Please for the love of God tell me that Michele Bachmann's support in the polls will vanish after today. She said that, in response to the British embassy in Iran being raided by "students" a few days ago, she would close our embassy in Iran. The only problem is that we haven't had an embassy in Iran since before I was born.
So seriously, fuck Michele Bachmann. This episode clearly demonstrates that she is willing to completely talk out of her ass on important matters. This wasn't a gaffe or a blunder. It was taking a policy position without having the slightest clue about the facts of the policy. It is indefensible, and it shows she has no place in public discourse.
Wednesday, November 30, 2011
Tuesday, November 29, 2011
Newt's K-Street history
While the Tea Party and the Occupy Wall Street movements disagree on many things, they both (early on, at least, in the case of the Tea Party) decried the rise of "crony capitalism". They recognized that the huge lobbying checks written to those in power cause huge, unfair distortions in the market, disproportionately helping the donors at the expense of the rest of us. The Tea Party in particular has been rabidly "anti-Washington". One would think that lobbyists and Washington insiders would be immensely unpopular with both crowds. The Tea Party's recent embrace of one Newton Leroy Gingrich demonstrates that this formerly-key principle of the movement has been abandoned, as Gingrich is entirely a creature of K Street, lobbying capital of the universe.
After Gingrich's resignation as Speaker, he spent the next decade making money off of his name and his connections in Washington. He set up numerous for-profit organizations to this end. These organizations are all located on K Street (as Rachel Maddow discussed yesterday; jump to 5:30 for the relevant section). He received at least $37 million just from health care organizations. While he never officially registered as a lobbyist, it's safe to assume that they weren't just paying him tens of millions for his perspective as a historian.
The Tea Party would lose all of its credibility if Newt, a literal creature of K Street, were to become the nominee. It would mark the completion of the Republican establishment's mission to subsume the Tea Party movement.
After Gingrich's resignation as Speaker, he spent the next decade making money off of his name and his connections in Washington. He set up numerous for-profit organizations to this end. These organizations are all located on K Street (as Rachel Maddow discussed yesterday; jump to 5:30 for the relevant section). He received at least $37 million just from health care organizations. While he never officially registered as a lobbyist, it's safe to assume that they weren't just paying him tens of millions for his perspective as a historian.
The Tea Party would lose all of its credibility if Newt, a literal creature of K Street, were to become the nominee. It would mark the completion of the Republican establishment's mission to subsume the Tea Party movement.
Thursday, November 10, 2011
Romney will be the nominee
At tonight's CNBC debate, Rick Perry likely torpedoed both his own campaign and Herman Cain's. As a result, I will predict that by December 1 Newt Gingrich will be at least 2nd in the polls, if not 1st. More importantly, I would now project Mitt Romney to be the near-certain nominee.
Perry committed a huge blunder in the debate. He was attempting to discuss his plans to eliminate three cabinet departments, then couldn't name which three. He got Commerce and Education, but forgot the Energy Department.
If Romney, Gingrich, Huntsman, Santorum or Paul would have committed this mistake, it might not have been so bad for their chances. For Perry, however, the gaffe played into an already-established narrative that he's, to be blunt, too dumb to be President. This reinforcing nature of the gaffe is what makes it so fatal, just like Howard Dean's "I have a scream" moment killed him because it reinforced that he was unstable/angry or why Dan Quayle's "potatoe" gaffe defined his legacy.
It is, frankly, unacceptable for a Presidential candidate to not be able to rattle off every cabinet department, or at least the ones he plans to eliminate. Perry should have been able to catch himself, start a list of each department and arrive at the right one.
This gaffe will undoubtedly be run again and again on the news, and I think we can all predict with a fair degree of certainty what Saturday Night Live will open with this week. I predict that this will lead to a discussion of the intellectual requirements to be President, and that this (along with the sexual harassment stuff) will end Cain's reign at/near the top.
So why Gingrich? Truly, it's largely a process of elimination. Perry, Cain and Bachmann have already had their shot (and fail the intelligence test), Paul's too out there, Santorum and Huntsman too unknown, and Romney's Romney, so it's Gingrich's turn. He certainly meets the intelligence requirement. He's a true conservative, with 1994 Contract with America credentials. Perry and Cain are going down, and voters won't settle on Romney yet, so it's Newt's turn.
Does Newt have a chance of being the nominee? I truly doubt it. With the intensified attention that will come with improving in the polls, people will remember about his "right-wing social engineering" remark, his serial affairs, his ethics issues that led to reprimand by the House, etc. But for now, when poll respondents only remember the 1994 revolution and his recent debate performances, he'll have a rise.
But after his inevitable fall, we'll be left with Romney. I think Santorum's social stances are too extreme even for the modern Republican Party, and he's just not that likeable. Huntsman is too moderate/reasonable. So they're left with Romney. As previously discussed, I'm OK with that.
Perry committed a huge blunder in the debate. He was attempting to discuss his plans to eliminate three cabinet departments, then couldn't name which three. He got Commerce and Education, but forgot the Energy Department.
