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Robert Kuttner looks at Herman Cain’s ’9-9-9′ tax plans and sees a big hit for the middle class

Robert Kuttner looks at Herman Cain’s ’9-9-9′ tax plans and sees a big hit for the middle class > Personal Political Criticism > DLU Articles > Democratic Liberal Umbrella
Countdown Staff |October 13, 2011 at 9:01 pm |

Herman…it’s nice to see another African-American in the race, but I feel that the GOP conservatives will not support you just like they don’t support Michelle Bachmann! The reasons, well I’ll let you think about that and you come up with your own!

Sad Herman Cain

Herman Cain Gage Skidmore/Flickr

Keith and economist Robert Kuttner, co-founder of The American Prospect and a senior fellow at Demos, look at the details of GOP presidential candidate Herman Cain’s “9-9-9″ tax plan, which would, according to some calculations, double the taxes an average middle-class family would pay.

KEITH OLBERMANN: Republicans, the new “No Taxes” party, now calling for tax increases, at least on the poor and the middle class. On our third story tonight — even as new data showing this country’s middle-class citizens are paying a greater percentage than is its wealthiest, GOP candidates — including Rick Perry — expressing outrage that tax rates on the poor and middle class are not higher.

(Audio from video clip) RICKY PERRY: We’re dismayed at the injustice that nearly half of all Americans don’t even pay any income tax.

OLBERMANN: Look, we know you’re functionally stupid. so let me explain this to you, sir. The Americans he’s talking about are mostly low-income earners who are below the minimum income level at which you get assessed income tax. But they still, in fact — still do pay payroll taxes and gas taxes, as well as state and local taxes.

Who’s really not paying their share of tax? A new Congressional analysis finds a quarter of this country’s millionaires pay a smaller share than do many middle-class families. And a plan from GOP front-runner Herman Cain would makes things even worse. His so-called “9-9-9 Plan” — or “Nein! Nein! Nein!” — would create a flat-rate system with a nine-percent tax on business income, personal income and all sales. It’s getting a lot of buzz because it’s easy to remember for stupid media people. In fact, the number nine was mentioned only 85 times during the GOP debate this week.

(Excerpt from video clip) HERMAN CAIN: Remember “9-9-9 Plan” –

(Excerpt from video clip) MICHELE BACHMANN: “9-9-9 Plan” –

(Excerpt from video clip) RICK PERRY: I don’t need “9-9-9″ –

(Excerpt from video clip) RICK SANTORUM: His “9-9-9 Plan” –

(Excerpt from video clip) CHARLIE ROSE: You keep mentioning “9-9-9″ and Herman Cain, I’m going to have to go back to him every other question.

(Excerpt from video clip) SANTORUM: Well, the reason –

(Excerpt from video clip) CAIN: Thank you.

OLBERMANN: “9-9-9″ — the plan they could not stop talking about — would nearly double taxes on middle-class families, that according to a calculation by ABC News. But not only that, according to Bloomberg’s Julianna Goldman it would also increase the deficit.

(Excerpt from video clip) JULIANNA GOLDMAN: Bloomberg Government has run the numbers, and your plan would have raised no more than $2 trillion, and — even with that shortfall — you’d still be slapping a nine-percent sales tax on food and medicine.

(Excerpt from video clip) CAIN: The problem with that analysis is that it is incorrect.

OLBERMANN: I’m waiting for him to show his math. Keep waiting. Good answer, Herman.

He was also stumped when asked how his plan would apply to things like American products that had international components, saying he “doesn’t know.”

The plan has earned scorn from economists on both sides of the aisle. Bruce Bartlett, a conservative who worked in both the Reagan and George H.W. Bush administrations, writing in The New York Times, that “The Cain plan is a distributional monstrosity. The poor would pay more while the rich would have their taxes cut.” That’s the idea. Even the Cain campaign’s own economists say the “9-9-9 Plan” “wouldn’t be the one I picked.”

