while calculating the impacts of 9-9-9 might be simple, comparing them to the current tax system is complicated.
Cain's assumption holds when you look at single earners, but married couples and people with children making $50,000 a year would likely pay more under 9-9-9 than the current system.
We knock the claim down one mark for cherry-picking a figure of $50,000 a year and two more because the claim itself is only half right. To us, that equals a Mostly False.
This ruling has been edited for print. Read the full version at PolitiFact.com/Florida.
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