Sunday, October 23, 2011

More on Herman Cain's Weird Tax Plan

Jared Bernstein gives us a graph which shows how Herman Cain's 9-9-9 tax plan would change tax liabilities. It's a stunner, and you MUST check it out. I tried to copy it here but because of that awesome reason which makes it a stunner it does not copy very well.

It's not a coincidence that flat tax plans of this type are always proposed by the right-wingers. Without all sorts of modifications and exceptions, flat taxes benefit the wealthiest most of all. In Cain's plan, for instance, a very low-income tax payer would have to pay nine percent federal income tax and would find food, housing, transportation and everything else more expensive because of that nine percent sales tax. Currently low-income individuals or families do not pay federal income taxes. That Cain's plan would also do away with deductions for mortgage interest and for dependents suggests that many middle-income tax payers would also pay more in total taxes than currently.

I mentioned that the flat tax schemes always come from the political right. But I have been surprised to find that even some people who are progressive or liberal like them because of their apparent simplicity. What those sweaty days of tax preparation have done to us!

Sadly, the simplicity of those plans can only stay if their unfairness stays. Once we start exempting low-income individuals from the flat income tax (which would be necessary) and all sorts of necessary commodities (food and clothing, say) from the flat sales tax, we bring back the complexities, the game playing and the need for oversight and bureaucracy.

In any case, as Bernstein notes in another post, there is no reason why a progressive income tax system could not be made simple.