Visualizing Herman Cain's 9-9-9 plan to redistribute wealth from the poor to the rich

Maybe you've heard about Herman Cain's 9-9-9 plan for America: 9% sales tax, 9% income tax, and 9% corporate tax, and wondered how it would play out in the real world. Here's a chart that illustrates the answer neatly (click for full, farcically long-ass version): the poor will pay a little more (or a lot more, relative to their income), and the rich will pay a lot less, and the very rich will pay so much less that it takes 9403 vertical pixels to express how much they'll save.

(Thanks, Fipi Lele!)


  1. This could be spun the usual way – helping the rich helps the economy. A rising tide lifts all boats.

    They never mention that most of the boats are chained to the ocean floor.

    1. wealth distribution to the rich, cutting taxes on “job creators”, whatever you want to call it… it’s *not* “A rising tide lifts all boats”… the analogy correctly stated would be “A rising yacht lifts all tides”, which clearly reveals the stupidity behind the thought process.

    2. The question is how much help the rich need before it helps the economy. The rich weren’t that bad off to begin with, and so far helping the rich has only…helped the rich. For decades.

      1. I’m always weirded out when people refer to the government not taking as much of much of your resources as they used to take as “helping” you.

    3. Of course. The Cainites are already trying to claim that existing prices include hidden taxes that are passed on to the consumer. Once these hidden taxes are removed, prices will be discounted by an amount that far exceeds the new national sales tax,…

      And if you don’t believe this, it just shows your ignorance of common sense economics.,.

      1. Not to mention the incredible naivety of assuming that wealthy business owners won’t simply keep the prices the same, invent whatever bullshit excuse they think the masses will believe and pocket the difference.

        1. Of course.  Businesses do not pay taxes.  They pass off that “expense” to the consumer and it simply fuels inflation.  We better get off ths “Eat The Rich” meme.

  2. so you are saying that right now, the rich pay a disproportionaly large amount of the income taxes gathered in the US?

    1. Disproportionate to what? You don’t agree that everyone should contribute the same amount of sweat and effort towards the common goals?

    2. Over the last generation, the wealth controlled by the top 1% has doubled, to about 40% of the country’s wealth. Half of that belongs to the top 0.1%, and that’s also doubled over the last generation. If, as you claim, the wealthy were being taxed so much more heavily than everyone else, wouldn’t you expect their grip on their wealth to be slipping, not ever tightening? Isn’t it clear that the real class warfare in this country for the last several decades has been waged quite successfully, to increase the power of the wealthiest among us?

    3. Yeah, kind of like armies usually draft only men between 18 and 38 instead of everyone, even though 8 year old girls are perfectly able to carry a few grenades. 

    4. Top 10% own 87% of the wealth in the USA, and they pay 69% of the taxes. Why aren’t they paying 87% of the taxes? Why do us ‘others’ have to pick up the percentage of taxes on wealth that we don’t even own?

        1. Because in the US, we tax income, not wealth.

          And therein lies the problem. If you’re only taxed on what you earn instead of what you have then people who have buttloads of money they didn’t earn through traditional 9-5 paychecks are off the hook. As Warren Buffett recently noted there is a point at which wealth becomes self-generating. Investments, stock dividends, inheritance, etc. can all make you fantastically wealthy without making you subject to any kind of traditional income tax.

          1. I’m not sure what you mean by “traditional income tax”, but dividends and inheritance are subject to tax.

            Dividends are taxed at 15%, but that is on top of the 35% that the distributing corporation already paid in taxes, so dividends are in effect taxed at a 50% rate.  Warren Buffett is being disingenuous when he says he only pays 15% in federal taxes.  While his federal return may say 15%, it overlooks the 35% slice taken out at the corporate level.  Corporations don’t pay taxes.  People pay taxes.

            Inheritance is also taxed, but only after $5 million.  You argue that money should be taxed just for the sake of it existing/people having it.  That presumes that money serves a better purpose in the government’s hands than in individuals’.  Personally, I think that a rich heir does more good for society by holding his money in investments;  investments which are profitable only because of their utility to society, e.g. Exxon, Apple, etc.  They wouldn’t be profitable unless people didn’t want to voluntarily trade their money for the company’s services.

            In any event, your point seems to be that taxing just income is not the ideal course to take.  I agree with you on that, which is why a consumption tax (one of the 9’s in Cain’s 9-9-9 plan, if you noticed) is worth considering.  It would reward saving, and also benefit taxpayers with the time-value of their money.  Instead of being taxed up front when they earn their money, taxpayers are taxed later on when (and if) they spend it.

          2. …which is why a consumption tax (one of the 9’s in Cain’s 9-9-9 plan, if you noticed) is worth considering.  It would reward saving…

            Why yes, yes it would. It would reward people with money to save, and have an enormously negative impact on the people who don’t. For the life of me I can’t figure out who those two groups of people might be.

          3. But you said it was an incentive to save. What’s the point, if you’re just going to remove that incentive from everyone except the people who don’t need it?

          4. You argue that money should be taxed just for the sake of it existing/people having it.

            No, I argue that people should be taxed based on how much wealth they have.

            Personally, I think that a rich heir does more good for society by holding his money in investments;  investments which are profitable only because of their utility to society, e.g. Exxon, Apple, etc.

            Whereas a poor working class family would probably just waste it on stuff like “food” and “rent.”

