Washington (CNN) - Republican presidential hopeful Herman Cain defended his "9-9-9" tax reform plan Sunday, saying the plan is fair and would not cause people with limited financial resources to pay more in taxes than they do currently.
Cain's proposal to do away with the current tax code in favor of a 9% corporate tax rate, 9% individual tax rate, and new 9% national sales tax has become the policy centerpiece of his increasingly popular 2012 White House bid.
On CNN's "State of the Union," Cain said the argument that the plan is not revenue-neutral was based on faulty analysis.
“The people who are saying it will not be revenue-neutral? They are absolutely wrong because they did a static analysis,” Cain said. “We had this done with the dynamic analysis with an outside independent firm so they are making an erroneous assumption.”
Cain also pushed back on the suggestion the plan is regressive because it proposes taxing the rich at the same rate as middle and lower-class people.
“Relative to regression, no, it is not,” Cain said. “If you take a family of four at $50,000, and $25,000, start with the fact that if they're getting a paycheck, they pay 15.3% in the payroll tax. That 15.3 becomes 9 percent. That's a 6 percentage point differential.”
Cain explained that the proposed 9% national sales tax would only be applied to new goods that change hands and not to the sale of used goods. Asked on CBS’ “Face the Nation” what the impact of that would be on the auto industry, Cain said it would lead to the depletion of the existing inventory of used cars. "And, eventually, people are going to start buying new cars. So that's not a big negative," Cain said.
Cain also insisted that, notwithstanding the new additional 9% national sales tax, the poor would not pay more in taxes. Cain reasoned that the lower individual income rate of 9% under his proposal would save lower-wage taxpayers money relative to the amount of payroll taxes they currently pay. Specifically, because of the differential between the current 15.3% payroll tax rate and his proposed 9% flat individual income tax rate, Cain said "9-9-9" would generate savings on individual income taxes for all taxpayers.
“That 6 percentage point difference makes up for a lot of the sales tax that people will have to pay,” Cain said on CNN.
When asked by CNN’s Candy Crowley if he thought the plan is fair, Cain pointed out that under his plan, used goods would not be taxed.
“Yes, it does sound fair, because of the other point that I'm about to make,” Cain said. “If they need to buy a car or a home or some hard goods that are used, they pay no taxes. So they have an opportunity for them to leverage their income.”
In a segment on CNN's "John King, USA" on Wednesday, the specific revenue proposals in Cain's plan were compared with the current tax structure. King showed a significant gap in revenue between Cain's plan, which would bring in $1.768 trillion in revenue, and the current tax structure, which brings in about $2.16 trillion.