WASHINGTON -- Herman Cain's bid for the Republican presidential nomination is fueled in part by his proposed tax code overhaul that tax policy veterans say doesn't add up. Cain's proposal is gaining attention after a Washington Post-ABC News poll released Tuesday found his campaign is tied for second place with Texas Gov. Rick Perry among Republicans and Republican-leaning independents.
In campaign stops, Cain touts his 9-9-9 plan as a concept that will lead to a fairer tax system. The proposal would tax sales transactions and gross income for individuals and businesses at 9 percent while eliminating levies on capital gains. It also ends the taxes that fund Social Security, and corporations wouldn't pay a tax on dividends.
Following the broad contours of Cain's plan, the federal government would have collected almost $2 trillion in 2010, according to a Bloomberg News calculation based on data from the Commerce Department's Bureau of Economic Analysis. The government actually collected almost $2.2 trillion that year, according to the White House Office of Management and Budget.
Tax policy experts say Cain's plan is unrealistic because it presumes that no deductions and exemptions will be permitted, no matter now popular.
"Either Herman Cain is the tax messiah or is proposing a system that has no correspondence to real-world tax systems," said Edward Kleinbard, a former chief of staff to the congressional Joint Committee on Taxation. He is now a professor at the University of Southern California Gould School of Law.
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