            In any event, your point seems to be that taxing just income is not the ideal course to take.  I agree with you on that, which is why a consumption tax (one of the 9’s in Cain’s 9-9-9 plan, if you noticed) is worth considering.  It would reward saving, and also benefit taxpayers with the time-value of their money.

            And who can save a larger percentage of their money—a billionaire or someone who struggles just to meet their monthly bills?

          5. “No, I argue that people should be taxed based on how much wealth they have.”

            Your statement confirms the idea that people should be taxed by dint of them just simply having money, ignoring any considerations of how much to tax.

            “Whereas a poor working class family would probably just waste it on stuff like “food” and “rent.””

            I was comparing what individuals do with their money with what the government does with it, not investors vs. consumers.

            “And who can save a larger percentage of their money—a billionaire or someone who struggles just to meet their monthly bills?”

            Which is why there should be an exemption amount.  Earners under a certain income should be exempt.  I never advocated Cain’s specific plan, just the idea of a consumption tax, the incidence of which would overwhelmingly burden big spenders.

          6. Your statement confirms the idea that people should be taxed by dint of them just simply having it, considerations of how much tax aside.

            What do you mean “considerations of how much tax aside?” I think it’s fair that the amount people are taxed should be tied to the amount they have. What is so unfair about that?

            I was comparing what individuals do with their money with what the government does with it, not investors vs. consumers.

            If you don’t tax investors then you have to take more from the consumers. The end result is the same as if you take money from the people on the bottom and give it to the people on top.

            I never advocated Cain’s specific plan, just the idea of a consumption tax, the incidence of which would overwhelmingly burden big spenders.

            ANY general consumption tax is regressive by nature, because the more wealth you have the less of it has to go toward consumable goods. You don’t need to reward people for being rich enough to save a large portion of their income, because they’re the ones that are already rich enough to save a large portion of their income. I never got the idea that the tax code should come up with extra incentives for making a lot of money—having a lot of money is incentive enough on its own.

          7. It’s not hard to understand at all.  I just didn’t get why you denied that the basic idea behind a wealth tax is that people are taxed just for the sake of having money.

          8. Are you under the impression that everyone is jealous of how the wealthy find sacks of gold in caves or something?

          9. It’s important to remember that the people we’re talking about don’t “just simply have money”. They have accumulated returns on investment, and those returns are profit extracted mostly from the work of other people.

            They should absolutely pay a higher percentage in taxes, because they’re channeling wealth, not creating it ex nihilo. And this is completely distinct from the fact that we as a society have a very strong incentive to reduce that stream; wealth begets more wealth, and without stopgaps and controls we end up in a situation like we’re in right now.

          10. Wealth begetting wealth should be stopped?

            Profit should not be extracted from other people?  Why do you think you’re employer hired you?  For your own benefit?  You should give your employer a piece of your mind and demand all his profits through your work be returned to you.  What were you thinking engaging in a mutually beneficial transaction with him?  I mean it’s as simple as you being just as productive without him.

          11. When did I say that? It should be controlled, and it should be fair. That’s the entire purpose of progressive taxation. There’s nothing extreme about it, so don’t try to paint me as an extremist. You seem to be confused about how civilization works.

            And uh, mutually beneficial? When you get some spare time, check out the labor market.

          12. Wealth begetting wealth should be discouraged?  Why should the pie not become as big as possible?  One person’s wealth begetting wealth does not necessarily diminish another’s wealth.

            If you don’t believe that you and your employer are engaged in a mutually beneficial relationship, you either are a fool to continue working for her, or you don’t understand civilization.

            The tax provides an incentive to save insofar as it provides a disincentive to spend.  There is always the incentive to save regardless of whether there is a consumption tax.  The tax just provides greater incentive.  The lowest-income earners still have an incentive to save money.

          13. One person’s wealth begetting wealth does not necessarily diminish another’s wealth.

            I’m not being sarcastic here: have you paid any attention to any real-world economics for the past few decades? Do you think the middle class has been feverishly misplacing their money? Yes. Yes it does diminish it. Just because GDP increases doesn’t mean there’s infinite wealth and value laying around.

            If you don’t believe that you and your employer are engaged in a mutually beneficial relationship, you either are a fool to continue working for her, or you don’t understand civilization.

            It can be mutually beneficial if you’re making starvation wages while your boss is a millionaire. Mutually beneficial does not mean fair, and it does not mean right. Getting income from a job doesn’t mean that you’re not being exploited. Higher taxes on higher earnings has a tendency to level the playing field somewhat between people who create value and people who invest in it.

            As for an incentive to save, what we’re talking about is your consumption tax; don’t dance around it. If only the well-off benefit, I don’t see what the economic purpose is.

          14. The key word there is “investment.” When you say that the returns are extracted from the work of other people, you fail to mention that it was the capital investment (at least partially) that financed the work in the first place. Less investment, less ability to work. It is right to receive a portion of the profits from work that you put up the scratch for. Investment is not a magic money-making box. There is a mechanism by which it works. Investors can and do lose money.

            Now if you want to talk about people who channel wealth, let’s talk about folks who “make” money via arbitrage, especially in currency exchange. They are doing little more than exploiting inefficiencies in the system.

          15. Yes and no. Investment is a start-up issue, on a practical level; everything after a period of time (generally a relatively short one) is paid for by revenue.

            The question really, is at what point that investor is still providing value to the economy, and at what point value is simply being extracted from the economy.

  3. One of the big things that has caused  the income inequality is globalization. As jobs and manufacturing are outsourced, the CEOs and the shareholders get richer, while the jobless get poorer. 

