Herman Cain’s Fuzzy Math

Guest Blogger: Mike Sax

CNBC seems to be rather smitten with Cain as he has won some unexpected straw polls and his numbers have risen nationally. At present he is now ahead of presumed main challenger to Romney, Rick Perry.

Mr. Cain, who has had some very nice things to say about low income Americans and the Occupy Wall Street protests — like if you’re not rich it’s your fault and that the protesters are “un-American” — now claims that his tax proposal will benefit these same low income Americans who are so ignorant of their own interests.

His proposal-described apocalyptically enough as the only one that will “blow up the tax code” — he dubs the 9-9-9. Basically, it’s a flat tax. He claims that it’s not regressive which means that he is mistaken on at least one count. As a flat tax is inherently regressive it can’t be both flat and not regressive.

His rationale for saying it isn’t regressive is fairly spotty too it must be said, “No, it is not regressive,” he said. “First of all, by putting it on sales tax — that third ‘9’ — we are going to pick up revenue that we are not getting today. That helps to lower the rate for everybody including the people that are making the least amount of money.”

For his fully laid out proposal see http://www.hermancain.com/999plan

A sales tax, “that third “9” ” how does a sales tax make his plan not regressive? A sales tax is by definition a regressive tax. He also claims that it will raise revenue. Sure, it’s gonna raise revenue while lowering the corporate tax rate to 9 percent and eliminating the capital gains tax. The usual supply side delusions.

Only thing missing from his plan is a proposal to square the circle.

Cross-posted at Diary of a Republican Hater

3 thoughts on “Herman Cain’s Fuzzy Math

  1. Texas has an 8% sales tax on top of which municipalities can add another 0.5% (which they always seem to do…surprise!). Texas has no state income tax. So would state/local sales tax be added to Cain’s magic 9% national sales tax? Or would states have to give up their sales taxes? So would the federal government have to give back to the states? Thought these teabaggers wanted everything to be at the state level, anyway.

    It is a most regressive tax, too. A poor person and even lower middle class spend nearly all of their income on basic food, clothing, fuel needs, etc., IOW, pay 18% tax. A multimillionaire would at most pay 18%, too. However, unless a millionaire goes on a big spending spree buying Rolls-Royce autos, yachts, private jets, they can only spend so much in a year’s time, so much of their money will be put into stocks and bonds where they pay now a low capital gains tax of 15%. Does Cain propose doing away with that tax, too?

    Cain’s 9-9-9 guru isn’t even an economist. Rich Lowrie is a wealth management adviser with an accounting degree who worked for Wells-Fargo Bank that was a recipient of TARP funds. Lowrie was a donor to Mitt Romney in 2008 and active in the American Conservative Union.


  2. Some good thoughts here Grant. My assumption is that Cain’s national sales tax would be on top of the state sales tax-it is currently rising in most states. Effectively then you would be paying a sales tax in the high teens.

    Even if a rich guy goes on a spending spree it is nowhere near the proportion that those with modest means have to spend on basic necessities.

    These guys are in a contest it seems as to who can top the last guy with a worse plan. Mr. Cain has set the bar high

  3. What my mother said to me three years ago when the race between Obama and McCain was drawing to a conclusion and Palin was in the news about every other day with inanity after inanity, comes to mind now.

    The Republicans are trying to lose. It’s already been decided and they’re purposely trying to lose. What else could explain the incredible imbeciles they’ve lined up to oppose the incumbent Obama?

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