If Romney, Gingrich, Huntsman, Santorum or Paul would have committed this mistake, it might not have been so bad for their chances. For Perry, however, the gaffe played into an already-established narrative that he's, to be blunt, too dumb to be President. This reinforcing nature of the gaffe is what makes it so fatal, just like Howard Dean's "I have a scream" moment killed him because it reinforced that he was unstable/angry or why Dan Quayle's "potatoe" gaffe defined his legacy.
It is, frankly, unacceptable for a Presidential candidate to not be able to rattle off every cabinet department, or at least the ones he plans to eliminate. Perry should have been able to catch himself, start a list of each department and arrive at the right one.
This gaffe will undoubtedly be run again and again on the news, and I think we can all predict with a fair degree of certainty what Saturday Night Live will open with this week. I predict that this will lead to a discussion of the intellectual requirements to be President, and that this (along with the sexual harassment stuff) will end Cain's reign at/near the top.
So why Gingrich? Truly, it's largely a process of elimination. Perry, Cain and Bachmann have already had their shot (and fail the intelligence test), Paul's too out there, Santorum and Huntsman too unknown, and Romney's Romney, so it's Gingrich's turn. He certainly meets the intelligence requirement. He's a true conservative, with 1994 Contract with America credentials. Perry and Cain are going down, and voters won't settle on Romney yet, so it's Newt's turn.
Does Newt have a chance of being the nominee? I truly doubt it. With the intensified attention that will come with improving in the polls, people will remember about his "right-wing social engineering" remark, his serial affairs, his ethics issues that led to reprimand by the House, etc. But for now, when poll respondents only remember the 1994 revolution and his recent debate performances, he'll have a rise.
But after his inevitable fall, we'll be left with Romney. I think Santorum's social stances are too extreme even for the modern Republican Party, and he's just not that likeable. Huntsman is too moderate/reasonable. So they're left with Romney. As previously discussed, I'm OK with that.
Wednesday, November 9, 2011
Perry's tax plan more viable than 9-9-9
The biggest non-sex-related* development in the Republican race in the last two debate-free weeks was Rick Perry's unveiling of his flat tax plan (.pdf). The main takeaway is that, like Herman Cain's 9-9-9 plan, it hugely decreases taxes on the wealthy. More importantly, in terms of politics, it represents a much more politically-feasible route to such giveaways than the Cain plan.
First, the numbers. Perry proposes to offer every taxpayer a choice between the current system and a flat tax of 20%. It also eliminates taxes on capital gains, the estate tax, increases personal exemptions to $12,500 per person in the household, and greatly reduces corporate taxes on profits earned overseas. It does not change the payroll tax.
Now, the math. So far as I can tell, the plan eliminates the Earned Income Tax Credit, which as previously discussed would be a disaster for the working poor. In a sane world, proposing to end an effective tool to help the poor which was instituted by Ronald Reagan would carry a political cost. In today's Republican Party, however, the problem is apparently the 47% of Americans who only pay sales, payroll, state/local and property taxes but don't pay federal income taxes, so screwing the poor is accepted party doctrine.
Where Perry's plan is politically superior to Cain's is its effects on the middle class. As previously discussed, Cain's plan would raise taxes on the average family of 4 by about $3,000 a year. For the vast majority (84%) of taxpayers, they could do the math and find that they would pay more under 9-9-9. Regardless of the arguments one might make for a tax proposal, if a vast majority of voters find it hurts them, it's probably not going to do very well at the end of the day.
Under Perry's plan, our family of 4 making $50,000 sees its federal income tax burden fall to $0, thanks to the increased personal exemption: $50,000 - 4 x $12,500 = 0 taxable income. Families making more than $50,000, their tax bill goes down under Perry's plan, except for a narrow band of people whose income is right around where the current income tax rate goes from 15% to 25%, which is $69,000 after deductions/exemptions. These people wouldn't actually see their taxes go up either, as they're allowed to choose to remain with the current plan.
For the rich, whose current income tax rate is 35%, 20% is a pretty great deal, particularly when they get to keep the mortgage interest deduction. The deduction actually phases out for incomes over $500,000, but the income tax rate savings more than make up for the phase-out. The wealthy also make a much larger percentage of their income from capital gains, the taxes on which drop from 15% to 0% under Perry's plan. They also no longer have to pay estate taxes, which only applies to estates of $5 million or more and currently tops out at 35%.
Cain's 9-9-9 plan at least attempts to be revenue-neutral (i.e., bring in as much money as the current code). Perry's plan would bring in much less revenue, exploding the deficit. Mainstream Republicans are under the impression that tax cuts for the rich are inherently revenue-neutral. They base this on the Laffer Curve, which states that there exists a level of taxation above which tax revenue will actually go down. While such a level exists, it's above the level of taxation where we currently are, so lowering tax rates will lower revenue, despite what Perry and others would have us believe.