    We should just completely withdraw from international trade and make everything domestically. We’d have a thriving middle class, and plenty of jobs. Sound good?

    1. Nah, globalisation just exposed some uncomfortable truths about the non-capitalist nature of our supposedly capitalist systems. The idea of globalisation itself is a good one – there is no reason for people to be isolated in the arbitrarily-sized geographical enclaves of their birth. It’s just that freedom of movement of capital without freedom of movement of labour makes no sense (economic or ethical), and neither does a highly centralised and entrenched distribution of wealth. 

  4. Hmm, it seems that the richest people will be much better off. I’m surprised that they haven’t already got this going through congress or wherever tax reforms need to go. Of course they’ll all agree to it because they’re all either on the payroll of the mega rich, or they are the mega rich.
    Is there anyone naive enough to think that anything the American government does (whichever party is in power, I’m not throwing stones at the right wing loonies, or the even more right wing loonies).
    Ha, that just made me think, the whole Occupy Wall Street thing is basically a massive protest in favour of communism… Or more accurately Marxism (I think it was Marxism that suggested everyone be equal and communism that some are more equal than others ;-) ) The exploited workers are having a revolt.

  5. I find Cain interesting, and I am very interested in a flatter, simpler tax structure – but 9% is really low for personal and corporate tax.

    1. That’s not the part that bothers me, I just don’t trust the feds enough to give them an income tax *and* a sales tax.  drop one of the nines. 

      As for the amount, we spend too much, and tax too much. Govt produces nothing, at best, it can offer a shelter for people to produce within, but no more than that, and that is handled quite cheaply. 

      1. “Govt produces nothing, at best, it can offer a shelter for people to produce within, but no more than that, and that is handled quite cheaply.”

        Bullshit. The government produces quite a lot, thank you very much. The roads you drive on? Fire / Police / Emergency services? Education? The government ensures that utility-level services are provided to all citizens when corporations feel it wouldn’t be in their best interests to do so. 

        I’ll agree with you that we spend too much. We spend far too much on overseas military action. We also spend far too much waging a “war” on drugs that more than 50% of us think should be legal.

        But you just go ahead and keep on not trusting the government. But if you want to not be a hypocrite, please don’t use the Interstates. Or any aircraft. Or the Internet.

      2. Are you really going to claim that the government produces nothing on the internet that the government produced? Really?

      3. I spent some time last night helping one of my kids study for a history quiz today: to write out the Preamble to the Constitution, exactly as originally written (capital letters, punctuation, etc.) in under 5 minutes from memory.

        “We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”

        That is our Founding Fathers’ basis for the government they founded.  Sounds like they expected the federal government to be a lot more than a for-profit producer of tangible goods.

      4. How is that ‘produce’ going to get from the producer to the consumer? Magic? Do they not need roads, rails, bridges, etc to get the ‘produce’ to the consumer? Are these producers ready to build, maintain, police (from marauding bands of thieves) these ‘produce’ avenues ?

  6. Just graph it on a log scale, you won’t need nearly as many pixels.  Problem solved!  Cain in ’12 anyone?

      1. It wasn’t until Cain took over. When it was a small company, it made good pizza. Cain cut corners, cheapened the ingredients, etc. and made it sucky pizza.

  7. I just spent the past few minutes actually crunching the numbers. According to google there are ~ 300 million people in the US. Given that applied to these numbers, it means that the bottom quintile will pay an additional $113 billion, the second will pay an additional $239 billion , the middle an additional $266 billion, the fourth an additional $264 billion, while the next 19% will cost the government $842 billion, the next 0.9% $732 billiont, and the top 0.1% $416 billion. Therefore the bottom 80% of earners will pay an additional 883 billion dollars in taxes, while the federal government will lose about 2 trillion dollars from the top 20%.So it’s an over $1 trillion net loss for the federal government.

    Given that the entire GOP platform at the moment is BALANCE THE BUDGET BALANCE THE BUDGET he’ll have to make over $1 trillion in governmental service cuts to make this work, so he’ll have to adopt Ron Paul’s $1 trillion budget cuts proposal which would mean ending all foreign military engagement for the US and eliminating the department of energy and the department of education (among other things)

    Which will all be worth it so that the people making $1000/month on the low end of the spectrum there can now only take home $910/month, but feel like they’re contributing to the government’s coffers.

    Incidentally also given that my boss, an honest to god American Small Business Owner™ probably makes enough to put him in the third or fourth quintile on that graph, Cain’s tax plan will raise his taxes, and given the GOP current strain of logic that if you raise the personal income taxes on an American Job Creator™ it will mean that he will take that loss out directly on his employees so that he can keep his current level of net income. 
    Therefore, I’m taking this as “Herman Cain’s tax plan will fire one of my people”

  8. How about a bit of balance. 

    Why don’t you publish the actual dollar amounts that someone in each of the groups actually pays in taxes?

    1. That would be a separate discussion and linked to the dollar amounts of wealth someone in each of the groups actually controls.

      What is being discussed here is quite different. The country is in trouble and requires a painful adjustment to get back on the right track. The question then, is how should the pain of the adjustment be distributed. According to Cain, ALL of this new pain should be placed onto the backs of the poor and the middle class (both through tax increases and through about $1 trillion in cuts that Cain’s cuts would require – thanks for the calculations Jackson), while the rich and the very rich actually get significant breaks from the already existing pain that they are apparently already experiencing.

