Wednesday, October 12, 2011

Mother Jones - Herman Cain's 9/9/9 Plan Raises Taxes on the Poor


Herman Cain has been saying all the right things to become the anti-Romney candidate for the fundamentalist segment of the GOP. He has also said things about the #OccupyWallStreet people that fit in perfectly with the corporate agenda the demonstrations are against:
I don't have facts to back this up, but I happen to believe that these demonstrations are planned and orchestrated to distract from the failed policies of the Obama administration. Don't blame Wall Street, don't blame the big banks, if you don't have a job and you're not rich, blame yourself! It is not someone’s fault if they succeeded.
Why let a silly thing like facts get in the way of your agenda?

His tax plan will make a lot more American's poor and homeless - so Mother Jones breaks it down (with a quote from a former conservative economics adviser) and reveals the effect this will have on the poor.

Cain's plan is pretty simple (or simple-minded): 9 percent corporate tax, 9 percent sales tax, and 9 percent income tax. Easy to remember, easy to talk about, and unfair to the majority of Americans. The wealthy would get a cut in taxes from 37% percent or higher to 9% - the poor would get an increase from no income tax to 9%, plus a new 9% sales tax that DOES NOT exempt food, as most state and local sales taxes do.

Here is some of the Mother Jones article, which is mostly a quote from Bruce Bartlett, economic adviser to Reagan and Bush the first:
Cain was asked at the debate to explain away the charge that his 9/9/9 plan would effectively raise taxes on low-income workers. (Among other things, Cain's plan would implement a sales tax on groceries, which only two states currently do.)

Cain rejected the notion, but the facts are pretty clearly not on his side. Don't take it from me, though. None other than Bruce Bartlett, a former economic adviser to Ronald Reagan and George H.W. Bush, says so. Here's how he explained it at the New York Times' "Economix" blog earlier this week:
It's important to understand that the 9 percent rates on personal and business income would apply to very different tax bases than now exist. For individuals, the tax would apply to gross income less only the deduction for charitable contributions. No mention is made of a personal exemption.

This means that the 47 percent of tax filers who now pay no federal income taxes will pay 9 percent on their total income. And elimination of the payroll tax won’t even help half of them because the earned income tax credit, which Mr. Cain would abolish, offsets both their income tax liability and their payroll tax payment as well.

Additionally, everyone would now pay a 9 percent sales tax on all purchases. No mention is made of any exemptions from this tax, so we may assume that it will apply to food, medical care, rent, home and auto purchases and a wide variety of other expenditures now exempt from state sales taxes. This would increase their cost of living by 9 percent while, at the same time, the poor would pay income taxes.
Bartlett, no lefty, calls Cain's plan a "distributional monstrosity." The Center for American Progress, meanwhile, found that the lowest quintile of earners would pay nine times more under the 9/9/9 plan—18 percent of their total income, versus 2 percent today.
Cain makes Romney seem rather moderate and measured in his approach. That is scary.

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