Perry's plan would be terrible for the country, as the deficit would grow even more and force huge cuts in government programs. But, because taxes will go down on the middle class and way, way down for the rich, it is more politically palatable to voters, particularly those who put us at the wrong point on the Laffer Curve. By introducing the plan, Perry has positioned himself to potentially capitalize on an eventual Cain demise.
(*: I don't really care to comment on the particulars of the allegations against Cain. If you're interested in the story, www.politico.com has been the best source)
First, the numbers. Perry proposes to offer every taxpayer a choice between the current system and a flat tax of 20%. It also eliminates taxes on capital gains, the estate tax, increases personal exemptions to $12,500 per person in the household, and greatly reduces corporate taxes on profits earned overseas. It does not change the payroll tax.
Now, the math. So far as I can tell, the plan eliminates the Earned Income Tax Credit, which as previously discussed would be a disaster for the working poor. In a sane world, proposing to end an effective tool to help the poor which was instituted by Ronald Reagan would carry a political cost. In today's Republican Party, however, the problem is apparently the 47% of Americans who only pay sales, payroll, state/local and property taxes but don't pay federal income taxes, so screwing the poor is accepted party doctrine.
Where Perry's plan is politically superior to Cain's is its effects on the middle class. As previously discussed, Cain's plan would raise taxes on the average family of 4 by about $3,000 a year. For the vast majority (84%) of taxpayers, they could do the math and find that they would pay more under 9-9-9. Regardless of the arguments one might make for a tax proposal, if a vast majority of voters find it hurts them, it's probably not going to do very well at the end of the day.
Under Perry's plan, our family of 4 making $50,000 sees its federal income tax burden fall to $0, thanks to the increased personal exemption: $50,000 - 4 x $12,500 = 0 taxable income. Families making more than $50,000, their tax bill goes down under Perry's plan, except for a narrow band of people whose income is right around where the current income tax rate goes from 15% to 25%, which is $69,000 after deductions/exemptions. These people wouldn't actually see their taxes go up either, as they're allowed to choose to remain with the current plan.
For the rich, whose current income tax rate is 35%, 20% is a pretty great deal, particularly when they get to keep the mortgage interest deduction. The deduction actually phases out for incomes over $500,000, but the income tax rate savings more than make up for the phase-out. The wealthy also make a much larger percentage of their income from capital gains, the taxes on which drop from 15% to 0% under Perry's plan. They also no longer have to pay estate taxes, which only applies to estates of $5 million or more and currently tops out at 35%.
Cain's 9-9-9 plan at least attempts to be revenue-neutral (i.e., bring in as much money as the current code). Perry's plan would bring in much less revenue, exploding the deficit. Mainstream Republicans are under the impression that tax cuts for the rich are inherently revenue-neutral. They base this on the Laffer Curve, which states that there exists a level of taxation above which tax revenue will actually go down. While such a level exists, it's above the level of taxation where we currently are, so lowering tax rates will lower revenue, despite what Perry and others would have us believe.
Perry's plan would be terrible for the country, as the deficit would grow even more and force huge cuts in government programs. But, because taxes will go down on the middle class and way, way down for the rich, it is more politically palatable to voters, particularly those who put us at the wrong point on the Laffer Curve. By introducing the plan, Perry has positioned himself to potentially capitalize on an eventual Cain demise.
(*: I don't really care to comment on the particulars of the allegations against Cain. If you're interested in the story, www.politico.com has been the best source)
Wednesday, October 26, 2011
Maybe Herman Cain's just clueless
Herman Cain's been getting a lot of shit from me recently. I think it's mostly justified, as his policies would be terrible for the nation. But it's becoming increasingly clear the more I hear him in interviews and debates that the man just has no idea what he's talking about. A sampling;
-His previously-discussed ignorance of the Palestinian Right of Return, a fairly major element in the Israel-Palestine conflict.
-His ignorance of neoconservatism, the dominant foreign policy idea in the Republican Party in the past 15 years.
-His proud ignorance of details of foreign countries and foreign leaders; "Uzbeki-beki-beki-beki-stan-stan".
-Most damning are his fumbles of questions on abortion, a topic he should be strong on given the prominent role it played in his 2004 run for Senate. In an interview with John Stossel about 3 months ago, Cain gives completely contradictory answers in back to back sentences. The clip really is worth watching; it's just over a minute, and the other guest's response to Cain's literally-jaw-dropping answer is worth the price of admission.
-On Meet the Press, he said he did not support abortion under any circumstances but then said abortion in the case of a threat to the life of the mother would have to be made by the family. Not as self-contradictory as the Stossel interview, but not crystal clear either.
-He further muddied the waters on his abortion stance in an interview with Piers Morgan, where he again seemed to indicate it wasn't the government's role to make the choice on abortion.
What concerns me most about the repeated poor responses on abortion is that neither the candidate nor his team thought to tighten up the answers. After the Stossel interview months ago, an intelligent/savvy politician would have spent some time to figure out a way to clearly convey his stance on this issue, which is a particularly important one in Iowa and throughout a Republican primary.