      1. And, to add to your post (in agreement with you): I somehow fail to comprehend the kind of “pain” a multi-millionaire or billionaire experiences in paying a little more to help out their fellow humans.

        One less yacht, perhaps? One less home? Oh, the pain. I cry and sob at the torture which they endure. How persecuted they are.

        1. You have an unrealistic vision of the so-called rich.  Most of the rich being targeted are small business owners who employ most of the people in this country.  There just aren’t that many “Richie Rich’s” out there like you’re fantasizing about.  Just look at all the businesses in your local industrial parks and shopping centers and you’ll see the people/owners/companies are being targeted.  And if you think that a big tax increase won’t affect their ability to hire and keep employees you’re being naive.

          1. “figurative”, your comment is a huge fallacy.  none of the owners of local businesses in your neighborhood are included in the 1%.  they do not make $1 million in personal income per year.  not even close.  many of their businesses gross in excess of $1 million, but they cannot afford to pay themselves that much each year.

          2. The one percent thing is a Occupy thing. In reality the rich that are actually being targeted by the Obama admin are those making more than $250K. That’s real.

          3. Well, you know,  that sort of is rich. In that it’s almost 10 times the median income. (And no, everyone, I’d rather not hear anyone tell me “But that won’t go far in a big city!!!” Yes it will. $250k a year is flat-out rich anywhere.)

            If a small-business owner is making that much as personal income, they’re rich. It’s not like taxation is based on gross sales, it’s based on gross sales minus expenses, or profit. So it makes no difference at all whether it’s an office job or a business. If one person is making it, it’s pre-tax income.

            When people say ‘small business!’, they’re using loaded terminology. I’m a (very) small business owner. It’s my income the same as if I got it all from my day job. And rich is rich.

          4. “And if you think that a big tax increase won’t affect their ability to hire and keep employees you’re being naive.”
            If they are making enough to fall into the categories we’re talking about, then they can deal with tax increases by either (1) taking a pay cut, or (2) firing employees. Both are valid solutions. By the way, the person who picks (1) probably ends up with a better product, better service, and/or happier employees, and so is more likely to succeed in the long run.

          5. Money that is taxed does not vanish. It is spent, and those expenditures go back into the economy. Investment and consumption both put people to work, and regardless of whether it is individuals, businesses, or governments doing the spending. The question is ultimately about what kind of spending is best overall.

            Taxing those with a large income would not cripple anything. If their income is large, then either they are saving lots of money (in which case there are many ways the government can use that money more productively for everyone’s benefit)  or spending it (in which case, again, it would be far better for each of 10 employees making $25k to get a $1k raise than for the boss to make yet another $10k, since the utility of money increases sublinearly). And if the individuals want to use their money to do good, they are free to give their pre-tax dollars to charitable causes in lieu of paying the higher taxes on that income.

      2. But you’re defining pain as the change in the level of pain. 

        That’s a very odd measure. 

        For example, person is whipped twice a year. Person two is whipped 50 times a year. It’s proposed to change the number of times people are whipped. 

        According to you is that if the person who is whipped twice a year is now whipped on Feb the 29th,  and gets lots of goodies from the person doing the whipping, but the person being whipped 50 times is only going to be whipped 45 times, then that’s unfair. After all,  one person now has the prospect of being whipped on the 29th of Feb.

        Is’t the issue the number of times someone is whipped (taxed),  rather than the change in the level, the real measure of pain?

        1. No.

          The difference is that some people are “whipped” with a silk whip of their own making, wearing a silk robe, and retire for brandy and cigars afterwards in one of their private mansions or yachts for the evening.

          And then, the rest of us are whipped with a cat-o-nine tails and thrown in a filthy dungeon afterwards, which also happens to be owned by one of the people wearing silk robes.

          1. So you’re blaming the other victims for them being whipped, rather than those that wield the whip.

            ie. Because you’re being whipped, someone else must be whipped and take the pain for you, because you don’t like being whipped. 

            Why not address the real issue? People being whipped. Period. 

            Or is it that you want the goodies but not to pay for them?

            As for the economics of the rich. They have two choices don’t they. 

            1. Spend it, wisely or otherwise.
            2. Save it – either by loaning it to others, or to invest it. 

            Which bit about the behaviour of the rich do you want to change?

        2. Please, knowingly or unknowingly you are trying to change the conversation again. We are not having this debate in 1999 or 2007, when everyone thinks that the economy is functioning well and we are trying to figure out how to make it function better. In fact, when times are good no serious politicians ever suggest major changes to the tax system and few pressure groups push for it. It’s not about the stable status quo, it is about the design of a painful transition that we now have to undergo one way or another.

          The better analogy would be this. Imagine we realised that we had to decrease the number of shoes in America. Would it be either ethical or efficient to ask the person with 1 pair of shoes and the person with 1,000 pairs of shoes to both give up 1 pair?

          Look, no one is saying that people should inherently be prevented from being successful. No one is for equality of outcomes. What people are for is equality of opportunity. People who become successful, in other words, should not be allowed to put down roots and prevent others from displacing them from the positions. No artificial barriers should be constructed to make keeping success much easier than earning it. Equality of opportunity means that factors one cannot control should not influence the outcome of one’s life – the son of the white billionaire and the daughter of the African American street prostitute should have equal likelihood of dying as part of the top 10%. While this is not the case – while wealth remains significantly determined by the lottery of luck and systemic advantage – tax policy will be needed to reduce, a bit, the impact of the bias. And this is both for reasons of ethics and of economic efficiency – the economic aristocracy, which we have today, is as bad for the country as the political aristocracy during the times of Louis XVI.

