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NationofChange / Special Feature
Published: Wednesday 26 October 2011
An analytical break-down on how a flat tax plan like Cain’s would create vast wealth inequality while serving to make the wealthiest Americans wealthier
Should Minimum Wage Earners Pay a Tax Rate 460 Times Higher than Millionaires?
The question of the supposed simplicity and fairness of a flat tax keeps popping up every few years in political debate, most recently with the plans of Cain and now Perry. I just wanted to look at what this kind of flat tax would look like for people across the income range to see how fair and simple it would be. One question needs to be addressed before we can begin to look at real numbers. How much needs to be spent every month to meet the requirements of what the majority of people would consider to be necessities? How much do we need to pay our rent/mortgage, utilities, food, clothing, medical expenses, etc.? Let’s say we need a minimum of $1,000.00 each month for these basic necessities. Before you say “$1,000 a month, that is way too…” Were you going to say large a sum, or small? Though this is an argument that should be addressed, perhaps we can save it for another article and agree to use the figure of $1,000.00 per month for now. Let us also add that half of that money will be used for non-taxable expenses such as rent/mortgage and half would be taxable by a flat tax similar to sales tax.
On to real people (Fig. 1). A person working for minimum wage, $7.25 per hour, for 40 hours per week, for 52 weeks per year with no vacation days, no days sick, no extra days off (did I say a real person?) would earn before any deductions $15,080 per year. Just for the sake of comparison, we are only going to take out social security, leaving all other income for the person making minimum wage. Taking out the employee contribution to social security at 6.2% a total of $935 leaves this person $14,145 for the year. Necessities, remember, are $1,000 per month, $12,000 per year, leaving this person with $2,145 to be spent on non-necessities. But remember that half of the $12,000 used for necessities are taxable, so $6,000 is taxable. Let’s use Cain’s tax rate of 9%. This means that the person making minimum wage will pay $540 in taxes. Of the $2,145 that someone working 40 hours per week, 52 weeks per year, has left to spend, $540 of it goes to taxes, for a tax rate of 25% on their income after necessities are paid.
Fig. 1: A person making $15,080 per year
On to other real people (Fig. 2), the average American. According to the US census, the average median income of employees in all states in the US is $51,575. So a person making this salary would pay 6.2% social security taxes (unless self employed) or $3,198 per year, leaving the average American worker with $48,377 to spend per year. Again, for the sake of simple comparison, assuming that necessities constitute $1,000 per month, half of which are taxable, yields $540 in taxes and an income of $36,377 after necessities and Social Security are paid. So the average American will pay a tax rate of approximately 1.5%.
Fig. 2: A person making $51,575 per year
But, you say, the average American needs to spend a great deal more on “necessities”. Ok, let’s run the numbers again (Fig. 3) assuming that the average American needs to spend $2,500 per month on necessities, or 2.5 times that of someone making minimum wage. (Of course if that is true, those working 40 hours per week, 52 weeks per year making minimum wage fall far short of what is considered to be the income necessary to live. This, as mentioned earlier, is an argument that needs to be explored in depth in another article). In this case, the average American still has $48,377 to spend per year, but $30,000 goes to necessities, leaving $18,377 for non-essentials and $1,654 in taxes at Cain’s 9% for a tax rate of 9%.
Fig. 3: A person making $51,575 per year (higher "necessities")
On to other real people (Fig. 4), those making $1,000,000 per year. Again taking out social security at 6.2%, or $62,000… Wait, did I say $62,000? According to the Social Security administration, deductions are capped at $106,800 per year. So a person making $1,000,000 per year only pays $6,622 in social security taxes per year, for a rate of .6622% whereas the person making minimum wage and the average American both pay at least 6.2%. Though this doesn’t seem fair or simple to me, it is, alas, also an argument for another article. Back to our earner of $1,000,000 per year. Taking out $6,622 for social security and $12,000 for necessities, half of which are taxable, this person is left with $981,378 for the year, of which $540 goes to taxes for a rate of .055%
Fig. 4: A person making $1,000,000 per year
So spending the same amount of money and taxed at the same rate (a flat or sales tax) someone making minimum wage pays an effective rate of 25%, the average American pays an effective rate of 1.5%, and someone making $1,000,000 per year pays an effective rate of .055%.