Republican voters should be hopeful that Cain's campaign mirrors that of Ross Perot. By making tax reform a central issue in his campaign, he is influencing the debate, just like Perot did in '92 on deficit and spending issues. But should Cain's lead in the polls carry him to the nomination, I'm supremely confident of four more years for Obama, and likely big gains in Congress as well.
-His previously-discussed ignorance of the Palestinian Right of Return, a fairly major element in the Israel-Palestine conflict.
-His ignorance of neoconservatism, the dominant foreign policy idea in the Republican Party in the past 15 years.
-His proud ignorance of details of foreign countries and foreign leaders; "Uzbeki-beki-beki-beki-stan-stan".
-Most damning are his fumbles of questions on abortion, a topic he should be strong on given the prominent role it played in his 2004 run for Senate. In an interview with John Stossel about 3 months ago, Cain gives completely contradictory answers in back to back sentences. The clip really is worth watching; it's just over a minute, and the other guest's response to Cain's literally-jaw-dropping answer is worth the price of admission.
-On Meet the Press, he said he did not support abortion under any circumstances but then said abortion in the case of a threat to the life of the mother would have to be made by the family. Not as self-contradictory as the Stossel interview, but not crystal clear either.
-He further muddied the waters on his abortion stance in an interview with Piers Morgan, where he again seemed to indicate it wasn't the government's role to make the choice on abortion.
What concerns me most about the repeated poor responses on abortion is that neither the candidate nor his team thought to tighten up the answers. After the Stossel interview months ago, an intelligent/savvy politician would have spent some time to figure out a way to clearly convey his stance on this issue, which is a particularly important one in Iowa and throughout a Republican primary.
Republican voters should be hopeful that Cain's campaign mirrors that of Ross Perot. By making tax reform a central issue in his campaign, he is influencing the debate, just like Perot did in '92 on deficit and spending issues. But should Cain's lead in the polls carry him to the nomination, I'm supremely confident of four more years for Obama, and likely big gains in Congress as well.
Friday, October 21, 2011
Herman Cain thinks he's helping poor people
Today's Herman Cain news is that he says "if you are at or below the poverty level, your plan isn't 9-9-9. It's 9-0-9." Then, being the fucking asshole that he is, he follows that up with "Say Amen, y'all", as if to put an exclamation point on the tremendous gift he's given the poor among us. The middle number is the income tax, so people in poverty are excused from that portion.
So, let's fire up the arithmetic machine and see what effect 9-9-9 would have on the average family of 4 living at the poverty line. For a family of four, the poverty line is at $22,050, so let's look at a family making $22,000 a year. Sneak preview, they will be $6,878* worse off should 9-9-9 (which is 9-0-9 for them) come to pass:
-McDonald's has to pay 7.65% in payroll taxes, so they have to spend $23,683 to hire a worker with a $22,000 salary, with the extra $1,683 going to Uncle Sam
-The family also must pay 7.65% in payroll taxes, so there goes another $1,683
-The standard deduction for a married couple is $11,400, dropping their taxable income to $10,600
-The personal exemption ($3,650 per family member) drops their taxable income to $0
-As you might expect, this drops their owed income tax to $0
-Not only do they not owe any income taxes, they get additional, refundable credits, including:
So the family's total tax bill would be $1,683 in payroll taxes, plus $1,683 that their employer pays. They get a credit of $6,334. So their personal tax bill is currently a net credit of $4,651, or $2,968 when you include the employer's portion, which you should.
Now President Cain institutes 9-9-9 (or 9-0-9 for the poor). In the process, he completely eliminates the Earned Income Tax Credit and the Child Tax Credit. Here's the math:
-McDonald's is still willing to spend $23,683 to employ the family's breadwinner ($22,000 + employer's contribution toward Social Security and Medicare)
-Under Cain's plan, McDonald's has to pay a 9% tax on that money, reducing the gross pay of the family to $21,551, since 9% is more than 7.65%, with the other $2,132 going to Uncle Sam.
-The family will, according to the Consumer Expenditure Survey, be expected to spend even more than their income (i.e., go into debt) every year. Let's assume they just spend their income.
-If you were to spend $21,551 including a 9% sales tax, you'd spend $19,772 on stuff and $1,779 in taxes.
So our family pays $1,779 in direct taxes, or $3,910 if you include the employer's portion, which you should.
Herman Cain's 9-9-9 plan, even with the 9-0-9 change, changes the tax bill for a family in povery from a $2,968 credit to a $3,910 liability. This is $6,878 less that a family already IN POVERTY would have every year if Cain's plan becomes the law of the land.
Say Amen to that, you fucking asshole
(*an earlier version of these calculations used a wrong poverty threshold, which was taken from Herman Cain's website (.pdf, table 6). Serves me right for taking numbers from a source I spend the entire post attempting to rip to shreds.)