          1. Again, you’re focusing on the bit about consumption. You’re not focussing on what is need ed to get the US and other countries too out of the mess. 

            I’m UK based, and the attitude is the same here, so let me put the details on it. 

            When you say shoes, you’re asking the rich not to consume and spend. Cut back on your spending of shoes. Not a good idea because someone who makes those shoes is out of a job. You don’t want to reduce the number of shoes, (make GDP smaller), because your debts aren’t going to shrink as a result. You’re tax take goes down, you debts stay the same. If you carry on spending at the same rate (40% overspend), your debts escalate. 

            So what’s needed.

            1. Cuts in spending. You’re not going to increase taxes to the level needed to pay for the current levels of spending without causing huge harm. 

            2. Changes in taxation – simplification and tax breaks for people investing in projects that result in a positive return. 

            For example in the UK the government will take 50% of the profits, none of the risk, and do none of the work if you start a new company. Given that you may lose your entire investment, then you need massive returns to make it economical. That needs to change.

            Likewise we have a government that says it does investment. For example there is a proposed high speed rail link. The ticket sales do not cover the interest charges on the borrowing, let alone the running costs. The return is negative.  Why should people who don’t use the service be charged via taxes so the privilidged few can use it cheaply?

            The next one relates to the 9-9-9-9. 

            What is needed is 

            1) No taxation below the poverty line.
            2) Equal rates of taxation above the poverty line. 
            3) Governments who don’t spend more than they tax in taxataion.

            After all, if debt forgiveness is right for the third world, why should children in the first world be saddled with debt run up by financially incontinent governments? In the UK, my son is lumbered with 350,000 USD of government debt, primarily rising with inflation. 

          2. We are not having this debate in 1999 or 2007, when everyone thinks that the economy is functioning well and we are trying to figure out how to make it function better

            I’ve just reread your post, and other. 

            What’s interesting is that people, yourself included, fail to say what you want to achieve. That’s very telling. The above bit is as far as you can get.

            let me put some of the actual arguments that are put forward for taxes.

            1. People behave in ways we don’t like so we should use the tax system to change that. 

            Examples from the last 2 weeks in the UK are.

            a) Tax fatty foods because people are fat. OK – Why not tax body mass index? Why should the skinny be penalised for that bit of chocolate. Answer, you can’t do that you are discrimating against fat people.

            b) Tax the elderly (or give them a tax break to move out) if they have a large house. They couldn’t quite bring themselves to say they are being selfish.

            2. The rich got their money illegally (or inherited), so we should tax them

            So what about the people who earned it?

            3.  The biggy. I don’t want to pay taxes so someone else (richer than me) should pay for it. 

            The main reason.

            4. No consideration of value for money. i.e. Most people wouldn’t object to taxation if

            a) They need the service that the taxation goes towards.
            b) The price of that service is lower than the alternative means of providing it. 

            However, that’s not the case. Vast amounts of taxation is inefficiently spent. Goes on things other than services such as debts and public worker’s pensions (past services)

            5. The detrimental effects are ignored. 

            e.g. If the government sucks up all the money and spends it, its not going on investments that generate more money. 

            i.e. If you want to solve the mess its clear. Less spending. More investment. Do your plans make that happen?

          3. Bullshit. You completely left out “rich people really aren’t paying a just share of the costs of government,” in favor of the usual nonsense “just jealous of rich people” theory.

            When your model doesn’t include the notion that other people might have any kind of moral sense, it says more about you than about them.

          4. You’ve haven’t defined just.

            Should you pay the cost for your food, or should you pay  a percentage of your income for your food?

            After all, if you’re posting here, you won’t be in the ‘poor’ category. You won’t be in the super rich, but compared to most people in the world you are definitely rich. 

            So why aren’t you paying, say, 50% of your income for your food. That way the excess over the cost can go to pay for those with lower incomes. 

            And just out of interest, just how much extra tax did you voluntarily pay last year? If you think more tax is such a good thing, I presume you’ve done this. Have you? 

          5. When your model doesn’t include the notion that other people might have any kind of moral sense, it says more about you than about them.

            I’ll ignore the personal attach and concentrate on your idea. 

            Let me rephrase it. 

            You want the rich to pay more for moral reasons. 

            1. To help other people.
            2. To deal with inequality.

            I think that’s a pretty representative view of the moral reason why people should help. Against that are 

            1. I may object to what help is given. Eg, giving money to a government to fight wars. Morally, I object to that.  Likewise I might object to the behaviour of people receiving the money. Eg. Money going to alcoholics to buy alcohol. Happens in the UK.

            2. I don’t think it does address inequality, and inequality is an odd measure. For example, in the UK poverty is defined as being a percentage of median wages. The same as Bushes, half pupils are below average and we have to do something about it. 

            So if a lot of rich people leave, average wages go down, and poor people get richer. Really.  What individuals care about is becoming wealthier and able to do more. To do that you need growth and not redistribution.