But again you say to expect someone making $1,000,000 a year to spend $1,000 a month on necessities is absurd. Alright, I agree. Let us have this person spend each month on necessities what the person making minimum wage makes in an entire year ($15,080) and run the numbers again (Fig. 5). I know, to argue that anyone needs to spend $15,080 a month on necessities in order to live is one that still needs to be made, but let us again leave that for a future article. So the person making $1,000,000 per year, paying $6,622 for social security, and $180,960 for necessities, is left with $812,418. From this we must take taxes at 9% of $90,480, half of what was spent on necessities. This yields taxes of $8,143 for the year for a rate of 1%.
Fig. 5: A person making $1,000,000 per year (higher "necessities")
So spending on necessities $1,000 per month for someone earning minimum wage, $2,500 per month for the average American, and $15,080 per month for someone earning $1,000,000 per year, paying taxes at a flat rate of 9%, the effective tax rate is 25% for the poorest Americans, 9% for the average Americans, and 1% for the wealthy.
I don’t see how this can be simple, fair, or balanced. But I am not an economist, a politician, a political scientist, an expert, or a magician. I am just a relatively intelligent person, a voter, and someone who can do math. If anyone can point out to me mistakes in the math or approach, I would be happy to hear them and revise my thinking. But it doesn’t take an expert to know there is something wrong with a flat tax system for any but the wealthiest of Americans.
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ABOUT Kyle Linzer
Kyle Linzer B.A., M.A., is a contributing author for NationofChange. Kyle lives in New Mexico and has been designing and teaching courses in Philosophy, both Eastern and Western, World Religions, English, Math, History, Mythology, Yoga, Pilates, and Dance at both the High School and College levels for 13 years. He was also a successful business owner/partner for 3 years. As a Buddhist, philosopher, and teacher of philosophy, he is interested in truth, fairness, equality, and the eradication of ignorance.
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70 comments on "Should Minimum Wage Earners Pay a Tax Rate 460 Times Higher than Millionaires?"
November 29, 2011 6:01am
All watches that cost over $1000 should be taxed at 300%. Since these types of watches are status symbols anyway, the tax will only add to the status value of the watch.
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November 09, 2011 1:40am
It was in there, you missed it.
October 30, 2011 9:22pm
Wow Kyle has absolutely no idea what he is talking about. 9% of $1,000,000 is not $540. Plus, the wealthy actually pay more than lower income because disposable income is taxed through consumption. Actually do some research Kyle.
October 31, 2011 1:40pm
Please read the article first and then tell me which statistics I actually wrote that you would like to discuss. I never said that 9% of $1,000,000 is $540. As other posts have said, the wealthy can choose to pay more in taxes than those making less money by consuming more, but for the wealthy it is a choice, for the poor it is not. Please let me know what research you would like me to perform based on what I said in the article. Thanks.
October 30, 2011 7:03pm
It would be nice if you liberals would check your facts instead of spouting off statistics that hear from dishonest people. Here are some facts for you: The rich DO pay more taxes than the poor. It is hard to pay less than zero. Three of the top 10 states (plus DC) for millionaires are Virginia, Maryland and Washington DC. The wealth is in government! It is the government that has too much money, not people. Here are some practical measures: 1 - Keep the tax rates where they are, or better go with a flat tax. 2 - Take out the loopholes that allow the rich to pay less. 3 - Increase taxes on capital gains a little. 4 - Decrease corporate taxes. 5 - Cut out entire federal departments that are of no real use (see DOE). 6 - Decrease spending (not a decrease in the growth rate) in every department by 10 %. 7 - Make it a crime for any politician to do business with any lobbyist. 8 - Cut Congressional staffs by 30%. There you go. Take a little from the left and little from the right and you have a solution. It will never happen though, because this would decrease their power, which is really all it is about for Dems and Repubs.
October 30, 2011 12:54pm
The author seem to ignore the fact that disposable income would also be taxed at a rate of 9% as part of income. It would then be taxed again at 9% if it were spent on non essential goods rather than saved. (Also Cains plan assumes a removal of the SSI tax) Lets look at two simplistic cases below for laborers earning 15,000 and 1,000,000 respectively.
An individual with an income of $15,000 and living expenses of 12,000 per year, half of which is taxable, would pay $810 in income taxes. Then if they decided to spend their remaining money(3000-810=2190) on taxable goods they could potentially pay an additional $197.10. This yields a tax rate that varies from a minimum of 5.4% up to 6.7%.
