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AdLib On October - 13 - 2011


If this is mid-October, there must be a new GOP frontrunner for the Presidency and if NBC/Wall Street’s latest poll is accurate, the Baggers’ version of the Chuck E. Cheese birthday crown has now been placed on the head of Herman Cain.

It’s not surprising that Cain, who basks in his ignorance, prejudice and intolerance as positive traits has Baggers nodding, “He’s just like me…except how come he’s black?”

With the Mainstream Media chasing conservative attention like a needy best friend, they have swiftly elevated Cain to a position of importance, whether or not he is a babbling fool who thinks that facts are the same as being stubborn and having opinions. Then again…whoever excels most in that might typically be in the lead of the GOP presidential campaign.

As was evidenced in this week’s debate, Herman Cain’s “9-9-9” plan, though he’s produced no economic materials or substantial details, is being viewed by the MSM as a serious plan. It’s as if he’s promised unicorn rides to all American and instead of questioning the existence of unicorns, all the MSM is asking is when they get their turn to ride.

Ever since there have been wealthy people who have wanted to crush the poor and middle class under a regressive tax burden, so they could pay less, there have been flat tax proposals.

The insidious thing about flat tax proposals is how their utter simplicity fools reasonable people. If someone said, “The fairest way to tax people is to get rid of all deductions and make everyone pay exactly the same 9% in income and sales taxes!”, it doesn’t sound terribly unreasonable at first. One has to start looking at specifics as opposed to generalities to truly understand the social disaster such a plan represents.

Let’s begin with the wealthy:

In 2008, the top earning 400 paid an effective federal income tax rate of 18.11%, up from a record low 16.62% in 2007, when an even higher share of their total income came from capital gains.

http://www.forbes.com/sites/janetnovack/2011/05/11/richest-400-took-record-share-of-capital-gains-during-market-meltdown-year/

Now, these whining buckets of greed, who howl at paying the top rate of 34%…but are in fact paying only 18%…want their taxes cut in half to 9%. Imagine the massive loss of revenues to our government that would entail. However could we subsidize this enormous tax cut for the wealthy?

Good question, which brings us to the poor. Here is some info from the National Poverty Center:

2010 Poverty Thresholds, Selected Family Types

  Single Individual Under 65 years  $ 11,344
65 years & older  $ 10,458
  Single Parent One child  $ 15,030
Two children  $ 17,568
  Two Adults No children  $ 14,602
One child  $ 17,552
Two children  $ 22,113
Three children  $ 26,023


SOURCE: U.S. Bureau of the Census, Income, Poverty, and Health Insurance Coverage in the United States: 2010, Report P60, n. 238, p. 61.

Poverty guidelines are a simplified version of poverty thresholds and are issued by the Department of Health and Human Services to determine financial eligibility for certain federal programs.  For more information on these guidelines, see the 2011 Federal Poverty Guidelines.

How many people were poor in 2010?

In 2010, 15.1 percent of all persons lived in poverty. The poverty rate in 2010 was the highest poverty rate since 1993. Between 1993 and 2000, the poverty rate fell each year, reaching 11.3 percent in 2000.

http://www.npc.umich.edu/poverty/

So, out of 309 million Americans, 47 million live in poverty. Unlike the convenient demonizing from the wealthy, these are not just lazy college drop outs and welfare queens, these include senior citizens, the handicapped and severely ill and most of all, children.

Consider the amounts in the chart above that these households bring in. Those who are poor struggle just to pay for food, rent and other necessities. They don’t pay federal income tax…because they’re poor and our government acknowledges that they can’t afford to do so. Many do however pay payroll taxes for Social Security and Medicare, they pay state sales taxes and other fees and taxes.

Under this immoral 999 plan…they would instead have to pay 9% of the money that isn’t enough to lift them out of poverty, in income tax. If that isn’t bad enough, the price of everything they buy, baby formula and baby food, diapers, eggs, milk, butter, bread, etc. suddenly costs them 9% more in federal sales tax (added to the existing state sales tax of course, for example, that would mean that they and everyone in CA would pay 17.75% in tax on everything they buy).

