NOTE FROM TED: Regrettably, I forgot to include Herman Cain's elimination of payroll taxes in our calculations at 6pm tonight. Cain's 9-9-9 eliminates the taxes currently withdrawn from your paycheck for Social Security and Medicare - which add up to more than 7 percent of your current income. Your employer pays the same amount for you as well. When that is calculated the average Texas family would see a salary increase of $3,694. The tax bill for the average family would be $8,514. When you figure out what that means for your family, don't forget to add in the raise. I am sorry for the error and very thankful to our viewers who pointed it out.
Cain says it doesn't have to be complicated to be effective, but the plan he's riding to such success is just now being closely inspected. Do the math for your family. You may have different ideas about how it helps or hurts your bottom line.
It sounds so simple.
"Remember 9-9-9 throws out the current tax code," Cain said.
And that's one of the reasons it's so attractive.
"It's an interesting theory," said Houston resident Brandon White.
The 9-9-9 plan scraps the current tax code and all those deductions and replaces it with a 9 percent business income tax, a 9 percent personal income tax and a 9 percent national sales tax.
When you add the local tax on top of Cain's tax, everything in Houston is taxed at more than 17 percent.
"Nine percent doesn't sound like a lot, but in my household there's only one income so it really is a lot," said Houstonian Jessica Piedra.
When we looked at it with the help of Houston economist Barton Smith, we found some serious differences depending on how much money you make.
"For the majority of Americans -- the $60,000 a year or less family -- they're likely to end up with less in their pocket," Smith said.
According to the census, the average Texas family makes $48,286 a year. Nine percent of that is $4,346.
According to Bundle.com, a Texas family spends $42,623 every year. The 9 percent sales tax on that is $3,836.07.
Add it up and that's a tax bill of $8,182 under Cain's plan. Compare that to your current tax bill.
"Based on last year, that would mean I would pay more," said Eliot Kabachnick of Houston.
Part of the problem Cain aims to solve is that 49 percent of Americans don't make enough to pay any income tax after deductions. Under this plan they would pay more and the rich would pay less.
"A household earning over $120,000 would likely be gainers. But to see a big gain it's for those in excess of $250,000," said Smith.
Keep in mind that the top 10 percent of incomes is $120,000 a year. According to Smith's educated guess, that is who is helped the most.
To offset the higher taxes, cain proposes eliminating taxes for Medicare and Social Security. They are currently automatically deducted from your paycheck. If those are eliminated, the average texas family would get a $3,694 annual raise.
And one more note: according to Politifact.com, Cain's 9-9-9 plan is not revenue neutral, but would bring in about $350 billion less than the government brought in this year.