An individual with an income of $1,000,000 and living expenses of 100,000 per year, half of which is taxable, would pay $85,000 in income taxes. Then if they decided to spend their remaining money(900,000-85,000=815,000) on taxable goods they could potentially pay an additional $73,350. This yields a tax rate that varies from a minimum of 8.5% up to 15.8%.
What makes the difference in these two cases is the proportion of income which is taxable. A lower income laborer will likely spend a greater portion of their earnings on non-taxable expenditures such as rent and food. Thus their effective tax rate will be lower.
October 30, 2011 12:51pm
The author seem to ignore the fact that disposable income would also be taxed at a rate of 9% as part of income. It would then be taxed again at 9% if it were spent on non essential goods rather than saved. (Also Cains plan assumes a removal of the SSI tax) Lets look at two simplistic cases below for laborers earning 15,000 and 1,000,000 respectively.An individual with an income of $15,000 and living expenses of 12,000 per year, half of which is taxable, would pay $810 in income taxes. Then if they decided to spend their remaining money(3000-810=2190) on taxable goods they could potentially pay an additional $197.10. This yields a tax rate that varies from a minimum of 5.4% up to 6.7%.An individual with an income of $1,000,000 and living expenses of 100,000 per year, half of which is taxable, would pay $85,000 in income taxes. Then if they decided to spend their remaining money(900,000-85,000=815,000) on taxable goods they could potentially pay an additional $73,350. This yields a tax rate that varies from a minimum of 8.5% up to 15.8%.What makes the difference in these two cases is the proportion of income which is taxable. A lower income laborer will likely spend a greater portion of their earnings on non-taxable expenditures such as rent and food. Thus their effective tax rate will be lower.
October 28, 2011 6:49am
The suggestion that this will creat more jobs might be similar to the imaginary jobs that were created by GWB with low tax rates during the lost decade.
We have tried low tax rates for stimulating the economy... they have a very minimal real dollar impact on the economy. When compared to infrastructure development and research investment the benefits are strongly weighted towards investment rather than austerity.
Static or Dynamic modeling is limited in it's projecting of growth. The real results are empirical. Even with the minimal stimulus when Obama took office he arrested the shedding of private sector jobs under GWB (see video on href="http://www.CorrectAngle.com">www.CorrectAngle.com). The data says that Democrats are more successful on the economy.
Speaking of minimum wage... the GOP has consistently fought against the minimum wage. It would be much lower if they had their wishes. The dream of lower prices due to lower taxes as they add a tax on everything being sold is interesting. I'm not against taxes (I think taxes are fair fees for living in the greatest country on Earth) but I'd love to hear you defend your inconsistency.
The way you see this will be more about your values. If you think government should be small and ineffective vote for a candidate who will cut the legs out from under us by having no money in government coffers. Don't play that it will create jobs... it's been tried. If the NeoCons were correct on even a few of their gambles with America we'd be a lot better off. Their lack of success should be enough to disprove your speculative projections.
In the end it's about values. I want a stronger America... I will be voting for Democrats until the GOP are not working to bankrupt government and impose their strict father model onto every aspect of life. Probably not in my lifetime.
America believes we're all in the same boat; conservatives say "you're on your own buddy."
By bankrupting the government do you mean attempting to get rid of large parts of unemployment which are direct losses by the government. On the issue of lowering taxes for people you clearly have never run a business at all or effectively. As a business owner the more taxes I am forced to pay the further away I am from being in the black. Therefore to keep my profits high I must let people go in my company thus forcing more people to go collect unemployment and become parasitic to the country. People want to blame the GOP for the economic fall out when the Democratic congressmen congress imposed harsher job regulations upon the business owners therefore hindering capitalism
October 28, 2011 6:50am
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October 27, 2011 9:47pm
It is not about taxes per se, it is that wealth in every society in everyhistorical era in history buys power, exemption from the law. Our countries founders understood that coming from countries that had a inherited wealth class and the in-equality and misery it spawned everywhere.
October 27, 2011 1:45pm
STATIC STATIC STATIC. Sorry, but this analysis is flawed in that it does not take into account the 12 million jobs this plan is reporting to create.
Second, the person with the minimum wage job won't be on minimum wage that long when the economic growth this creates kicks in.
Third, this writer is not taking into account the prices of goods and services that will be LOWER because of all the hidden taxes that are calculated into the price of a good or service will be eliminated.
