Cain defends '9-9-9' US tax plan


Republican presidential candidate Herman Cain has agreed his "9-9-9" tax reform plan would raise taxes for some Americans.


Mr Cain rejected criticisms that it would help the rich while hurting the poor.

"Some people will pay more. But most people will pay less," said Mr Cain, a former chief executive of Godfather's Pizza who has never held elected office. The acknowledgment of higher taxes could give ammunition to a growing number of Cain critics, including anti-tax crusader Grover Norquist, who opposes his plan.

Mr Cain entered the presidential race as a long shot but has recently shown signs of front-runner status with backing from fiscally conservative Tea Party activists who believe his plan would lead to lower federal taxes.

The 9-9-9 plan would replace the complex US tax code with a 9 per cent income tax, a 9 per cent corporate tax and a new 9 per cent national sales tax.

"Who would pay more? The people who spend more money on new goods. The sales tax only applies to people who buy new goods, not used goods. That's a big difference," said Mr Cain on NBC television's Meet the Press.

In a separate interview, Mr Cain predicted his plan would spark economic growth because of its flat tax on corporate profits.

"It's going to boost this economy quickly because of the last nine. ... If businesses can subtract purchases and capital expenditures ... that's what's going to spur this economy because businesses are going to say, 'We love this.'

"It provides certainty," he added. "Businesses only want to know what the ground rules are."

General Electric chief executive Jack Welch weighed in on the side of Mr Cain on Twitter. "Watching Herman Cain on Meet the Press. His no BS clarity is so refreshing," Mr Welch tweeted. NBC's parent company, NBC Universal is jointly owned by Comcast and General Electric.

Mr Cain placed first in an NBC-Wall Street Journal poll among Republican candidates and second in a Reuters/Ipsos poll but his fundraising totals in the third quarter were far behind the leading contenders - former Massachusetts Governor Mitt Romney and Texas Governor Rick Perry.

President Barack Obama, a Democrat, faces a rough fight for re-election in November 2012, but his Republican rivals must convince voters they have a better plan to create jobs and get the economy moving again.

Despite popularity in some quarters, Mr Cain's 9-9-9 plan is under fire from across the political spectrum and independent analysts who say it would raise taxes on the poor and middle class.

The Wall Street Journal warned a national sales tax - a fixture of many western economies - could raise taxes on goods in some areas to 17 per cent or more when combined with state and local levies.

"If you add them together, yes, you'd get that number," Mr Cain said on Meet the Press. But he dismissed the idea of considering state taxes alongside the 9-9-9 plan as "muddying the water" because federal taxes would go down in most cases.

He said the plan's elimination of "invisible" taxes now paid by manufacturers under the current system would lead to lower retail prices.

"In reality, those taxes go away, so the prices of goods don't go up," Mr Cain said. "They actually go down based upon competition. Competition drives prices down."