Unlike the wealthy who have plenty of income for investing and saving, the poor spend the money they earn. So a federal sales tax would be applied to most of their income whereas it would only be applied to a fraction of the wealthy’s income.

The true impact on the poor would be explosive and devastating. Already barely able or not fully able to make ends meet, the poor would have up to 18% more of the already minimal income they bring in, taken away from them. Millions will simply not be able to afford food and shelter anymore, let alone medical and child care expenses.

Meanwhile, someone in the top 1% making a billion dollars a year saves $900,000 in income tax. Oh, and the Cain plan also eliminates the Capital Gains tax which is how many of the wealthiest people receive much of their income…meaning they will pay 0% income tax on what, for many of them, is most of their income. And what’s that you say, at least when they die they’ll have to pay an Inheritance Tax? Nope, Cain’s flat tax also eliminates that tax so a wall is built around the wealthy to cement their towering wealth in place.

Welcome to the 1%’s America.

As we’ve heard from the GOP Meme Machine, 47% of Americans don’t pay federal income tax. Though the poor will be the hardest hit victims of such a scheme, even those making around the median household income in America will be hammered.

The average U.S. household income in 2010 was $49,445 (typically the combined income of two adults). A majority of households making that amount or less pay little or no federal taxes but as described above, they pay state taxes, property taxes, payroll taxes, etc..

So, all of those Americans whose income has stagnated under the corporate class warfare of the past decades, which in fact means that due to inflation most Americans are making less each year, would also be hit by a 9% rise in everything they buy and a 9% loss of their current earnings.

As if this is not bad enough, consider what happens if the only taxes being paid are sales and income taxes. No more payroll taxes mean no more Social Security and Medicare for Americans. Not even a privatization of the safety net, Herman Cain’s flat tax eliminates the social safety nets completely.

As Lawrence O’Donnell pointed out yesterday, Herman Cain’s website actually states that he would end Social Security and Medicare:

For the generations or workers who have paid into Social Security and Medicare, the federal government’s inevitable failure to pay them as they retire is undeniably stealing. These are generations who have worked and sacrificed to leave this country a better place for their children and grand children as they retire. The current behavior of an out of control federal government does little to ease their minds.

The federal government has imposed expensive and often counter-productive social and welfare programs on the states and the people. It is time to admit the mistakes, and get the federal government out of the way. This will allow states, cities, churches, charities and businesses to offer a helping hand instead of a handout where they live. People closest to the problems are the best ones to solve the problems effectively.

https://www.hermancain.com/the-issues (click the Entitlements tab).

Yep, that’s right. Not only would everything that seniors buy cost 9% more, including medicine, health care, food, etc…but they wouldn’t even have any money to pay for anything anyway since they wouldn’t get Social Security checks anymore.

When future seniors need heart surgery or cancer treatment, well, according to Cain, the local church or hardware store will surely be happy to take care of that for them.

Lastly, as was explained in the debate, Bloomberg did an analysis on Cain’s plan and concluded that it would bring in 10% less than the $2.2 trillion in taxes brought in last year. So, under Cain’s plan, another $200 billion would need to be chopped out of the budget…and without Social Security to borrow from anymore, a greater amount more would have to be cut.

America would be torn apart at the seams with privation and desperation on every street in America.

It is literally insane that the arguable GOP front runner for President of the United States wants to wreak such havoc on America and the MSM just gives him a nod.

Indie Voters were swayed by the hysteria of the right over the Affordable Care Act that was actually about insuring many people who couldn’t get coverage. And yet, now when there’s a plan being floated that would destroy Social Security and Medicare, crush the poor, plunge most Americans deeper in debt so that the wealthy can keep more of their money and underfund the US which would send our economy into a disastrous Depression…the perpetrator is treated with greater respect.