            3. What’s moral about using threats and violence (the consequences of not paying taxes) extract charity money?

          6. First we need to make sure we keep separate two very different questions:

            1. What should our final destination be?
            2. How can we get there in the least bad way possible?

            There is much disagreement about any long term vision of (1). Many different people want many different things. Myself, I see the biggest problem that faces us as the incumbency advantage. The competition between an incumbent and an upstart is not fair, with the incumbent always having a leg up. This is as true in politics as it is in the broader economy. Privilege is much harder to acquire than it is to keep. As a result of this advantage, too many social structures, institutions, and organisations have gotten too big and too centralised. The incumbents, having created high barriers against being dislodged, bloat and ossify, while everyone else finds few avenues to grow and develop – like young saplings under a dense, already-established forest canopy. See here for a good further discussion ( ).

            However, (1) is not really the question here. Because so many different people want so many different versions of (1), and because the most powerful parties rather like the status quo (understandably – under the status quo they are the most powerful), the scope of (1) today lies somewhere between “avoid total economic collapse” and “shake ourselves out of an interminable stagnation”. Of course, since near-death crises are now among the only times at which the status quo can be shaken (see above for bloating, ossification, and the preferences of the most powerful parties), now is also potentially a good time to attempt to introduce some more fundamental changes, but let’s leave revolutions aside for now.

            So, we’re now left with “avert stagnation or collapse” as our minimal answer to (1). How, then, to get there? First, we must be clear about why we want to avert stagnation or collapse. I would argue it is because under stagnation and collapse both average, median, and modal range quality of life decreases. While it is difficult to imagine ways of increasing quality of life without economic growth, it is pretty easy to imagine ways of growing the economy without actually increasing general quality of life (e.g. enslave 90% of the population and have them work for export – granted, it’s an egregious example, but you get the point…). Thus, we do not only need growth, but growth that makes life better; we do not only need jobs, but jobs that are actually worthwhile.

            Giving money to the wealthiest in the hope that they would hire more servants (and exhorting to everyone else just how lucky they should feel to be able to serve the elite) does get economic growth. It does not get any economic growth that is particularly desirable. Thus, if the system has become so top-heavy (consider wealth and income distributions in the US or UK) that top-down (i.e. trickle down) growth is no longer an ethically justifiable or economically efficient option, the other option left is bottom up. Decentralisation of capital, small-scale entrepreneurship, etc. Unfortunately, the only to get to that from the stays quo is through taxes on size. So yeah, the (itself overly bloated) government needs to get involved, but cut taxes to the most powerful (the wealthiest individuals and the biggest corporations) and you are only strengthening the setup that got us into the current mess in the first place.

          7. First few paragraphs, I agree. If you want to do some research, look at rent seeking, and in particular what the Greens are up to in this area. 

            I all with you up until this point
            Giving money to the wealthiest in the hope that  ….

            It’s factually wrong. What the article proposes is taking money from the wealthy, not giving them money. That’s not been proposed.

            So given we agree that stagnation or reductions in GDP are bad, the question is how to avoid it.

            1. Stop spending on things that do not produce a future income. 
            2. Increase spending on things that do produce a future income. 

            That’s needed for both government and individuals. 

            For example, look at government, what percentage of their spending results in lower future expenditure, or generates an income stream. For these items how much do they have to spend/borrow to achieve those goals.

            Is tax policy such that, for the non government, point 2 is increased?

            For that you need.

            1. Lower regulations (reduce the cost – increase the profits)
            2. Lower the risk of failure
            3. Increase the profits by not taxing them.

            All those are things that will result in growth. I see very little signs that governments intend doing any of these things.

            Their aim, is as you point out, the same as any incumbant. Keep the money flowing to them so they have have their cut, and bugger other people in the process.

            For example, in the UK, the government taxes those below the poverty line, 12,000 GBP a year, to the tune of 2,500 GBP. At the same time it is paying some people on benefits (welfare), 104,000 GBP a year to live in swanky areas (just for rent)

          8. Taking less from rich people and giving more to rich people are ethically different, but functionally equivalent. We are talking about jump-starting the economy, right? Then we are talking about the economy, effectively, at a fixed point in time. Within an economy at a fixed point in time, the amount of value is fixed, and as a result, one the more value is controlled by one of the actors, the less value is controlled by the others. Thus we have a condition that can be described through two main facets:

            1. What the rules of the game are.
            2. What the capabilities of the actors are (namely, what is the distribution of effective control over capital).

            You prefer to focus on the rules. I prefer to focus on the distribution of capabilities. Why? Because the rules are decent enough. The rules today are not all that drastically different from the rules 30 years ago (we did not, at any point experience what happened to the Soviet Union in 1991, for instance), and the economy has done ok under them. Wealth and income gaps, however, have grown significantly since the 1980s. No less importantly, the rules are no longer the biggest limiting factor to the most important economic actors. Some daft make-work regulation that has an $200k compliance cost could all but sink a young startup or mom-n-pop business, but would be a non-issue for GE. And today we have more of the economy being shaped by the GEs than by the small businesses. The only regulations that would make any dent with the big boys would be those in worker protection, healthcare, and environment, but decreases in those regulations would be taking from the poor and giving to the rich, and would be examples of the type of growth that, I believe, actually lowers general welfare.

