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Bachmann Campaign Press Release - "9-9-9" Targets the Middle Class and Lays the Groundwork European-Style Value-Added Tax

October 18, 2011

Herman Cain's signature "9-9-9" plan raises taxes on middle class Americans and lays the groundwork for a growth-suppressing European-style "value added tax," both in Cain's proposed national sales tax and within his "corporate tax."

"If you have a family of four with an income of just under $50,000, they could end up paying more under the Cain plan. Currently, they are taxed around $3,850 in income tax. Under Cain's plan, they would be taxed at 9 percent or pay $4,500. That's $650 more. Although the family would save almost $4,000 in Social Security taxes, it would have to give up the child tax credit worth the same amount. Furthermore, it would pay an additional national sales tax of 9 percent on everything purchased, including groceries and clothes, which totals about $2,000. That means under the Cain plan that family could end up paying $2,725 more." (Ben Forer, "What Could Cain's 9-9-9 Plan Mean For You?" ABC News, abcnews.go.com, 10/12/2011)

"…a low income couple with children and making $20,000 a year paid no taxes in 2010, but would have to pay almost $2,000 under the 999-plan." (Aaron Brilbeck, "Herman Cain's 999 tax proposal applied to real Iowans," WHO-TV, www.whotv.com, 10/13/2011)

Cain's new 9 percent national sales tax mimics a European-style VAT, but his so-called 9 percent "corporate tax" is not a simply reduction of the current tax on corporate profits, but actually a brand new tax on corporate revenues that functions effectively the same way that a VAT does, imputing costs during every stage of production that are ultimately paid by the consumer.

"The misunderstanding concerns the third component. Most media reports, taking the lead from Cain's own terminology, continue to describe it as a business or corporate tax or even as a tax on corporate profits. Yet, the tax is actually a value added tax (VAT), a fact confirmed by the economic analysis circulated by Cain's campaign.

"A VAT and a retail sales tax are conceptually equivalent consumption taxes, apart from administrative and compliance issues. The plan is therefore better described as featuring a 9 percent income tax and an 18 percent consumption tax, with half of the latter collected using the VAT methodology and the other half collected using the retail sales tax methodology." (Alan Viard, "Cain's 9-9-9 tax plan: the good, the bad, and the ugly," The American, blog.american.com, 10/13/2011)

Sensible tax reform will lower the burden on American business, simply the tax code for all taxpayers, and make the U.S. the most competitive engine of economic growth in the world.

As a former federal tax litigation attorney, Congresswoman Michele Bachmann has seen firsthand the how the current code devastates American job creators. As President, she will reform the tax code to produce real American jobs, right now, without creating new taxes.

Michele Bachmann, Bachmann Campaign Press Release - "9-9-9" Targets the Middle Class and Lays the Groundwork European-Style Value-Added Tax Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/298828

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