Erin BreenChannel 2 News
Reforming taxes in this country is surfacing as a theme with Republican candidates vying to run against President Barack Obama. Just today Governor of Texas, Rick Perry announced a plan he calls 'Cut, Balance and Grow.' Basically it cuts federal income taxes to a flat 20%. It would wean us off of Social Security by allowing personal retirement accounts instead. And it would cut corporate taxes.
But it's Herman Cain's plan that's gotten the most attention - 9-9-9. And he's selling it one audience at a time. "It's simple and it will work," Cain recently told a group of Republicans meeting in Las Vegas last week.
But not everyone agrees with that. Economist Brad Schiller at UNR is one who says the simplest is not always the best.
"It's a great slogan, you have to give him that," Schiller said, "But you have to look at the real facts and the fact is that Nevada would be hurt by it."
Schiller says that while it would eliminate a lot of loopholes it would also eliminate a lot of tax advantages we have grown accustomed to like the home mortgage interest deduction.
"If you took that away," Schiller said, "the values of homes would drop another 20-25%, and we just can't take that. Plus, in a state that depends on construction and a state where we've already seen a 50% drop in housing values losing that deduction just wouldn't work."
He also says losing the charitable giving deduction would mean a drop for charities - being unable to deduct state and local taxes from the feds would also make it harder for local governments to keep services status quo. In Nevada we'd be paying close to 17% sales tax when you add the 9% Cain has proposed.
"Plus, that 9% income tax might not seem so fair in Nevada. It's a huge cut for the rich and a huge hike for the poor and Nevada is a low-income state so it would be hit pretty hard," Schiller said.
Schiller says the country does need tax reform but the kind of tax reform we need will take some hard work and the current administration and Congress seem unwilling to do it.
And with Cain's plan out there, and Perry's announced today, it's hard to tell what we may be considering for the election, which is still a year away.