So, let's fire up the arithmetic machine and see what effect 9-9-9 would have on the average family of 4 living at the poverty line. For a family of four, the poverty line is at $22,050, so let's look at a family making $22,000 a year. Sneak preview, they will be $6,878* worse off should 9-9-9 (which is 9-0-9 for them) come to pass:
-McDonald's has to pay 7.65% in payroll taxes, so they have to spend $23,683 to hire a worker with a $22,000 salary, with the extra $1,683 going to Uncle Sam
-The family also must pay 7.65% in payroll taxes, so there goes another $1,683
-The standard deduction for a married couple is $11,400, dropping their taxable income to $10,600
-The personal exemption ($3,650 per family member) drops their taxable income to $0
-As you might expect, this drops their owed income tax to $0
-Not only do they not owe any income taxes, they get additional, refundable credits, including:
-Earned Income Tax Credit (.pdf, Page 46): For a family of 4 making $22,000, they would get a tax credit of $4,917. This credit is refundable (i.e., they get a check from the government for $4,917 every year
-Child Tax Credit: Under current law, after the stimulus peters out, our family would get a $1,417 refundable tax credit (it'd be $2,000 today)
So the family's total tax bill would be $1,683 in payroll taxes, plus $1,683 that their employer pays. They get a credit of $6,334. So their personal tax bill is currently a net credit of $4,651, or $2,968 when you include the employer's portion, which you should.
Now President Cain institutes 9-9-9 (or 9-0-9 for the poor). In the process, he completely eliminates the Earned Income Tax Credit and the Child Tax Credit. Here's the math:
-McDonald's is still willing to spend $23,683 to employ the family's breadwinner ($22,000 + employer's contribution toward Social Security and Medicare)
-Under Cain's plan, McDonald's has to pay a 9% tax on that money, reducing the gross pay of the family to $21,551, since 9% is more than 7.65%, with the other $2,132 going to Uncle Sam.
-The family will, according to the Consumer Expenditure Survey, be expected to spend even more than their income (i.e., go into debt) every year. Let's assume they just spend their income.
-If you were to spend $21,551 including a 9% sales tax, you'd spend $19,772 on stuff and $1,779 in taxes.
So our family pays $1,779 in direct taxes, or $3,910 if you include the employer's portion, which you should.
Herman Cain's 9-9-9 plan, even with the 9-0-9 change, changes the tax bill for a family in povery from a $2,968 credit to a $3,910 liability. This is $6,878 less that a family already IN POVERTY would have every year if Cain's plan becomes the law of the land.
Say Amen to that, you fucking asshole
(*an earlier version of these calculations used a wrong poverty threshold, which was taken from Herman Cain's website (.pdf, table 6). Serves me right for taking numbers from a source I spend the entire post attempting to rip to shreds.)
Fun with Math, or, Herman Cain is a Fucking Asshole, Part 2
In Part 1, I showed my work behind my assertion that Herman Cain's plan would be terrible for the average American family. While I have endeavored to do the same for a family making $1,000,000/year, the accounting is frankly beyond my meager abilities. So here's a graph from The Washington Post that quite succinctly sums up the relative effects of Cain's plan on the Rich and everyone else. It's worth the click, I promise...
note: the difference between the effect on the middle 20% and my calculation Part 1 relates to my effort to include the poverty exemption that Cain's website mentions.
So how on Earth could Cain ever expect to get elected and get this thing passed? The answer appears to be through flat-out lying to voters. In this interview with MSNBC last week, at the 2:00 mark, Cain discussed the tax situation of a family of four making $50,000/year. He states:
Cain: Today, under the current system, they will pay over $10,000 in taxes,
assuming standard deductions and standard exemptions. I've gone through the math. $10,000
In Part 1, I showed that their tax bill, including the employer's Social Security/Medicare contributions, would be $8,416. So, how does he arrive at "over $10,000"? By leaving out the child tax credit, which is $1,000 per kid, or, for a family of four, $2,000 for two kids. This credit, which goes away under 9-9-9, accounts for much of the hit that middle-class families will take if Cain's plan is ever instituted. But, since he's a fucking asshole who is apparently comfortable with lying to people to make the current system look worse and by extension make his own plan look better, he overinflates the family's current tax bill. The interview continues...
Cain: Now, with 9-9-9, they're going to pay that 9% personal, that
9% tax on income, so that's only $4,500. You still have $5,500 left
over to apply to the sales tax piece.
Bullshit! Bull. Shit.
In order to get to $10,000 under the current system, you have to, in addition to ignoring the child tax credit, include the employer's Social Security/Medicare contribution, which is almost $4,000/year in addition to the $50,000 salary. 9-9-9, while it eliminates these contributions, also no longer allows businesses to deduct wages/salaries from their taxable income. So companies will have to pay a 9% tax on the money they want to pay their employees. Essentially, 9-9-9 replaces the current 7.65% employer payroll tax with a 9% employer payroll tax.