I suggest you try a DYNAMIC analysis and you will see this plan is not as bad as the critics are trying to say.
Your first two points are unprovable, as for the third: you really think a company will lower prices out of goodwill when they have less to pay in taxes? Do you live in America? They will simply keep the cost the same, and report greater profits to increase their stock price. I suggest you start paying attention to how the real world works.
October 28, 2011 6:35am
This might be similar to the imaginary jobs that were created by GWB with low tax rates during the lost decade.
We have tried low tax rates for stimulating the economy... they have a very minimal real dollar impact on the economy. When compared to infrastructure development and research investment the benefits are strongly weighted towards investment rather than austerity.
Static or Dynamic modeling is limited in it's projecting of growth. The real results are empirical. Even with the minimal stimulus when Obama took office he arrested the shedding of private sector jobs under GWB (see video on www.CorrectAngle.com). The data says that Democrats are more successful on the economy.
Speaking of minimum wage... the GOP has consistently fought against the minimum wage. It would be much lower if they had their wishes. The dream of lower prices due to lower taxes as they add a tax on everything being sold is interesting. I'm not against taxes (I think taxes are fair fees for living in the greatest country on Earth) but I'd love to hear you defend your inconsistency.
The way you see this will be more about your values. If you think government should be small and ineffective vote for a candidate who will cut the legs out from under us by having no money in government coffers. Don't play that it will create jobs... it's been tried. If the NeoCons were correct on even a few of their gambles with America we'd be a lot better off. Their lack of success should be enough to disprove your speculative projections.
In the end it's about values. I want a stronger America... I will be voting for Democrats until the GOP are not working to bankrupt government and impose their strict father model onto every aspect of life. Probably not in my lifetime.
America believes we're all in the same boat; conservatives say "you're on your own buddy."
October 28, 2011 11:56am
Actually, if you look at the labor statistics, jobs were on the upswing and so was the economy up to 2007. It was only until AFTER the democrats took control of Congress after the 2006 election that the employment numbers started to tank.
October 27, 2011 8:05pm
I am so sick of the fact that the fat cats keep stepping over simple fact - dammit, the tax cuts given to wealthy, already the lowest in modern history, has NOT created jobs - it has only make the rich RICHER. They don't give a rats ass about CREATING jobs - or they wouldn't have bailed on their own country when they were making good products and record profits, for countries that made crap products by sweat shops and slave labor, to turn around and sell back to the people they don't want to pay a living wage to. . AMERICAN workers can not compete with SLAVE LABOR. The tax code DEFINITELY needs to be simplified - but stop this perpetual lie of the boom in jobs that will magically pour out of millionaire arm pits if we allow them to make BIGGER PROFITS by tax cuts. Hasn't worked - didn't work - still - all the republicans can pull out of their collective asses is " MULTI-TRILLION DOLLAR WARS ON TERROR, DRUGS - Good. Abortions - bad. birth control, bad. Unwanted pregnancies - therefore - good. Health care for the poor - bad. Food stamps and education - bad. PS - Jesus loves tax cuts to the wealthy, and republicans. Jesus - good. ten commandments - in federal buildings - good. actually following them - bad. same nasty old rhetoric. "New Battle Hymn of the OVERLORDS - LET THEM EAT PIZZA!
October 28, 2011 12:01pm
Actually, the Bush tax cuts DID help with the recession he inherited after he took office in 2001. If you look at the labor statistics, jobs were being created up until 2007 until after the democrats took control of Congress. It was the housing crises that caused the recession and it does not matter which economic theory you subscribe to whether it is supply side or keynsian, the economy was going to tank.
You're making a whole lot of assumptions. Assuming jobs will be created for Americans firstly. We all know that most jobs being created by American companies are being created overseas. Try again, RomanDOG7.
October 28, 2011 11:54am
Ah yes, and the name calling starts. You do realize that you prove Ann Coulter right when you name call? All it does is show you have lost the argument. May I suggest you try the huffington post to spew your ad hominems? This site is reserved for people of an intellect that are interested in debating issues in an above the gutter level.
Thank you
October 27, 2011 1:17pm
The wealthy must pay the same percentage as the minimum wage earner as in:Wealthy pays 10% of 1,000 = 100.oo while Minimum Wage Earner pays 10% of 100 = 10.00. That's fair taxing in my book!
