Cain Could Benefit Handsomely From '9-9-9'

Presidential candidate Herman Cain made over a dozen stock sales over the past year and a half that earned him between $230,000 and $1.3 million in capital gains — income that would not be taxed at all under his “9-9-9” plan, according to his own financial disclosure statement reviewed by NBC News.

Cain’s 9–9-9 proposal has kicked off fierce controversy spurred by criticism that it will primarily benefit wealthy Americans — in part by eliminating all taxes on capitals gains from the sale of stocks and bonds.

Former Reagan administration official Bruce Bartlett recently called Cain’s proposal a “distributional monstrosity” because “with no tax on capital gains, the rich would pay almost nothing” while taxes on the poor and working class would increase.

On Saturday, Bartlett said Cain, the former CEO of Godfather’s Pizza, is one example of the sort of wealthy investor who would reap the most benefits from his proposal. “No question about it,” said Bartlett. “The wealthier you are, the more your income is going to come from capital gains. And [Cain] is a wealthy man.”

On Saturday, Cain’s campaign did not dispute the figures on Cain’s income from stock sales, calculated from his disclosure statement filed with the Federal Election Commission on August 24, 2011.

But J.D. Gordon, his spokesman, said Cain under his proposal would still have to pay nine percent in income taxes — “the same as everybody else.” He added that the candidate’s plan to set uniform income tax rates and eliminate all capital gains taxes would expand the economy and create jobs by spurring new investment.

In an interview this week, Rich Lowrie — a Cleveland-area market analyst who serves as Cain’s chief economic adviser and helped craft the 9-9-9 plan — said there is nothing unfair at all about eliminating capital gains taxes for stock investors like Cain.

“If you want the same treatment as Herman Cain, it’s available to everybody,” he said in an interview. “All you have to do is work and follow the same path as Mr. Cain. That’s fairness.”

Cain is hardly the wealthiest of Republican presidential candidates. Mitt Romney’s financial disclosure, for example, shows that he is worth between $190 million and $250 million — far more than Cain — with tens of millions of dollars in reported income from capital gains. But Romney has not called for the elimination of all capital gains taxes — only for middle class families, a proposal that is similar to one supported by President Obama. (Texas Gov. Rick Perry has asked for an extension and not yet filed his disclosure statement with the FEC.)

Currently, the tax rate on capital gains from the sales of stock is 15 percent — and is slated to increase to 20 percent in 2013. It is impossible to know how much in capital gains taxes Cain has paid on his stock sales because his financial disclosure statement provides no information on how much he paid for the stocks he sold or when he purchased them. Gordon, his spokesman, declined to say whether Cain would release his income tax returns.

But Cain’s financial disclosure with the FEC shows that he has profited from a multifaceted business career that earned him $846,691 from a radio talk show, speaking appearances and directors fees on three corporate boards during the 20-month period covered by the statement (Jan. 1, 2010, to this August). His total net worth, according to figures in the statement, is between $1.85 million and $4 million.

The disclosure also shows that Cain has been an active investor in the stock market. His largest capital gains came from the sale of 5,738 shares of Coca Cola common stock. Cain reported income from that sale of between $100,000 and $1 million.

He also reported, on another occasion, a separate sale of 2,163 shares of Coca Cola stock for which he reported earning between $15,000 and $50,000. (The financial disclosure requires candidates to disclose their income from such sales only in broad categories.)

Cain also reported capital gains from the sale of 1,999 shares of Whirlpool stock that he valued at between $50,000 and $100,000; another sale of 2,000 Whirlpool shares (valued between $50,000 and $100,000); the sale of stock in Berkshire Hathaway — the firm headed by Warren Buffet (valued at between $5,000 and $15,000) and the sale of 2,000 shares of Sonic Wall Inc. (valued at between $5,000 and $15,000). He also reported smaller stock sales in seven other firms.

The abolition of capital gains taxes is hardly the only part of his proposal that has generated debate — and fierce criticism. Under the proposal, the new 9 percent uniform income tax rate would eliminate all exemptions and deductions, including those for child care, school tuition, health savings accounts and interest on home mortgages. There would also be a 9 percent business tax and a national 9 percent federal sales tax — with no exemptions, even for food and medicine. This would be paid by consumers on top of state and local sales taxes.