The bright spot to all of this is that Herman Cain will never be elected President. He hasn’t the smarts or philosophies that would appeal to anyone outside of the hateful, pro-greed base in the Republican party.

However, attention should be paid to this flat tax plan, if at least to enlighten and educate people as to the threat a flat tax poses, the ruthlessness of the GOP and the top 1%, how openly brutal they want to be towards the majority of Americans and how callously they would destroy the lives of millions of Americans once again, out of their insatiable greed.

Written by AdLib

My motto is, "It is better to have blogged and lost hours of your day, than never to have blogged at all."

100 Responses so far.

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  1. bito says:

    Two views. One from the NYT and one from the WSJ, neither one that gets to the meat of the plan IMO.

    NewsHour NewsHour
    What is the 9-9-9 tax plan? @NYTimes ow.ly/6WCWN + @wsj ow.ly/6WCXW have more info #HermanCain

  2. AdLib says:

    An amusing side note:

    Now leading in at least one national poll, Cain is frequently asked if he is the new political flavor of the month. Cain’s canned response is: “Haagen-Dazs black walnut tastes good all the time.”

    Here’s the problem: Haagen Dazs no longer makes black walnut ice cream. It was a limited edition, and is no longer available. So, in a manner of speaking, you might say that Haagen Dazs black walnut was – by definition – a flavor of the month.

    When contacted by ABC News, Hazel, at the Haagen-Daz customer service line, said, “We don’t sell black walnut. The sales nationally did not meet our expectations, unfortunately. It did not behoove us to continue with the product.”

    The ice cream did not meet expectations. Cain better hope that is not a metaphor for his candidacy.

    http://abcnews.go.com/blogs/politics/2011/10/fact-check-herman-cains-ice-cream-meltdown/

  3. MurphTheSurf3 says:

    WHERE DID CAIN GET HIS PLAN?

    Rich Lowrie, whom Cain identified as “lead economist on helping to develop” his plan.

    Lowrie doesn’t have a degree in economics; he has a bachelor’s in accountancy. He is a financial advisor with Wells Fargo Advisors in Cleveland, Ohio. Lowrie’s office referred questions to Cain’s campaign spokesman, Wlliam Gordon.

    An email sent to Lowrie triggered an automated response saying that inquiries should be directed to the campaign, and that “[i]n his efforts on behalf of Mr. Cain’s campaign, Mr. Lowrie represents only himself, and not Wells Fargo Advisors.”

    Cain said an “independent firm” conducted an analysis of his plan and found that it is revenue neutral. Cain identified that firm in a CNBC interview as Fiscal Associates of Virginia, whose work has long been cited by FairTax proponents. Americans for Fair Taxation, a group that advocates for a FairTax, says in a 2007 white paper that a FairTax “would increase the GDP by 36.3 percent and increase private output by 48.4 percent over the long run,” citing the work of Gary and Aldona Robbins of Fiscal Associates.

    In a phone interview, Gary Robbins confirmed that his firm did the analysis for Cain. He said he used 2008 economic data and determined that the three taxes combined would generate about $2.3 trillion — each producing about a third of the total revenue stream. That’s about $200 billion short of how much the federal government collected in revenues that year. But, he said, $200 billion would come from “other sources,” such as revenues from the Federal Reserve.

    So, he claims, it is revenue neutral.

    As for tax fairness, he said he did not determine the impact on different income groups. He said he was not asked to produce income distribution tables common for major tax proposals.

    FLAWED FROM START TO FINISH.

    • AdLib says:

      Heh, he didn’t bother to determine the impact of the flat tax on different income groups. Just kinda skipped that unimportant little tidbit.

      Yeah, it’s not a critical issue about changing the entire tax system, how it affects Americans, just a trivial thing.

      Could there be a more blatant explanation by these people that the wealthy get a huge transfer of wealth and 99% of Americans, especially the poor, get destroyed?