So, since we've established in the $10,000 number that we're gonna count employer contributions, and we don't want to compare apples and oranges, you have to include ~$4,900 in payroll taxes, in addition to the $4,500 in income taxes that Cain mentions. So you only have $600 to apply to the sales tax piece, not $5,500 as the fucking asshole claims. And that assumes you buy the $10,000 number, which itself is bullshit. Paying $600 in sales taxes assumes less than $7,000 in spending annually. That's less than what a household with that income would pay just for transportation, according to the Consumer Expenditure Survey.
Extra taxes for working families while The Rich get a tax cut that's literally off the chart. Several screens worth of off the chart. What an asshole...
Thursday, October 20, 2011
Fun with Math, or Herman Cain is a Fucking Asshole, Part 1
While there have been a number of analyses of the tax implications of Herman Cain's 9-9-9 Plan, I haven't seen one that breaks things down enough for the layperson to understand exactly what the implications will be for an average American family. So here's my humble attempt to fill that gap; it's long but I think it's pretty easy to follow. If you don't feel like working through it, a typical family of four would pay just under $3,000 more in taxes under Cain's plan, while the rich would pay lower rates on income and zero taxes on capital gains and inheritances. Cain covers this up by flat-out lying about how much an average family pays in taxes. We'll address the lying and the effects on the rich in part 2.
-Let's consider a family of four making $50,000 a year, which is pretty close to the median household income.
-Their employer must pay 6.2% of that amount in Social Security taxes and 1.45% in Medicare taxes (source), meaning that their employer really spends $53,825 to employ that person.
-Of that $50,000, the family must also pay 6.2% toward Social Security and 1.45% toward Medicare, dropping their total to $46,175.
-They must also pay income taxes. This first involves figuring out their taxable income, which depends on several factors:
Total Gross Income: $50,000
Standard Deduction in 2010 for a married couple is $11,400
So their taxable income is now $38,600
They also can claim a Personal Exemption of $3,650 per family member. $3,650 x 4 = $14,600
This drops their taxable income to $24,000
For couples filing jointly, the tax tables (massive .pdf, relevant bit on page 77) work out to a total liability of $2,766
But the family of four would get two $1,000 child credits, dropping their bill to $766
-So their take-home after payroll taxes, $46,175, minus $766 in income taxes, makes their total post-tax income $45,409.
-Their total tax bill is $4,591
-If you want to count the employer's portion of payroll taxes, which I think is totally legitimate and indeed preferred, as if there were no taxes the employer would be happy to give that cash to the family, their bill is $8,416
As shown in Table 10c of this pdf, the actual tax rate under the 9-9-9 plan would actually be 9.1%. 9's more catchy, but we'll do the calculations with the actual number of 9.1%.
Now, under Cain's plan, let's assume that same employer still wants to spend a total $53,825 to employ the employee. What will be the family's total after-tax income under Cain's plan?
-Payroll taxes go away under 9-9-9. But, employee wages/salaries, which are currently tax-deductible, are no longer so under Cain's plan. This means that the employer has to pay taxes equal to 9% of your wages before they can give the rest to you. So 0.091 x $53,825 = $4,898 is how much they pay in taxes before they give you your salary.
-The family's gross pay is thus $53,825-$4,898 = $48,927
-While Cain hasn't discussed it on the campaign trail, his calculations (.pdf, Table 6) allow for a deduction equal to the poverty rate. For our family of 4, this means they can claim a deduction of $15,006
-Their total taxable income is therefore $48,927 - $15,006 = $33,921
-Paying 9.1% of that in income taxes takes out $3,087
-Their total take-home, after corporate and income taxes but before sales taxes, is $48,927-$3087 = $45,840
-Based on the Bureau of Labor Statistics Consumer Expenditures Survey, a household with that after-tax income would be expected to spend about $41,000 each year.
-With the proposed sales tax, our family would have to pay a 9.1% sales tax on purchases. This would mean an additional $3,420 in taxes ($37,580 in spending plus 9.1% of that amount equals $41,000)
Got all that? Great, we're almost to the end!
Total tax bill under 9-9-9 = $3,087 (income tax) + $3,420 (sales tax) = $6,507
Including the employer's portion = $6,507 + $4,898 = $11,405
Currently, the family would pay $4,591 in federal taxes. Under 9-9-9, it goes up to $6,507, for an increase of $1,916. Counting the employer's contribution, which I think is really the more valid comparison, the family's tax bill increases from $8,416 to $11,405, an increase of $2,989.
For families who currently make less than $50,000, the change is proportionally worse, as they pay an even lower rate under current law, thanks to other deductions and credits like the Earned Income Tax Credit, all of which go away under 9-9-9.
As Cain points out, the plan is intended to be revenue-neutral (i.e., raises the same amount of taxes in total as the current system). So, if the average family and poorer families are paying more, that means the rich will pay less. A lot less. We'll look at just how much less in Part 2.
See what I mean about Cain being a fucking asshole?
-Let's consider a family of four making $50,000 a year, which is pretty close to the median household income.