Lowrie said in the interview that the elimination of “hidden taxes” built into the tax code would free up market forces and quickly lead to sharp drops in prices, resulting in no net increases paid by consumers when they go shopping.

But critics say the new sales taxes would hurt lower-income consumers the hardest. Edward Kleinbard, a professor of tax law at University of Southern California, has calculated that a family of four with an income of $50,000 could face a tax hike of more than $5,000.

“Anybody who works for a living and has an income below six figures a year is going to find him or herself very sorry that they live in a 9-9-9 tax environment,” Kleinbard said.


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Comments are posted from viewers like you and do not always reflect the views of this station.
  • by mom on Oct 21, 2011 at 01:01 PM
    ok...now it should be the 111 plan...I work 3 jobs and still cannot make ends meet.
  • by Truth on Oct 19, 2011 at 07:48 PM
    A simple chart to show how Herman Cain's 999 tax and how it would actually effect you: (http://wapo.st/rqA1Tl)
  • by Robert Location: Pinetown on Oct 18, 2011 at 08:59 PM
    Show me a Rich Democrat who does not own a Stock? Then you just showed me a real fool! Please comment here and give me a poor Democrat in Congress or the Senate who does not invest in the Stock Markets. They just put their money in a bank savings account with 2% interest
  • by Jasper Location: NC on Oct 18, 2011 at 08:30 PM
    Love the WITN Dem Lib Obama loving media. Cain Could Benefit Handsomely From '9-9-9'? - Only Herman and no one eles?. What seems like the WINT Dem Lib Media is now affraid of a smart Black Man to oppose our Golfer n Chief
  • by Norma Location: Bath on Oct 18, 2011 at 08:15 PM
    What a black politican who does not want to tax your savings? Herman Cain must be a madman LOL. Maybe he is the true Messiah
  • by Linda Location: Washington on Oct 18, 2011 at 08:06 PM
    I agree why give the government my money I saved to invest in it is my money. Herman got my vote! At one time a had to cash in a IRA , I got tax 25 % on the money I saved. Herman is real Hope and Change
  • by Wolfgang Location: Chocowinity,NC on Oct 18, 2011 at 07:44 PM
    Obama would like this idea. I bet Hussein & Michelle owns many stocks! Cain Could Benefit Handsomely From '9-9-9' We all could benefit from this plan - Think about it? This is a great idea. Now more people will start to invest ,and when you need the money. It is your money now! Not the Governments who take taxes out of the money you saved to retire on. Great Idea Herman Cain
  • by Ben Location: NC on Oct 18, 2011 at 07:27 PM
    If thats true all your IRA's & 401k's will not be taxes also when you retire. - Now your retirement funds when taken out are taxed at about 20% that goes to Obama. When you really need the money when your 64.
  • by Ha Ha Ha on Oct 18, 2011 at 05:13 PM
    I got to tell you. I cannot believe anybody is voting Republican in 2012. These guys are trying to turn this country over to the one percent. They change voting laws, vote against Unemployment Benefits, Vote against Jobs bills, Crush Union rights, they don't even vote for what they once believed in Infrastruc­ture and Tax Breaks for the middleclas­s. I cannot believe I used to be a Republican back in the early 80's. This party needs to learn how to care about the 99 percent of Americans before they are allowed back into the White house and should be thrown out of congress in 2012. There whole agenda is to toss Obama out of the White house­. Maybe we should teach them a lesson and toss them out of congress and reelect the President!
    • reply
      by April on Oct 18, 2011 at 06:28 PM in reply to Ha Ha Ha
      Rebuttal to - Ha Ha Ha on Oct 18, 2011 at 08:13 PM. The Republicans got rid of Obama's Chinese credit card.
    • reply
      by 40some on Oct 19, 2011 at 07:51 PM in reply to Ha Ha Ha
      afraid you might be in the minority on that one.
  • by Anonymous on Oct 18, 2011 at 05:00 PM
    GOP=Greedy One Percent.
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