Herman Cain's 9-9-9 tax plan has its flaws, but until recently it had the virtue of being the only plan that started with blowing up the current tax code instead of tinkering with it. Now, though, things are starting to liven up as other GOP candidates start to realize the need for radical structural reeform.
The plan starts with giving Americans a choice between a new, flat tax rate of 20% or their current income tax rate. The new flat tax preserves mortgage interest, charitable and state and local tax exemptions for families earning less than $500,000 annually, and it increases the standard deduction to $12,500 for individuals and dependents.
This simple 20% flat tax will allow Americans to file their taxes on a postcard, saving up to $483 billion in compliance costs.
A tax option with limited deductions or under the current U.S. income tax code. Anyone who strongly favors a deduction or credit under the federal government's current complex income tax system would have the choice to keep filing that way.
This optional flat tax system will create a new personal deduction for every adult of $10,000 to $12,000 (double for married couple), which would be above the established poverty level at $40,000 to $48,000. The current $1,000 tax credit for each child age sixteen or younger would also apply, as would the current earned income tax credit (EITC).
Should we have a 20 percent flat tax or a 15 percent flat tax? Now, that's my kind of debate. Both would make it voluntary, though, which seems to introduce an unnecessary level of complexity. The one Republic with whom we probably wouldn't see a major reform proposal is Mitt Romney. His plans for revision run on for about 160 pages.
