Oct 20 2011

Cain Way Ahead In Iowa – News Media Struggles With 9-9-9 Math

Published by at 12:13 pm under 2012 Elections

Cain is turning the Political Industrial Complex on its head these days. He has come out with an exciting and potentially life saving (from an economic perspective) plan to toss out the current, busted tax code and replace it with his massively stimulating 9-9-9 plan.

But there is more good news about him. When it comes to conservative social issues he is a man of faith and conviction – and one who completely resists the temptation to play God and use the federal government to enforce his views on others. The big example being discussed today is his correct stand on abortion. He agrees  life begins at conception and how the decision about family is for the family to decide. Those on the far right better understand there will be no federal ban on abortion coming, not under Cain nor under anyone else. It is not in the cards.

If the right thinks 9-9-9 is hard to sell, they better realize a federal abortion ban is basically impossible.

This center-right, libertarian sphere Cain occupies (because it is who he is, not some political strategy he maps out) is where the majority of the nation is when you look at the center of Main Street. We have our beliefs and conviction, but we don’t want to play dictator. Must be our humbleness and recognition we never know enough to lecture others on what is right or wrong in complex situations.

The result has been that Cain has consumed nearly all the anti-Obama oxygen and win control the race for the White House. If you watched Hannity and Frank Luntz’s focus group, Cain was the real winner, while Gingrich came in as best in show.

Add to that the picture now coming out of Iowa in the latest Rasmussen polling and you can see broad support congealing around Cain day by day:

A new Rasmussen Reports telephone survey of Likely Iowa caucus-goers shows that Cain is in front with 28% followed by former Massachusetts Governor Mitt Romney at 21%. Congressman Ron Paul is a distant third at 10% followed by former House Speaker Newt Gingrich at 9%, Congresswoman Michelle Bachmann at 8%, and Texas Governor Rick Perry at 7%.

If Cain really is leading the Iowa GOP caucus voters then he has truly donned the front runner status. These are not right leanng moderates or independents (who he has already). It is even more amazing if you look at Iowans who are certain to participate iin the caucuses:

Among those absolutely certain they will show up and participate in the caucus, Cain leads Romney 31% to 18%.

Neither Romney nor Perry can climb this kind of lead if it solidifies as more and more people make their decisions. Right now the momentum is still growing around Cain. I suspect it will grow and grow for weeks to come since he has not stumbled and the initial claims about his 9-9-9 plan have only proven many people don’t understand math and taxes.

For example. when I wrote my 9-9-9 For Dummies post I was clear that anyone who added 9% income to 9% sales tax and arrived at 18% was pretty much clueless:

If you add the 9% sales tax to the 9% income tax you get 18% – and would demonstrate why you should not be a tax accountant. The 9% sales tax is applied only to the disposable income that goes to buy taxable goods. Not all of your disposable income goes to buy taxable goods! Mortgage payments are not taxable goods. There probably are exemptions for insurance, etc.

Greta Van Sustern had Cain on last night and does the unthinkable, she adds 9 + 9 and got 18%. Lord save us from the ignorant (and I mean that in a nice, but honest way)

The short version of the 9-9-9 for Dummies is this: at the $82,250 income level (top of the 25% bracket) one pays 28% in federal taxes (payroll + income). Under Herman Cain’s 9-9-9 that is replaced by 9% income tax and 9% sales tax. But as I said yesterday, not all your take-home pay is used on purchases that fall under the 9% sales tax Cain is proposing. By definition you can NEVER see a combined 18% tax because 9% of your income is pulled for the income tax, leaving a maximum of 91% of your income for purchasing. (Note: for those who care, the mathematical ceiling is 17.2% of your income would go to the 9% income and 9% sales tax)

Yesterday I assumed 50% of the disposable income (left after the 9% income tax) would be used on the 9% federal sales tax.  And then I compare the difference between today’s tax code and 9-9-9. This was the result:

  • Under the current system the $82,250 in taxable income results in $59,209 in actual take home pay, giving the government $23,042 of your hard earned money
  • Under Cain’s 9-9-9 (from the perspective of the tax payer), that $82,250 in income results in $71,430 in take home pay, giving the giving the government only $10,820 of your hard earned money,

A difference of over $11,000 dollars in take home pay for an income of $82,250. Individual results will vary, especially when you trade off deductions – but the overall result is clear. Just about everyone will have more take home pay when ALL  federal taxes are taken into account under 9-9-9.

Greta may struggle with this, most people get it. So how do you stop a campaign that promises to level the tax paying field, give you more of your income back to spend as you see fit, and end the reign of liberalism run amok?