October 27, 2011 11:36am
Thanks so much for pointing out the obvious; yes Cain is a Republican, he is a millionaire, he is part of the 1% and he is not in touch with either the real man on minimum wage or the real man with $51,000 income. He might be leading the others for a moment, like Perry did before he dropped like a rock to 6%.His 9 9 9 plan is something that is not for 99.9% of us.
October 28, 2011 12:03pm
Cain is in the 1% because he started from the very bottom and worked his way up. He did it by working hard, doing the jobs that his employees were doing like sweeping parking lots, scrubbing toilets and other tasks.
He has every right to the money he has earned.
October 27, 2011 8:07pm
New Battle Hymn of the OVERLORDS - LET THEM EAT PIZZA!
October 27, 2011 8:35am
We don't have a very good frame for taxes yet. Jesus tried...
Paying Taxes to Caesar
13Later they sent some of the Pharisees and Herodians to Jesus to catch him in his words. 14They came to him and said, “Teacher, we know you are a man of integrity. You aren’t swayed by men, because you pay no attention to who they are; but you teach the way of God in accordance with the truth. Is it right to pay taxes to Caesar or not? 15Should we pay or shouldn’t we?”
But Jesus knew their hypocrisy. “Why are you trying to trap me?” he asked. “Bring me a denarius and let me look at it.” 16They brought the coin, and he asked them, “Whose portrait is this? And whose inscription?”
“Caesar’s,” they replied.
17Then Jesus said to them, “Give to Caesar what is Caesar’s and to God what is God’s.”
And they were amazed at him.
We live in the greatest country on Earth. We Pay our dues to live here. Our dues are simply fees that allows this country to be the best. If you are more able to pay due to the progressive empowerment and protection of government it is fair to have you pay more. You couldn't have done so well almost anywhere else.
October 27, 2011 8:08pm
THANK YOU!!!! Well SAID!
October 27, 2011 8:20am
The flat tax would also likely be implemented in 3 stages. 1st the 9% income tax rate (dropping tax rates for the wealthy)... 2nd & 3rd steps: stop pursuing it because the sales tax would be an increase in taxes.
Conservative strategy: To bankrupt government (established policy of StarveTheBeast)... then we can not have Social Security, Medicare, Consumer Protection, The Courts, roads, freedoms, etc.
Reagan called for Government to be small enough to drown in a bathtub... when we call folks like GWB unlucky or incompetent we fail to realize that this is their stated objective. They want ineffective Government. Being broke helps make government ineffective.
The Progressives want to make America Stronger. It seems there are very fair ways to do this, and having 1950's tax rates would be one of them. We got to the moon in less than a decade. Yeesh, now we have to buy a ticket to get into space. Do we think GWB strengthened America? Do you think austerity will help us keep moving into the future.
I recommend that everyone vote a straight Democratic line from the school board up to President until America looks a lot more like the America of our Dreams.
October 27, 2011 6:59am
Unfortunately, 9-9-9 still painfully regressive regardless when federal sales tax (including on food - WTF!) runs at 9% ON TOP OF state/local sales taxes. spend a little time unemployed to get the gist of that tax burden. Then return to adjust comments accordingly.
October 27, 2011 6:07am
What I never see from any of the proposals for "tax reform" is the sum total of estimated revenues for the proposed plan. For example, if Cain's 9-9-9 plan was enacted, what would expected federal revenues be? And from that, he should be forced to display his peabrain thinking and tell the 99% where he sees these revenues being spent. I can assure you that Defense, Corporate welfare and all the other ways the rich can take advantage when loopholes are eliminated, will take precedent over any social programming, including Social Security and Medicare. And the Conservatives would just point to the need to have a balanced budget, question our patriotism if we question defense spending, send up terror alerts and ignore our demands. The only way to ensure we do not experience further screwing from the Conservatives is to VOTE in any and all elections. Do not let an election go by without all of us pulling a lever or casting a ballot!
October 27, 2011 5:13am
Interesting article and comments. There is one factor that might be worthy of inclusion. The rich play by different rules. The tiered taxation system incentivises exploitation of tax loopholes. As such, the rich pay very little tax because they can afford to pay clever accountants and leverage their wealth. This doesn't mean they are necessarily opposed to paying tax. In fact, many are surprised they are not bailed up. But it's by and large a money game for them. A better taxation system would primarily say you must pay this percentage of tax - no ifs and or buts. But then, it's perhaps also worth investigating an idea whereby a) the highest wage is tied to the lowest wage - they must move up and down together by similar amounts, and b) the highest wage is not 10,20 times the lowest wage e.g. minimum wage of say 15K, maximum wage 100K. This would give incentives, but probably also stop the ever increasingly irresponsible behaviour of those in pursuit of endless, unsustainable growth.