So, who came up with such — crap? In fact, it was not crafted by an economist at all, but supposedly by a Koch brothers-affiliated financial advisor from a Wells Fargo branch in Ohio. And I say supposedly, because — as widely noted on the internet today — a “9-9-9″ tax plan — flat nine-percent taxes on three types of income — has existed since 2003 in the online game Sim City. We got a guy running for president with a total revision to the tax code that may be based on something somebody cribbed from a gamer.

Joining me now, to bring us back to reality, economist Robert Kuttner, co-founder of The American Prospect and Senior Fellow at Demos. Thank you for your time tonight, sir.

ROBERT KUTTNER: Well, it’s going to take a lot to get back to reality.

OLBERMANN: Seriously. After all those mentions of “9-9-9.”

KUTTNER: Nine!

OLBERMANN: What — right now, what would an increase on the tax rate of the middle class — doubling in the Cain case — what would that do to the economic foundation of the country?

KUTTNER: Well, let’s look at where the middle class has been. I mean, for 30 years, middle-class incomes have been flat or declining. The things that allow you to be middle class — the cost of buying a home, the cost of sending your kids to college, or going to college, the cost of health insurance — all of these have been going up faster than incomes. Since the collapse, the value of your house has gone down the drain, so you can’t play the game of borrowing against your house, and then — to frost the cake — they are gonna sock you with a nine-percent sales tax on top of the sales taxes you’re already paying to your state government. It’s really loopy.

OLBERMANN: Yeah.

KUTTNER: And it would just knock the stuffings out of the recovery, which isn’t very robust anyway.

OLBERMANN: Yeah, the ABC calculation was those middle-class families pay about 14 percent in federal income tax and it would go to 27 percent, so it would virtually double what they were doing.

Is the trick here — that this has any kind of support, particularly among anybody making less than $4 million a year — us the trick here like the one that Ken Burns documented in “Prohibition” — that when it passed, everybody thought their own favorite alcoholic beverage would still be legal — and now, everybody who looks at something like this says, “My taxes are gonna go down. My neighbors’ll go up, not mine.”

KUTTNER: Well, it really is just astonishing that something that is so crackpot gets taken at all seriously and that this guy — in the latest Wall Street Journal poll — is actually at the top of the field. I think the one good thing about this is it’s forcing people to take a close look at the details. And the more they look at the details, the more no serious person supports this thing. It’s distributionally bad. It’s bad for the recovery and it whacks the middle class, which has been whacked for three decades.

OLBERMANN: The Republicans talk about “half the country not paying income taxes,” which was their — their “Ah-ha, gotcha!” thing of the month. How accurate is it, and how effective a political argument has it become and isn’t it something like saying, “You know, a quarter of us are not paying car insurance,” and you leave out the fact that that’s the quarter that doesn’t drive?

KUTTNER: Well, I think the 99 versus the one is a lot more effective.

OLBERMANN: Yes.

KUTTNER: I mean, as you pointed out a moment ago. The people who don’t pay income taxes, don’t pay income taxes ’cause their incomes are so low. And income taxes on lower-income people were phased down and then phased out, as payroll taxes went up. But you take a typical lower-income family, or even a working-class family — you know, they’re paying 6.2 percent payroll tax. On top of that, they’re paying six or seven percent in property tax. On top of that, even if they rent, they’re paying a landlord’s share of the property tax. They’re paying sales tax.

So, there are very few people in this country who are paying less than — than 15 percent taxes. And, so now you’re gonna whack them with nine-percent income tax on everything and nine-percent sales tax on everything, including groceries and medicine. No exemptions, no deductions. They’re first-dollar taxes. So, it’s a big tax increase and it’s just astonishing when you think about it, that the Republican front-runner — at least this week — is a guy who’s advocating a tax increase on most Americans.

OLBERMANN: Bob Kuttner, the Senior Fellow at Demos, co-founder of The American Prospect, did bring us back to reality and we thank you kindly for doing so.

KUTTNER: Happy to be here. Thank you for bringing us back.

OLBERMANN: Try when I can.

http://current.com/shows/countdown/blog/robert-kuttner-looks-at-herman-cains-9-9-9-tax-plans-and-sees-a-big-hit-for-the-middle-class/

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