You can’t beat it. So far it simply sounds too good to be true. But it really isn’t. It is just too far outside the box for those still trapped in the Political Industrial Complex. Thankfully, they are not required for Cain to win or his plans to be implemented.

41 responses so far

41 Responses to “Cain Way Ahead In Iowa – News Media Struggles With 9-9-9 Math”

  1. WWS says:

    wow – when I finished reading that long description of Cain’s plan from his website, all I could think of was a trumpet playing “waah waah waah waaaaaaahhhh…….” In descending scale.

    I think I know too much about taxes, I have the same disease that everyone else who knows too much about them has. It’s manifested by an extreme despair at the knowledge that every new system we try will break down in even more bizarre and disastrous ways than the old one did.

    on the positive side, often change is good for it’s own sake, as Washington Irving wrote. “Change is often to be preferred for it’s own sake, such as when one is on a long and bumpy coach ride, it is always preferable after a time to shift positions and be bruised in some new spot.”

    alright, that sounds like Debbie Downer. I’ll quit.

    waah waah waah waaaaaaahhhh…….

  2. Frogg1 says:

    Real Clear Politics has Cain the frontrunner +.05 now.

  3. Frogg1 says:

    Under the Fair Tax (eventual goal of the 999 plan) used items aren’t taxed because they have been taxed once already. It did tax new houses, food, and all services, including rent. Dick Morris, in a recent video defending 999, said the average household consumption would be about 75% of your net income (after the 9% income comes off the top). I’m not sure where he got that rate from (I guess it is an average). Assuming 999 taxes the same as the fair tax then it seems rent would be taxed at 9%. However, I still say….your mortgage payment would not include 9% because the 9% was already included in the price of the house. Your mortgage payment is simply paying back the loan for your purchase and the 9% sales is already included inside your mortgage payment and pro-rated out). Rent on the other hand has it added in month by month. Red is right, however, there is no detailed plan available to the public. I really like what I see so far though (no doubt there will be tweeks needed). Come to think of it…..do any of the candidates have their full hundred page detailed plan on their campaign webpage? And, now Perry is coming out with a “flat tax” plan. I look forward to the debate between flat tax and fair tax (and 999 transitional plan) because we need to totally change our current tax code. Candidates talking about real reform are the real leaders.

  4. Fai Mao says:

    I wonder if the 9-9-9 plan should not be looked at as a starting point rather than a actual finished product? The reason there are no details is because Congress hasn’t written them yet. A president can suggest laws but not enact them. What it appears that Cain is doing is putting out a somewhat fuzzy verbal frame work of what he wants to see, not a full fledged bill. Remember he didn’t even write the proposal. He hired a consultant to come up with the plan and then he promoted it.

    The true point to me is that the entire US tax code needs to be replaced. Congress needs to come up with a definition of what taxes are for, how much of the GDP should they take and then start completely over. Abolish the whole thing and start over.

    The 9-9-9 plan is a plan that starts that process. It may come out as a 10-5-12 plan or a 12 -0- 15 plan or something but the idea is that the US tax code should be simple enforce, easy to comply with and understandable to the average citizen..

  5. Highlander says:

    AJStrata,

    You’re right, I don’t like your answer. Your site is one I visit daily and I very much look forward to your posts. I asked you a simple, honest, and direct question in the hopes of getting information to help me better understand the issues. Instead I got insults. I hope, in the vagueries of print, you simply misunderstood my intentions in asking the question. I’d prefer not to think of you as a complete asshat.

  6. AJStrata says:

    Highlander,

    I answered as you requested. Directly and (brutally) honestly. Worrying about the infinite future possibilities is a waste of time.

    Now – filter out those possibilities by establishing probabilities.

    So far, the liberals have been able to explode spending, but not taxing. And they are in the process of getting a multi-cycle shellacking by the voters. So I stand by my comment – stop sweating fanciful but unlikely futures.

    BTW, Cain did answer this better. He noted that by removing all the hidden complex business taxes in products and wrapping them up in one visible 9% tax, then voters KNOW when libs run around raising taxes.

  7. Highlander says:

    Thanks AJStrata. I appreciate your time in explaining your position. That was more of what I was looking for – as I know almost as little of economics as does Obama. I am intrigued by Cain’s plan and wanted to be able to explain and, if necessary, defend it. My question came from my desire to be educated. And my admiration of your work on this site led me to believe you could do so ably. I don’t think however, I would win over many hearts and minds among my liberal-leaning friends and co-workers, by accusing them up-front of intellectual incontinence – however accurate. ; )

  8. AJStrata says:

    Highlander,

    Well, my apologies for coming off too strong. Some days I let my frustration with the political dysfunction in DC bleed over to all my other interactions.