October 27, 2011 6:08am
Today analysis of federal data shows that Americans paid the lowest level of taxes since the Harry Truman's presidency. Federal, state, local, property, sales, and other taxes are 9.2% of all personal income in , the lowest rate since 1950. This is also true of multimillionaires and billionaires, who pay a maximum 35 percent income tax on salaries and not a penny in Social Security taxes on the vast majority of their income.
And when, like hedge fund managers, banksters, and health insurance company CEOs often do, they can call their income dividends and capital gains and pay a maximum 15 percent income tax. So billionaires pay 15 percent income tax and virtually no Social Security tax, and they are doing everything they can to keep it that way, funding entire think tanks and PR machines and Tea Parties to keep the anti-tax waters boiling.
The Kochs have spent millions of dollars funding the teaparty to support not taxing the rich. Donald Trump came out of his hole when he found out the Bush tax cuts might be repealed....then he became a birther.
October 26, 2011 10:14pm
The simple fact is that China has destroyed our industrial base...the one we used to win World War II ...if the playing field is flattened We can kick their ass.
October 26, 2011 11:50pm
Just tax the rich the way they were under Roosevelt: 90% and above.
That solves everything!
It is That simple.
October 26, 2011 11:48pm
This is war mongering talk- "kick someone's ass". Just deal with facts.
October 26, 2011 8:51pm
Federal and State taxes should be proportionate to wealth. That is, if 1% of Americans own 75% of the wealth, they should pay 75% of the taxes needed to maintain the government.
October 26, 2011 8:12pm
Are you sure about that 0 income tax on minimum wage earners?
October 26, 2011 5:12pm
Its basic math /common sense Class welfare began with 1981 deregulation, big cuts to CO that sent good jobs overseas, anti US trade policies, corp welfare with no safe guards for taxpayers 700 billion TARP scam. Incomes up to 65 K or so spend bulk of it on basic living expenses Nothing left for savings- investments.. or college . Kids are overcome with college debt and NO jobs We have lost immense value in our 401 K Pensions are all but gone. Wages tanked last 15-25 yrs for most Home values tanked .. income for the top has went up 250 times Its about fairness a level playing field 1980 -2008 crash TARP lied into war - con judges unfair laws. Money is NOT speech Corps are NOT people ! Reaganomics Bush GOP gave huge unfunded corp tax cuts.. loopholes, OIL subsides. Co's like GE
October 26, 2011 4:59pm
Addendum....
And just where has all the money gone from those tax cuts for the wealthy in America since Reagan took office? Did it go to create jobs? Oh yeah, it did that alright...a bunch of low paying Wal-Mart jobs with cr*p benefits. All it did was create an income gap between rich and the rest to the largest in our history since before 1929! Conservatives in this country are a bunch of whining selfish crooks. Period.
October 26, 2011 4:54pm
How about we go back to the tax tables of the 1950's. or the 60's, or even the 70's...you know...when America MADE stuff and there was a decent and solid middle class. What would be wrong with that? How could those tax rates hurt? Remember, they were there when American industrial and manufacturing was BOOMING! Pretty much sinks all the selfish whining I read here from the conservative flat tax crowd. I have NO SYMPATHY for those with too much money who have had their top tax rates cut in half since 1975. Get a life.
October 26, 2011 5:13pm
well said Brad
October 26, 2011 4:41pm
The wealthy do NOT spend all of their money, as you seem to believe. They save and invest a lot of it, and that money is not subject to sales tax. Also, their investments are not subject to income tax! All of these flat tax proposals tend to eliminate all taxes on investment income The flat tax just applies to earned income, either hourly or salary, but not bonuses, and not investments. Thus the wealthy pay a much lower percentage of total money in taxes on the Cain plan. If you could design a flat tax on income that applied to ALL income equally, regardless of the source, that would be fair. But a sales tax always hits lower income people, who spend all of their income, much harder than higher-income people, and that is regressive. And don't forget, that most states have their own sales tax as well. A poor person in Georgia or some Florida counties, would pay 9% income tax plus 9% sales tax PLUS 7% state sales tax, for a total of 25% of his income in taxes! (Well, less the amount of those sales taxes on his mortgage.)