-Their employer must pay 6.2% of that amount in Social Security taxes and 1.45% in Medicare taxes (source), meaning that their employer really spends $53,825 to employ that person.
-Of that $50,000, the family must also pay 6.2% toward Social Security and 1.45% toward Medicare, dropping their total to $46,175.
-They must also pay income taxes. This first involves figuring out their taxable income, which depends on several factors:
Total Gross Income: $50,000
Standard Deduction in 2010 for a married couple is $11,400
So their taxable income is now $38,600
They also can claim a Personal Exemption of $3,650 per family member. $3,650 x 4 = $14,600
This drops their taxable income to $24,000
For couples filing jointly, the tax tables (massive .pdf, relevant bit on page 77) work out to a total liability of $2,766
But the family of four would get two $1,000 child credits, dropping their bill to $766
-So their take-home after payroll taxes, $46,175, minus $766 in income taxes, makes their total post-tax income $45,409.
-Their total tax bill is $4,591
-If you want to count the employer's portion of payroll taxes, which I think is totally legitimate and indeed preferred, as if there were no taxes the employer would be happy to give that cash to the family, their bill is $8,416
As shown in Table 10c of this pdf, the actual tax rate under the 9-9-9 plan would actually be 9.1%. 9's more catchy, but we'll do the calculations with the actual number of 9.1%.
Now, under Cain's plan, let's assume that same employer still wants to spend a total $53,825 to employ the employee. What will be the family's total after-tax income under Cain's plan?
-Payroll taxes go away under 9-9-9. But, employee wages/salaries, which are currently tax-deductible, are no longer so under Cain's plan. This means that the employer has to pay taxes equal to 9% of your wages before they can give the rest to you. So 0.091 x $53,825 = $4,898 is how much they pay in taxes before they give you your salary.
-The family's gross pay is thus $53,825-$4,898 = $48,927
-While Cain hasn't discussed it on the campaign trail, his calculations (.pdf, Table 6) allow for a deduction equal to the poverty rate. For our family of 4, this means they can claim a deduction of $15,006
-Their total taxable income is therefore $48,927 - $15,006 = $33,921
-Paying 9.1% of that in income taxes takes out $3,087
-Their total take-home, after corporate and income taxes but before sales taxes, is $48,927-$3087 = $45,840
-Based on the Bureau of Labor Statistics Consumer Expenditures Survey, a household with that after-tax income would be expected to spend about $41,000 each year.
-With the proposed sales tax, our family would have to pay a 9.1% sales tax on purchases. This would mean an additional $3,420 in taxes ($37,580 in spending plus 9.1% of that amount equals $41,000)
Got all that? Great, we're almost to the end!
Total tax bill under 9-9-9 = $3,087 (income tax) + $3,420 (sales tax) = $6,507
Including the employer's portion = $6,507 + $4,898 = $11,405
Currently, the family would pay $4,591 in federal taxes. Under 9-9-9, it goes up to $6,507, for an increase of $1,916. Counting the employer's contribution, which I think is really the more valid comparison, the family's tax bill increases from $8,416 to $11,405, an increase of $2,989.
For families who currently make less than $50,000, the change is proportionally worse, as they pay an even lower rate under current law, thanks to other deductions and credits like the Earned Income Tax Credit, all of which go away under 9-9-9.
As Cain points out, the plan is intended to be revenue-neutral (i.e., raises the same amount of taxes in total as the current system). So, if the average family and poorer families are paying more, that means the rich will pay less. A lot less. We'll look at just how much less in Part 2.
See what I mean about Cain being a fucking asshole?
Monday, October 17, 2011
Tips for the 99%
As previously discussed, I support the Occupy Wall Street movement. But as much as we need changes to the political system, there are many things we can do to help bring about the goals of the 99% that don't require a corporately-supported politician to do anything. Here are some suggestions:
-Boycott the bad guys.
-Buy local and buy small. Mom and Pop's shop doesn't put them in the 1%. If you don't want CEOs to make 500 times what their employees make, don't buy from big companies. If a privately-owned company, such as Koch Industries, won't tell you what their executives/owners make, don't buy from them. Same thing for environmental protections, providing health insurance to their employees, or whatever else is important to you.
-Ignore political ads. The only reason political donations matter is that people allow biased (i.e., sponsored) media to influence their vote. If the 99% ignored ads, Karl Rove and the Koch Brothers could spend all the money they wanted and it wouldn't make much difference in the outcome of elections, so then politicians wouldn't feel like they owed their rich sponsors anything. Other forms of electioneering (voter canvassing, mailers, etc.) would still have a role, but these aren't nearly as effective or expensive as TV ads.
-Ignore ads in general. While you're at it, ignore all ads. If a company's big enough to buy an ad on a national network, it's probably big enough to hideously overpay its management.
We have more money than them. We have more votes than them. They can only maintain the current system by keeping us from using our power. Political protest is one way to fight back, but it's not the most direct or the most effective.
-Boycott the bad guys.