      Again, where is the MSM in exposing the fraud of the flat tax? They promote it as a viable alternative but are silent about the damage it would do.

      Guess that might have to do with the fact that the MSM isn’t owned by 99% of Americans.

      • MurphTheSurf3 says:

        I wrote my first post on 9-9-9-9 saying much the same thing as you just did.

        Now everyone is talking about it. One of the key roles played by the wee-journalists on blogs like this one is to ferret out the deeper truths as you did in your root story that kicked off this thread.

        Now everyone is talking….good, but what if investigation was front loaded?

        By the way, Kudos to Bloomberg for crunching those numbers months back.

  4. bito says:

    One more part of payroll taxes is a 0.8% dedution for federal unemployment insurance so you can kiss that baby goodbye and hope you never get laid off! Oh, that’s right the states, churches and charities will take care of you, right, Mr. Cain?
    Get disabled at work and expect SSI? Kiss that one off too.
    His plan depends heavily on employers converting all payroll taxes into employee pay, ha in your dreams and how much will states, cities, counties have to raise their taxes to make up for the shortfall. What happens to the Federal portion paid to states for the CHIP program? Tuff Luck kids!

    Mr. Cain’s “economist” had this the other day: (paraphrase)”oh with corporate taxes being only 9%, they will lower their prices on goods, anther savings.” Riiiight! Sure they will.

    I have not read Mr. Cain’s proposal, but before even reading your post, AdLib, or hearing what L.O’ said last night, I could see this as nothing but campaign rhetoric and a scam, and thanks for fleshing it out.

    This is a nightmare for the 99% and a wet-dream for the 1%. A blueprint dreamed up by the libertarians and corporations. As I said in TO/OT the other day: This is BS!

    Here are the tax rates, limits, and other payroll and financial information for 2011*:

    SOCIAL SECURITY AND MEDICARE:

    FICA is a combination of Social Security and Medicare taxes.

    Employee rate for Social Security will change to 4.2% on wages to $106,800.

    Employer rate for Social Security will stay the same at 6.2% on wages to $106,800

    Maximum Social Security withholding is $4,485.60 for 2011.

    Both employee and employer rate for Medicare is 1.45% on all wages.

    There is no maximum Medicare withholding.

    FEDERAL UNEMPLOYMENT TAX:

    Wage limit remains at $7,000 and the NET tax rate remains at 0.8%.

    http://www.fels.net/1/labor-safety/labor-issues/tax-rates-2011.html

    • AdLib says:

      Excellent point, Bito! However, isn’t unemployment a state payroll deduction? If so, that would remain in place so the tax on the 99% would be 9.8% but for corporations and the wealthy, would be 9%…unless they took their compensation as Capital Gains…in which case their tax rate would be 0%.

      So, hedge fund managers making billions would pay 0% in income tax and poor people making $15,000 a year would be paying 9.8% in income tax…not to mention an additional 9% in sales taxes. And no Medicare or SS when they get older.

      Sounds fair to me!

      • bito says:

        AdLib, Yes, unemployment insurance mostly a state responsibility, but as I understand it there is that 0.8% contribution that goes to the Feds and will the states have to pick that up to cover any shortfalls, like during a recession? His plan has as many “lost pieces” to it as 9 year old jigsaw puzzle.

        He was asked a question about it yesterday and he replied “I don’t know, the plan is still in flux.
        His plan is as old as Steve Forbes grandfathers plan, an original Robber Barron.

  5. funksands says:

    Ad, don’t dismiss 9-9-9 so quickly. It’s simplistic, catchy, and won’t work. That makes it extremely attractive to voters.

  6. atdnext says:

    “9-9-9” is nothing more than JUNK JUNK JUNK and GIMMICK GIMMICK GIMMICK. We don’t need any more regressive tax laws that redistribute even more wealth to the top 1% while the 99% suffer an even greater burden. And I thought these clowns cared about the budget deficit… Don’t they realize Cain’s gimmick would balloon it to whole new levels?

