Herman Cain’s 9-9-9 Plan: Structure, Winners, and Losers

Herman Cain’s 9-9-9 plan was a 2011 campaign proposal to scrap most federal taxes and replace them with three flat 9 percent levies: a 9 percent individual income tax, a 9 percent business tax, and a 9 percent national sales tax. It became the signature idea of Cain’s run for the 2012 Republican presidential nomination, briefly lifting him to frontrunner status before independent analysts concluded it would raise taxes on roughly 84 percent of American households while cutting them sharply for the very wealthy.¹

What the Three 9s Actually Were

Each of the three taxes worked differently, and the differences mattered more than the shared rate suggested.²³

The 9 percent individual tax applied to wage income. Nearly every existing deduction, exemption, and credit went away. Only a charitable-contribution deduction survived.
The 9 percent business tax was a subtraction-method value-added tax on sales minus purchases from other businesses and investment goods. Wages were not deductible, which meant labor costs were effectively taxed.⁴
The 9 percent national sales tax was a new federal retail tax collected at the register, stacked on top of any state and local sales taxes.³

An “empowerment zones” concept would have offered additional deductions for businesses and residents in economically distressed areas, though the details stayed thin throughout the campaign.³

What the Plan Would Replace

The 9-9-9 structure was designed to eliminate the existing federal individual income tax, the corporate income tax, payroll taxes including self-employment taxes, estate and gift taxes, and capital gains taxes.² Gone too were the Earned Income Tax Credit, the child tax credit, and all personal and dependent exemptions.⁵ That last point drove much of the distributional fight that followed, because those provisions are what currently zero out federal income tax bills for many low-income families.

Who Would Have Paid More and Who Would Have Paid Less

The Tax Policy Center, a joint project of the Urban Institute and the Brookings Institution, produced the most detailed independent analysis. Using 2013 income levels, it estimated the plan would raise about $2.55 trillion, roughly the same as the existing tax code — supporting Cain’s “revenue neutral” claim, but only if he did not add relief for lower-income households.⁵⁴

The distributional numbers were what drew the strongest reactions:

Overall, 84 percent of American households would pay more.¹
Middle-income households earning between $64,000 and $110,000 would see an average tax increase of about $4,300. Their effective federal tax rate would climb from 18.8 percent to 23.7 percent.⁴
Among households earning $10,000 to $20,000, almost 98 percent would pay more, with an average increase of roughly $2,485.⁵
The top 0.1 percent, those earning more than $2.7 million, would receive an average tax cut of nearly $1.4 million, raising their after-tax income by close to 27 percent.⁴

The Tax Policy Center noted an inversion: a household earning more than $2.7 million would pay a smaller share of its income in federal taxes than one earning less than $18,000.⁴ Eliminating taxes on capital gains and investment income sent large cuts to top earners, while the new sales tax hit every dollar spent by families lower down the scale. William Gale of Brookings went further than the Tax Policy Center’s revenue estimate, arguing the plan would “raise far less revenue than the current tax system” and was either “regressive, revenue-losing, or both.”⁶

Why Low-Income Families Would Be Hit Hardest

Three features combined against low earners. First, the credits and exemptions that currently zero out their income tax bills disappeared. Second, they would face a new 9 percent federal sales tax on every purchase, including necessities. Third, the business tax’s disallowance of wage deductions meant its cost would be passed on to workers and consumers, adding a hidden layer of tax on top of the visible sales tax. The Tax Policy Center calculated that the combined effect of all three taxes was equivalent to a single 25.38 percent national sales tax, a burden that falls hardest on those who spend most or all of what they earn.⁵

Criticism came from both sides. Bruce Bartlett, a former economic policy adviser to President George W. Bush, called the plan a “distributional monstrosity” that was “exceptionally ill conceived,” pointing out that because 47 percent of tax filers then paid no federal income tax, the new sales tax alone amounted to a net tax increase for them.⁷ Daniel Mitchell of the libertarian Cato Institute raised a separate concern: adding a national sales tax would give the federal government an entirely new revenue stream, one future politicians could raise.⁸

The 9-0-9 Revision

On October 21, 2011, during a speech at Michigan Central Station in Detroit, Cain announced a revised version. Under “9-0-9,” individuals at or below the poverty line would be exempt from the 9 percent individual income tax, leaving them subject only to the business tax and the sales tax. He also floated “empowerment zones” for struggling areas with rates as low as 3-3-3.⁹

Analysts were unmoved. Roberton Williams of the Tax Policy Center said the sales tax alone was a “deal breaker” for poor families, and the business tax would still reach low-income consumers through prices and wages. His estimate that 84 percent of families would be worse off did not meaningfully change. Gary Robbins of Fiscal Associates, who had analyzed the plan for the Cain campaign itself, acknowledged that the poverty-level break Cain actually proposed was “far smaller” than the hypothetical relief he had modeled earlier.¹

How 9-9-9 Fit Into a Bigger Plan

The 9-9-9 structure was not meant to be permanent. It was Phase 2 of a three-stage overhaul. Phase 1 would cut the top individual and corporate income tax rates to 25 percent and eliminate the capital gains tax as an immediate stimulus.¹⁰⁶ To make midstream rate hikes harder, Cain proposed requiring a two-thirds congressional vote to raise any of the 9 percent rates, though critics questioned whether such a requirement would be constitutional.¹¹

What Happened to the Plan

Cain’s rivals attacked 9-9-9 in the October 2011 Republican primary debates. Michele Bachmann warned that “when you take the 9-9-9 plan and turn it upside down… the devil’s in the details,” a reference to 666. Rick Santorum cited the Tax Policy Center’s 84 percent finding, Ron Paul called the plan “regressive,” and Rick Perry said flatly, “It’s not gonna fly.”¹²¹³

Cain withdrew from the race in December 2011, not because of the plan’s policy problems but amid allegations of sexual harassment and an extramarital affair, which he denied.¹⁴ The proposal was never introduced as legislation, but the three-number slogan endured as the thing most people associated with his political career. Cain died on July 30, 2020, at age 74, of complications from COVID-19.¹⁵

1
NPR. Will Cain’s New 9-0-9 Tax Plan Really Help the Poor
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Urban Institute. Herman Cain’s 9-9-9 Tax Plan
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Committee for a Responsible Federal Budget. Herman Cain’s 9-9-9 Plan
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Tax Policy Center. Cain’s 9-9-9 Plan Would Cut Taxes for the Rich, Raise Taxes for Almost Everyone Else
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Urban-Brookings Tax Policy Center. Herman Cain’s 9-9-9 Tax Plan
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Brookings Institution. The 9-9-9 Plan Needs to Be Recalibrated
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ABC News. Bush-Era Economic Adviser Calls Cain’s 9-9-9 Plan a Monstrosity
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Cato Institute. Look Before You Leap: Cain’s 9-9-9 Tax Plan
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NPR. For Poor, Cain Says His 9-9-9 Plan Is Now 9-0-9
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Christian Science Monitor. Herman Cain: Who Came Up With the 9-9-9 Plan
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CBS News. Huntsman: I Thought Cain 9-9-9 Plan Was Price of Pizza
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Los Angeles Times. Cain’s 9-9-9 Plan: Is It the Price of a Pizza or the Mark of the Devil
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Los Angeles Times. Vegas Debate: GOP Candidates Attack Cain’s 9-9-9 Plan
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TIME. Herman Cain Dies: Legacy and Trump
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Washington Post. Herman Cain, Former Republican Presidential Hopeful, Dies of COVID-19