October 26, 2011 4:25pm
By the way, the post card says "you're screwed" on the back of it.
Be interested in numbers for Rick Perry's 20% flat tax he just revealed.
October 26, 2011 4:24pm
This guy obviously hasn't read Cain's plan. First of all, there won't be a social security tax because the 9 9 9 plan eliminates EVERY tax and replaces with a 9% corporate tax, personal income tax, and a national sales tax. Secondly, the people making the least in this country (the minimum wagers) are exempt from the income tax. Their rates are 9 0 9. Get your facts straight, buddy.
October 26, 2011 11:47pm
you are rude and vulgar: did you know that? really an ugly- mouthed hostile, angry person
October 27, 2011 12:21pm
How was I rude? I challenged the author because he has his facts wrong. Should I have ignored that?
October 28, 2011 8:02am
Would you kindly tell me which facts in the article are incorrect? If you read the article, you will see that I am not addressing Cain's plan specifically, but rather the effects of a flat tax on various income levels.
October 29, 2011 6:41pm
In any flat tax there won't be a social security tax, and both Cain and Perry have provisions in their plans to exempt the lowest bracket from the income tax. But that is irrelevant, because you used the 9% number throughout your math so I think that implies you were referring to the 9 9 9 plan. I told you which facts you got wrong: there isn't a social security tax, and, again, the lowest tax bracket won't pay the income tax. I also forgot to add that in phase 2 of the 9 9 9 plan the income tax is phased out in all tax brackets. Everybody gets to keep more of their money, not just the rich. Everybody should be pretty happy about that.
October 26, 2011 5:41pm
How about we go back to the tax tables of the 1950's. or the 60's, or even the 70's...you know...when America MADE stuff and there was a decent and solid middle class. What would be wrong with that? How could those tax rates hurt? Remember, they were there when American industrial and manufacturing was BOOMING! Pretty much sinks all the selfish whining I read here from the conservative flat tax crowd. I have NO SYMPATHY for those with too much money who have had their top tax rates cut in half since 1975. Get a life.
October 27, 2011 12:29pm
So you believe that the rich aren’t “doing their share”? You believe that instead of lowering spending, we should raise taxes on the very people who push the economy. This approach is wrong on three levels; one of those is a practical reason, and the other two are philosophical.
1) First, the practical reason. The super-rich are the motor that drives the economy, and the liberals response to a faltering “recovery” is to put less fuel in the motor? Taking fuel from the motor to fiddle with the air conditioning (the unemployed) is not the way to fix the economy. Let trickle-down economy work its magic. Letting the rich keep more of their money so they can invest it is the only sensible way to get the economy moving again. Taking money from the rich (a.k.a. productive) and giving it to the poor (a.k.a. unproductive) does not seem very bright.
2) Chris Matthews, Nancy Pelosi, Anthony Weiner, and every other liberal in The United States has decided that every single dollar that is produced in this country belongs to the government. The income tax is a perfect example of this sentiment. The government owns everything you make and allows you to keep what the amount that they think is "fair". Barbara Boxer made this perfectly clear when she said the rich were “taking” money from the government when they got a tax break. Our elected officials need to remember that they aren’t in charge; we are.
3) Americans who are not in the top 1% have all made the assumption that money is just this thing that rich people have. They think that the richest 10% just got lucky, were in the right place at the right time, and don’t really deserve their millions. Some of those 1% did get lucky, but most of them worked their butts off to earn enough to afford a comfortable life for themselves and their families. This money is the fruit of their labor. It’s not just paper that they woke up one day and found under their mattress or a couple extra zeroes accidentally added at the end of their bank statement. The super-rich earned the wealth that makes them super-rich.
The amount of money one has doesn’t increase the right the government has to one’s income. Bill Gates should be able to keep as much of the money he makes as a minimum wage-earner at Safeway does.
October 26, 2011 4:24pm
This guy obviously hasn't read Cain's plan. First of all, there won't be a social security tax because the 9 9 9 plan eliminates EVERY tax and replaces with a 9% corporate tax, personal income tax, and a national sales tax. Secondly, the people making the least in this country (the minimum wagers) are exempt from the income tax. Their rates are 9 0 9. Get your facts straight, buddy.