    • AdLib says:

      I think they have a far more devious plan. Not to increase the deficit but to starve government and force savage cuts, destroying SS and Medicare along the way.

      It really is evil stuff.

  7. Kalima says:

    Good morning and good night. I was just reading this before going to sleep, and wondering how he is going to answer questions on this flaky fraud, wouldn’t want to be in his shoes. Bye-bye Cain.

    —-

    Cain’s 9-9-9 Plan Has No Chance

    http://www.thedailybeast.com/articles/2011/10/12/herman-cain-s-9-9-9-tax-plan-has-no-chance-of-passing-congress.html?utm_source=newsletter&utm_medium=email&utm_term=Cheat%20Sheet&utm_campaign=cheatsheet_morning&cid=newsletter%3Bemail%3Bcheatsheet_morning

    • bito says:

      Good one Kalima and the companion piece is also interesting on the advisors of the candidates.

      The Campaign Whisperers

      http://www.thedailybeast.com/articles/2011/10/12/gop-s-top-campaign-whisperers-for-2012-presidential-candidates.html

      I lost count on how many cited Steve Forbes, the billionaire who worships a flat tax and this one from Rich Lowrie (the Cain advisor)had me laffing:

      “I respect Art Laffer who was one of Reagan’s economic advisors and he says he likes the 9-9-9 plan very much!”

      Yeah the guy who says tax cuts pay for themselves, like W’s cuts didn’t add to the deficit.

    • AdLib says:

      Thanks Kalima, good article!

      I agree, there is no chance that this plan could ever pass but I think the takeaway should be, the GOP has one goal, destroying the lives of 99% of Americans to transfer more wealth to the wealthiest.

      This plan along with the Baggers’ performance in the House should make it irrefutable, these people want to hurt and damage most Americans in their pursuit of greed.

      People need to get this, the 2012 elections shouldn’t even be close!

  8. Emerald1943 says:

    Hi Adlib! I am so glad you wrote this piece! Cain has been talking ad nauseum about his scheme to make the poor pay more. He claimed, falsely, that since the poor pay 15.2% in payroll taxes, his 999 plan would mean a tax cut! Well, his numbers are wrong and Lawrence O’Donnell was the first and ONLY commentator to bring this up. I posted a comment about this a few days ago.

    Employees do pay those payroll taxes…but only at a rate of ONE-HALF of the amount, 7.6% with the employer paying the other half. So, this would mean that the poor would actually be paying MORE in payroll taxes! But, as Lawrence pointed out, these monies would not go into Medicare/Social Security. Mr. Cain wants to ABOLISH any social safety net program! For some strange reason, none of the talking heads have seen fit to bring that inconvenient truth into the light!

    IMO, Cain is a very silly man! He does not have the depth to attempt to run this country. And as your piece shows, his plans for a flat tax would ruin us…the rest of the way! Surely voters will have enough information to let Mr. Cain go back to selling pizzas. I’ll have a pepperoni with extra cheese, please! :-)

    • AdLib says:

      I saw that which is why I gave a hat tip to O’Donnell, that 7.6% in payroll taxes would be replaced by 9%, a 20% increase in taxes on them…then add another 9% in sales taxes on everything they buy…it’s a vicious assault on the poor in particular.

      And if Cain’s madness was possible, which it isn’t, killing SS and Medicare would throw tens of millions more of Americans into poverty with no safety nets.

      Imagine a conservatively projected 20% of this nation in poverty with no SS or Medicare, millions of seniors with no money for rent or food or medicine, those with illnesses and birth defects with no health care, children neglected and starving. Parts of America would rival the Third World, with many of the poor having no way to feed and house themselves and their families, let alone afford medical care.

      The cruel future Cain and others in the GOP seek, the destruction of America and the world so the wealthy can rule, has never been so plainly apparent.

      How can there be so many uninformed Americans that would honestly consider that kind of future for their country by voting GOP? I really don’t understand such dangerous ignorance.


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