            Thus, the best choice left, I would argue, is altering the capability distribution, and this does mean that it has to be done on the back of the powerful. The exact form this alteration will, of course, be complex. Some of it could come through taxation. Some of it could come through regulation differentials (keep the same or strengthen regulations on large businesses, cut them for small businesses). Perhaps something else…

            Look, I am no fan of the government, especially as it increases in scale towards the national ‘seat of power’. It’s full of egomaniacal, psychopathic incompetents mostly concerned with increasing their own prestige and importance (then again, much the same can be said for the C-suite of most long-established multinationals). A lot of what they do is horrendously inefficient and idiotic, especially when it comes to wealth redistribution. But we are now faced with three conditions that make bigger government intervention the only possible option:

            1. We have a pretty narrow window before things either go back to the way they were (and we allow the gangrene to fester and wait for the next, bigger crisis), or we have an economic catastrophe.
            2. The general population can influence politicians more effectively than they can influence the broad economic system.
            3. The market has been significantly corrupted and subverted by the incumbent actors and is no longer efficient. The invisible hand has had most of its knuckles crushed… by the private sector.

            So, deal with the economic rot first (it is more pressing), then move on to deal with the government rot.

          9. Taking less from rich people isn’t giving them money as you claimed. It’s not taking it off them in the first place.  

            Some daft make-work regulation that has an $200k compliance cost could all but sink a young startup or mom-n-pop business, but would be a non-issue for GE.

            Exactly. It drives up the cost of a start up, meaning that you need more reward if you take the risk. Since the rewards get taxed even more (because your now rich) it doesn’t make economic sense. It also protects the incumbents (as does bailing out the banks, rather than letting them fail)

            Wealth has grown, but that’s largely an illusion because they haven’t included government debts in the figures which reduce wealth drastically.

            So why the emphasis on inequality? Is your aim to reduce inequality (which may well result in making the poor poorer, so long as the rich are impacted harder), or is it to make the poorer better off? 

            What’s “capability distribution”?

            “we have an economic catastrophe”. I can’t see how it can be avoided. It’s already tipped, and all that is happening is that governments are piling on the debts. That hasn’t worked, so they are now printing (QE) like mad. 

            The invisible hand has had most of its knuckles crushed… by the private sector.

            You’ve got this bit wrong, because you’ve not put a scale on the effects.

            1. This can only happen with the aiding and abetting of government. 
            2. You aren’t forced to use a private company.
            3. You are forced to take the government offering.
            4. In the UK, 50% of most people’s money goes to the government and still they are running a massive deficit. If you lose 50% of your money to one actor when you are poor, its the government that’s the problem. 

          10. I do not agree with the blanket claim that reductoions in GDP are always bad.

            If tomorrow a doctor invented a cure for all infectious disease, cancer, dementia, and heart disease, that could be mass produced for $1/dose, the medical industry would mostly vanish and GDP would shrink substantially. Millions of doctors, nurses, and technicians would be out of work. And this would be a good thing.

            Similarly, suppose tomorrow all peoples and nations miraculously decided to live in peace. War and crime would vanish. Sales of arms would plummet, to the tune of a trillion dollar a year globally. This would be a good thing.

            Now, show me a measure of economic activity that approriately accounts for goods and services created outsid eof market transactions, and weighted for utility instead of money, and then we’ll talk.

          11. Absolutely, but not necessarily in the short-term. Huge numbers of unemployed citizens is a bad thing all by itself. It’s the same with automation: without access to the same quantity of new jobs as you lose, the only way everyone wins is redistribution. The doodads and prepared food might be a tiny bit cheaper, but employment is a much higher priority.

          12. I agree, and this is why “income redistribution” should not be regarded as a dirty word.

            Income redistribution at its best means ensuring every human being has food, water, basic shelter,clothing, heat, education (including continuing adult education), medical care, and local transportation. Only *after* that goal is met does profit have any justice to it.

          13. And what would be the side effect of that increase in efficiency?

            Yep – people would carry on working, so GDP would go up. 

            You can’t selectively include and exclude things from your calculations. 

            However, you could stop working and see if that impacts you. GDP would go down. 

          14. People would indeed go find other jobs eventually, and GDP would recover.  But that would be a process that took at least a decade, and their *would* be a very large (if temporary) dip in GDP. And when GDP returned to it’s previous level, it would be in new jobs or industries: the dollar total of GDP would be the same, but everyone would be better off.

            Suppose you have three neighbors who like to cook, clean, and do landscaping respectively, and they do these things for each other in exchange for money. Each pays the others $100/week. Total local GDP: $600. Over time they become friends and do these things for free instead. Local GDP: $0. Yet everyone has as much as they did before, plus new friends.

            GDP is a useful proxy, but it doesn’t measure the things most of us actually care about: human happiness and well-being.

          15. That would be the process, but you’ve excluded one massive effect. 

            In the interim, the government carries on spending, adding to the debt. 

            That debt needs servicing (or defaulting, full or partial). 

            That means the government has to keep extracting the cash, and now more of it, to pay for the debt, which isn’t going on services. 

            In the case of the US, a large percentage of that is external, so its money lost to the economy. 

            What you’ve done to make your case is draw a boundary that excludes the bad effects and assume they don’t exist. 

          16. If the idea is that GDP suffers some large reduction (with positive utility) then resumes growth, then this is not a problem. The government can make up the slack when times are good (they might of course be too stupid or foolish to do so, but that’s not my point). Government interest rates are extremely low, and there is no immediate reason for that to change.

            If you want a stable economy in which GDP is perpetually stagnant, then taxes need to be high enough that the government runs (and keeps in the treasury) surpluses as often as deficits, with a tidy nest egg in case of emergency. Needless to say no existing government mechanism can give us that.
            If the idea is to have a stable economy in which GDP constantly falls in such a way, that’s a very tall order. In order for that to happen from the kind of positive-utility GDP hits I described, essentially everything in existence would start being nearly free. In that event the price of the remaining scarce goods (time, land) would become very high, and could be heavily taxed. Alternatively, the government could require all citizens to directly work  in the national service for some period of time, thus allowing the government to continue to provide essential services. They wouldn’t *need* to pay these people much, because everything is already almost free.