    Cheers

  9. Highlander says:

    AJStrata,

    Ditto.

  10. Redteam says:

    WWS:
    “wow – when I finished reading that long description of Cain’s plan from his website, all I could think of was a trumpet playing “waah waah waah waaaaaaahhhh…….”

    You read a long description of the plan? on Cain’s Website? Is there more than one Cain presidential website? I only see a general outline of a plan at the site I go to. I would very much like for someone to provide a link to the plan, not a description of the plan. And yes, there is a difference.

    Oh, I did see where Cain is considering changing it to a 9-0-9 plan for some people.(poor people) Just as long as I’m in the 0-0-0 class, he can change it all he wants to. If you want to see the 9-0-9 plan, go to Cain’s website.

    definition of ‘poor people’ Those persons that are successful in hiding their income from the government.

  11. Redteam says:

    Frogg1 says:
    October 20, 2011 at 11:33 pm

    Under the Fair Tax (eventual goal of the 999 plan)

    Hey Frogg1, would you supply a link to the ‘Fair Tax’ plan?

  12. Frogg1 says:

    Red, I haven’t read the Fair Tax book so I just did a google and found some references. I’m no expert, sorry. I also don’t know all the pros and cons of flat tax vs fair tax; but, what I do know I lean towards favoring the Fair Tax because it gets rid of the hidden taxes as well as taxes the hidden income when things are purchased. Anyway, things will get tweeked no matter what we do. I just know that the current tax code is poison. Keep an open mind, ok?

  13. Frogg1 says:

    Cain still surging in second IA poll:

    Cain Leads Romney By Double Digits in IA
    http://davidwissing.com/?p=16262

    Herman Cain 37%
    Mitt Romney 27%

  14. Frogg1 says:

    It’s painful to see Cain muddle his abortion explanation so poorly. It is early in the game and he has time to smooth it over. His agenda will be one of economics (not social). I hope his actions speak louder than his muddled words to the one issue anti-abortion conservatives:
    ———————–

    “I have come to understand that Herman Cain has in reality done far more for the pro-life movement than I ever have. For instance, he donated $1 million of his own money in an attempt to encourage black voters to vote pro-life. His 2004 Senate campaign made life a central issue. His work opposing abortion – especially among the black population – has led many leftist organizations to denounce him with hysterical, shrieking screeds; which is probative evidence of the fact that they were to some degree effective.

    Herman Cain’s statements on abortion during this campaign season have not been as clear as they should have been. I have no idea why he couldn’t have re-issued his 2004 statement when questioned this year. There is no reason that someone possessed of pro-life convictions that are as firm as Herman Cain’s undoubtedly are should have stumbled badly enough to trip the radar of many pro-lifers.”

    http://www.redstate.com/leon_h_wolf/2011/10/21/a-mea-culpa-on-herman-cain-and-abortion/

  15. Frogg1 says:

    VIDEO: Herman Cain introduces 999 “Opportunity Zones”
    http://www.therightscoop.com/herman-cain-introduces-999-opportunity-zones/

  16. Redteam says:

    Thanks for your response Frogg.
    I think Cain has all good intentions, and I know the Plan has to be passed by congress.
    I’m just amazed at all the people that can state so much about what the plan will do when there IS NO PLAN. only a plan to have a plan.
    And for all those that think I’m wrong, prove it by supplying me a link to “the plan’ not a description of a plan to have a plan.

  17. Frogg1 says:

    Cain Takes In Over $1 Million Per Week, Already Beating Q3 Total

    Read more: http://www.businessinsider.com/cain-raising-1-million-per-week-2011-10#ixzz1bfPDjv82

  18. Frogg1 says:

    Redteam, you are right about that. There are so many assumptions being made about the 9-9-9 plan. I think Cain tried to make it sound as simple as possible more for the messaging aspect than anything. I know he talked about the empowerment zones early on (almost from the beginning) yet didn’t release the details until recently. Cain grew up poor. Does anyone thing he would honestly put out a program that would hurt the poor? Secretly, I think he planned to make an adjustment for the sales tax aspect on the poor (just like the fair tax) from day one also. Think about it, though…..can anyone name even one of Romney’s 59 points in his 59 point plan? It was probably a brilliant decision to start out simple by Cain’s accountancy advisor. But, rest assured…..if any tax plan by anyone is a bad deal it won’t pass. I am more worried about a good plan being denied the people due to partisan politics and demonization. Here is a link on the Fair Tax that looks pretty good:
    http://www.fairtax.org/site/PageServer