The 9-9-9 tax and the flat tax

Herman Cain has gotten a lot of attention for his 9-9-9 tax plan. I've looked into one part of the plan and decided I can't support it. Your responses are appreciated.

The plan is close to the Fair Tax that was discussed a few years ago. I confess, I didn't study the Fair Tax as I felt it had near-zero chance of being passed. I was forced to go look at it some. From what I've read the 9-9-9 plan has not laid out all the details and someone pointed me to the "prebate" part of the Fair Tax for more information.

The problem is that low income people today pay no income tax and will be forced to pay sales tax under 9-9-9. This additional burden on low income people would be offset (under the Fair Tax) by a "prebate", money given to them at the beginning of each month.

However, there is no mention of what happens to the current EITC and it appears to be eliminated. For those unfamiliar, the EITC is a refundable tax credit given to low income workers. The amount of the credit is based on the family size and the amount a person works. As the person's income increases, the EITC increases until it reaches a mid-point. Then it decreases, slower than the increase, until it gets to zero. Think of a standard curve, slightly skewed to the right.

EITC has been touted as "workfare, not welfare" because it encourages people to work. If the person has no earned income, they have no EITC. None other than conservative President Ronald Reagan pushed this program. You may not think the EITC is fair or that some people pay no income tax is not fair, but that's not part of my discussion today. Today, the EITC is the law and it gives low income workers additional cash. Taking that away may be revenue neutral to the government, but not to individuals.

Any tax plan that involves eliminating the EITC should include a plan (tax or otherwise) to address program. If a candidate decides not to replace it, he/she should clearly state that.