Tuesday, October 11, 2011

9-9-9: "Raising Cain" or just raising taxes on those who can least afford it?

"Don't condemn me because the first black one was bad."
Republican Presidential aspirant, pizza Godfather and book tour star Herman Cain has caused controversy with various remarks. He's labeled peaceful demonstrators "anti-American" because they call into question income inequality, waves of foreclosures after bailouts of banks and tax-fairness issues.

Worse, he has called African-Americans "brainwashed" because they've trended overwhelmingly toward the Democratic Party - their "plantation masters" according to Cain - since the 1960s when the GOP first ran a presidential candidate who opposed the Civil Rights Act and Republicans began eagerly embracing Dixiecrats who couldn't accept change.  In recycling that racial attack and posing as the "responsible" black man, Cain is giving cover to bigots like Rush Limbaugh who routinely smear black Democrats in the same vein.

And, while pandering to the GOP's racial polarization, Cain has the temerity to describe himself as a "real black man" - as opposed to President Obama.  That one is worthy of contempt, but no further comment.

In all of the brouhaha about Cain's rhetoric as he's rising in the GOP polls, appealing directly to the Tea Party base that is steeped in white resentment and hatred of President Obama, Cain's 9-9-9 tax plan tends to get overlooked. It's a 9% tax on income, a 9% tax on business profits and a 9% national sales tax.  Cain would entirely eliminate capital gains taxes - making even worse one of the most unfair income tax loopholes on the books.

On it's face, Cain's 9-9-9 scheme is obviously a tax break for the rich. Worse, it's a tax increase for the folks with the lowest incomes.  And as formulated it's even a bad deal for many businesses and for job creation.

Cain's plan taxes gross sales, less dividends and cost of purchases, but doesn't include a deduction for wages.  This is truly terrible for small businesses, many of which "profit" primarily by paying decent wages to worker-owners as well as their employees, who are often family members in the smaller enterprises.

Bruce Bartlett, writing at NYT's Economix (check out his detailed analysis) summarizes the plan's impact:
With no tax on capital gains, the rich would pay almost nothing, while elimination of all deductions and credits, as well as imposition of a national sales tax, must necessarily raise taxes on everyone else...

At a minimum, the Cain plan is a distributional monstrosity. The poor would pay more while the rich would have their taxes cut, with no guarantee that economic growth will increase and good reason to believe that the budget deficit will increase.

Even allowing for the poorly thought through promises routinely made on the campaign trail, Mr. Cain’s tax plan stands out as exceptionally ill conceived.
I honestly have no idea if Cain is a serious candidate or an egomaniacal crackpot seeking attention. Or both. In any case he definitely is some sort of crackpot. There's something more than a bit disturbing about watching a  black man gaining popularity - and profiting through his book sales and campaign fundraising - by appealing to the most ingrained resentments of the white Right, echoing their attacks on black people, the unemployed and the poor.

Cain appears on the election landscape as a shill for the worst of his audiences' assumptions - attempting to minimize the legacy and impact of racism on the black community and demeaning black folks' ability to act in their self-interest making pragmatic political choices as voters. He's blasting anyone who resists the Tea Party/GOP's barely-covert agenda to protect the rich who benefit from lower taxes and rising income inequality, and to further empower corporations.

Cain's 9-9-9 tax plan - shifting the tax burden from the rich to the working poor and lower-middle class - fully reflects his broader role on the GOP stage. "Exceptionally ill-conceived," as is Cain's entire candidacy.

(PS: More Cain Crazy - for one of those "funny if it wasn't so pathetic" take-downs,  in this case of Cain claiming to quote Abraham Lincoln as he attacks the Wall Street demos, check out this Crooks and Liars link.)

1 comment:

  1. So his slogan is "vote for me and everything will be 10% more expensive"? It's shocking that a Republican would back a national sales tax. Not even touching on the pain it will cause middle and lower class consumers, what does it mean for business? I guess the logic is that along side a 9% corporate tax rate, it is still lower than the current corporate rate. Except that it is essentially a tax on gross receipts, not net profit and there is no way to make deductions against it. I'm not an accountant, but at first glance it seems like it would actually raise most business's tax burden. Certainly GE would pay more under his plan. The executives of large businesses who have large amounts of wealth invested and who get a lot of compensation as stock options might personally do much better, but it seems like the actual businesses endeavors would be pushed to a higher threshold for profitability - a damper on innovation, entrepreneurship and the stock market.