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Cain Tweaks Tax Plan

Leroy Baker,, New York

25 October 2011

US Republican presidential candidate, Herman Cain has altered his proposal for a universal flat rate tax, dubbed the ‘9-9-9 Plan’. The former Godfather’s Pizza CEO caused controversy in the US after revealing plans for a reform of US tax, which would replace the existing system with a flat 9% business tax, 9% individual tax and 9% national sales tax.

According to Cain’s campaign website, “it [the 9-9-9 Plan] taxes the broadest possible base at the lowest possible rates. It is neutral with respect to savings and consumption, capital and labor, imports and exports and whether companies pay dividends or retain earnings.” The proposal has received some praise, with former Treasury official Gary Robbins claiming a potential boost in GDP by USD2 trillion, the creation of six million jobs and an increase in business investment by one third.

However, Cain has received criticism for his plan to simplify the US tax system. The Tax Policy Center has decried the 9-9-9 Plan’s potential impact on the US economy, stating that businesses and individuals will suffer taxes which “are essentially the same as the base of a national sales tax.”

Cain has since announced modifications to the plan. The reformed plan will provide “empowerment zones” in cities to support small businesses and create jobs. Cain’s altered plan will grant exemptions to businesses that invest in these zones as a way to boost economic development in poorer inner city neighbourhoods.

Cain supported his modified plan by saying: "We carved out a substantial amount from the aggregate 9-9-9 Plan tax base, enough to exempt those in poverty, and we will work with Congress to best apply these in a way to break the "poverty trap" and replace it with positive incentives that encourage people to work and take risks in this economy."

TAGS: individuals | tax | small business | economics | business | tax incentives | gross domestic product (GDP) | tax rates | United States | tax breaks | tax reform | individual income tax

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