Need I say more?
The Republican presidential candidate, who used to be CEO of Godfather’s Pizza, has proposed the “9-9-9” tax plan: a 9 percent national sales tax, a 9 percent business tax, and a 9 percent federal income tax for everyone, regardless of income level.
The President, whose American Jobs Act has been repeatedly defeated in Congress, has proposed cutting payroll taxes in half for the next year and increasing taxes by less than 1 percent on incomes exceeding $1 million.
Approximately 80 percent of Americans make less than $100,000. Did you ever think you’d see the day when a Republican frontrunner proposed tax increases on 80 percent of Americans? While a Democratic president proposed tax cuts for the same people?
Under Cain’s plan, a household making between $64,000 and $110,000 would see their federal tax rate increase from 18.8 percent to 23.7 percent. That’s an extra $4,300 that they owe the government.
But wait. If you make more than $2.7 million in a year — which puts you in the top 0.1 percent — Cain’s proposal would lower your federal tax rate from 32.9 percent to 17.9 percent. That’s an extra $1.4 million in your pocket!
Yet most Iowa Republican caucus-goers support the 9-9-9 plan. Why? Because Cain hasn’t told them the truth.
Among people making less than $50,000 a year, 34 percent think they’d be better off under 9-9-9 and 33 percent think they wouldn’t be affected. That’s stunning ignorance from the population that controls the beginning of the primaries.
Moreover, Republicans really do think that most Americans’ taxes are too low.
One statistic that always strikes a chord with Republican audiences is the 47 percent of Americans who don’t pay any federal income taxes.
But it’s not true. Oh, the statistic is accurate, but the implication is grossly misleading.
“The 47 percent” pay taxes, just not federal income taxes. They pay state taxes, local taxes, payroll taxes, and excise taxes. When you add them all up, even the poorest 20 percent of Americans pay approximately 16 percent of their income in taxes.
Which, by the way, is significantly less than Warren Buffett, who paid 11 percent in 2010.
But Republican audiences don’t know that, and Cain won’t tell them the truth.
The truth is that 9-9-9 would increase the budget deficit by $500 billion. It would increase taxes on the poor after a decade when the population in extreme-poverty neighborhoods has grown by one-third. It would drastically widen the inequality in after-tax income, an inequality that’s already the highest it’s been since the 1920s. It would eliminate all capital gains taxes, allowing Wall Street to stop paying taxes on all their investments in the wake of the worst financial crisis since the Great Depression.
You name the problem — CEO compensation, financial sector profits, corporate lobbying, corruption of campaign contributions, carried interest tax loophole, undertaxed overseas corporate profits, declining labor power and stagnant wages, short-term behavior by corporate managers, underpaid regulators, underfunded Social Security, rising health care costs — and 9-9-9 will make it worse. Because, in every one of those instances, it takes money from people who are suffering and gives it to the people who are causing the problem.
And it won’t stimulate the economy. If you take money away from 80 percent of Americans, who’s going to spend all the money you need to generate economic growth? Certainly not the rich. When their taxes were cut in 1981, the economy grew at 3 percent annually, the same as it did from 1973 to 1979. When their taxes were cut in 2001 and 2003, the economy grew slower than during any previous decade or half-decade since the Great Depression.
And then they invested their tax cuts in Wall Street. Need I say more?
This op-ed was published in today’s South Florida Sun-Sentinel, alongside an opposing view from Prof. Chandra Mishra of Florida Atlantic University. We were asked to assess Herman Cain’s “9-9-9” tax proposal.