-Buy local and buy small. Mom and Pop's shop doesn't put them in the 1%. If you don't want CEOs to make 500 times what their employees make, don't buy from big companies. If a privately-owned company, such as Koch Industries, won't tell you what their executives/owners make, don't buy from them. Same thing for environmental protections, providing health insurance to their employees, or whatever else is important to you.
-Ignore political ads. The only reason political donations matter is that people allow biased (i.e., sponsored) media to influence their vote. If the 99% ignored ads, Karl Rove and the Koch Brothers could spend all the money they wanted and it wouldn't make much difference in the outcome of elections, so then politicians wouldn't feel like they owed their rich sponsors anything. Other forms of electioneering (voter canvassing, mailers, etc.) would still have a role, but these aren't nearly as effective or expensive as TV ads.
-Ignore ads in general. While you're at it, ignore all ads. If a company's big enough to buy an ad on a national network, it's probably big enough to hideously overpay its management.
We have more money than them. We have more votes than them. They can only maintain the current system by keeping us from using our power. Political protest is one way to fight back, but it's not the most direct or the most effective.
Wednesday, October 12, 2011
Stunning poll numbers for Cain, Romney
Two new national polls released today. Both show Herman Cain in the lead over Mitt Romney, Cain taking the lead is interesting enough in itself, though his weaknesses as a candidate make me confident that he won't be the nominee. Of course, with the current state of the Republican Party, one can never be too sure.
The truly fascinating and important result come from comparing the new NBC poll with the previous one, conducted at the end of August. At that point, Rick Perry was in the lead with 38%, followed by Romney with 23%. Cain was tied for 5th at 5%. In the new poll, Perry's support has fallen to 16%, Romney is stuck at 23%, and Cain surged to 27%. His 22% rise perfectly mirrors Perry's 22% fall. Essentially, a fifth of the electorate decided to switch horses, and, statistically speaking, none of them decided to switch to Romney!
This is yet more support for the idea that most Republican voters just don't want to vote for the most electable (i.e., least conservative) of the major candidates. Romney's path to the nomination is to keep as many conservative candidates in the race to split the anti-Romney vote, allowing his 20-some percent to carry the day. Once he racks up wins in Iowa, New Hampshire and Nevada, he'll ride the inevitability/electability wave to the nomination. If 2 or 3 out of Perry/Cain/Bachmann/Gingrich drop out of the race before Iowa, one of the survivors might be strong enough to overcome Romney. But if everyone stays in and stays relatively even, Romney will cruise to the nomination.
This dynamic helps explain Romney's approach in last night's debate to Michele Bachmann. A feature of the debate was that each candidate was allowed to ask one question to another candidate. Most used this as an opportunity to try to nail Romney. When it was Romney's turn, he chose to lob a softball to Bachmann, who launched into an excerpt from her standard stump speech. Romney needs Bachmann, the weakest of the 2nd tier candidates, to stay competitive to draw support from other conservatives, so he used his question to help her out.
It will be very interesting in the weeks before Iowa (less than 3 months away) to see if there's pressure on conservative candidates to get out of the race. We know Ron Paul's in it til the convention, but will any of the others bow out to keep the more-moderate Romney from being the nominee?
The truly fascinating and important result come from comparing the new NBC poll with the previous one, conducted at the end of August. At that point, Rick Perry was in the lead with 38%, followed by Romney with 23%. Cain was tied for 5th at 5%. In the new poll, Perry's support has fallen to 16%, Romney is stuck at 23%, and Cain surged to 27%. His 22% rise perfectly mirrors Perry's 22% fall. Essentially, a fifth of the electorate decided to switch horses, and, statistically speaking, none of them decided to switch to Romney!
This is yet more support for the idea that most Republican voters just don't want to vote for the most electable (i.e., least conservative) of the major candidates. Romney's path to the nomination is to keep as many conservative candidates in the race to split the anti-Romney vote, allowing his 20-some percent to carry the day. Once he racks up wins in Iowa, New Hampshire and Nevada, he'll ride the inevitability/electability wave to the nomination. If 2 or 3 out of Perry/Cain/Bachmann/Gingrich drop out of the race before Iowa, one of the survivors might be strong enough to overcome Romney. But if everyone stays in and stays relatively even, Romney will cruise to the nomination.
This dynamic helps explain Romney's approach in last night's debate to Michele Bachmann. A feature of the debate was that each candidate was allowed to ask one question to another candidate. Most used this as an opportunity to try to nail Romney. When it was Romney's turn, he chose to lob a softball to Bachmann, who launched into an excerpt from her standard stump speech. Romney needs Bachmann, the weakest of the 2nd tier candidates, to stay competitive to draw support from other conservatives, so he used his question to help her out.
It will be very interesting in the weeks before Iowa (less than 3 months away) to see if there's pressure on conservative candidates to get out of the race. We know Ron Paul's in it til the convention, but will any of the others bow out to keep the more-moderate Romney from being the nominee?
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