            So yeah, transitions are hard and complicated, but there are many possible solutions.

          17. Well, here are some observations.

            1. A large reduction in GDP means people are worse off. That’s a problem. 

            2. The government can make up the slack. Well, look at the current set up, UK, USA, … Governments and people borrowed and spent too much. They (people) then defaulted, and there was a banking crisis. However, if you swallow Keynes hook like and sinker, then how can the Keynsian cure also be the cause of a recession? Currently with government deficits (US – 40% from memory), the economy should be booming. The 1930’s deficit spending was minute in comparison.

            3. The reason why rates are so low is that they are printing (QE). Buy banking assets with printed money. Force the banks who now have the cash to buy gilts/treasuries (we order you to increase your capital, and capital has to be govys), which means rates are low and the government gets the cash. 

            So the only reason they are low – for now – is the printing press. That’s inflationary. 

            So what happens next year. Another big hike on the borrowing bill. Strategy – borrow more. For another 10 years. so that’s 400% of GDP on the debt, ignoring any interest. Now express that as a multiple of taxation, because its taxation that pays for it. Could you borrow that sort of money? 

            Ah I see the solution. The slave option. You have to work for the state. What’s the difference between that and taxatation and the difference with slavery?

          18. (1) This is the premise we’re talking about. A reduction in GDP, even in real GDP, does *not* immediately imply that people are worse off. Often it does. Not always.

            2. Tax cuts are known by economists to be a relatively ineffective way to boost the economy, and it was tax cuts that led to the budget deficits prior to the recession.
            Since the recession began there has not, in fact, been an increase in government spending. The federal government increased spending very slightly, whereas state and local governments cut spending by about the same amount, give or take. Look back at Japan in the early 90’s. Look at how much the economists said Japan should have spent to boost their economy (they didn’t do that, btw, and had their lost decade). Scale that up to the size of the US economy, and you’ll see that the stimulus spending would have had to be about $4 trillion above and beyond whatever was needed to make up state and local shortfalls. That didn’t happen. If it had, we would have gotten ourselves a brand new national high-speed rail system, a modernized electric grid to accommodate new renewable power, and a road and highway system that doesn’t need trillions of dollars in neglected repairs.

            3. Printing too much much is indeed inflationary, but deflation is much more dangerous than inflation. Inflation is currently extremely low by historical standards even with all that quantitative easing. Of course it cannot continue indefinitely, but right now it is not an issue. Moreover, the Fed is actually holding the treasury bonds, and will over time get paid back with interest, at which point the extra money will cease to exist. The real time to worry is if the treasury decides to print itself a trillion dollar bill and use that to pay back the debt.

            4. Taxation vs. public service vs. slavery. Like it or not, you are not a completely independent individual. You never will be. You will always benefit from the communal efforts of those who came before you, and from the work of the other members of the society which you currently inhabit. You can honor their contribution to your well being by paying it forward, or you can tear it all down while calling it names. Say today you make $100k, and of that you pay $40k in taxes (federal, state, local, payroll, all of it). That means in addition to the $60k you spend on yourself, you spend $40k on various government services. You can look for yourself how that money is being spent. You can lobby and vote and protest and organize to change it. You can emigrate to a country with different laws. That is the difference between government and slavery: *we choose* to have a certain set of laws, to be bound by our collective will for our collective good. And yes, if many goods and services from the private sector became nearly free such that GDP decreased permanently, we would still require that $40k of government services. Right now it comes out of your wages. It could just as easily come from 40% of a working year in direct government employ.

          19. So if they can’t carry on, then GDP is permanently low, but the debt keeps on rising, and we go the Greek route. 

            At current levels of debt, we are going the Greek route. 

          20. LB — you’re forgetting that in the minds of true Progressives, everything really belongs to the collective. Anything that you “get” to keep after taxes is really a gift from the Group. Thus, reducing a tax burden is “giving” you money.

  9. We should make this graph our background image.  It would actually fill the whole page down to the bottom.

  10. I do not care for this whipping analogy, and maybe even the discussion of pain seems misleading. I won’t engage in this discussion further except to offer this variation on the analogy:

    Instead of whipping and pain, we’re talking about pleasure. Or sex.

    Lets say there is a group that gets to have sex twice a year, another three times, another four times, and another 300 times. The government has already come along, and reduced everyones amounts, so the groups respectively now get once a year, twice, three times, and the top group, unfairly, only gets to have sex 250 times.

    Herman cain comes along and says, let us change this to zero, once, twice, and 275.

    I won’t agree or disagree about fair points regarding whether one spends wisely or saves, whether income is fairly or unfairly earned, or what is an appropriate wage for a CEO. But. Thinking of adjusting these tax rates as ‘Hurting’ rich people to an ever greater degree seems very obfuscating.

    1. Becareful because lots of people mix the whipping with the sex. :-)

      So where’s the pleasure in it? Who gets the most pleasure for their money?

  11. .
    chart desperately needs to show
    second axis
    width of bar corresponding to
    number of people per category
    would be far far wider than it is tall
    very dramatically so
    is my guess
    traveling today or i would draw it
    someone please do!

  12. Fiddler on the Penthouse-suite Deck (to the tune of “If I
    Were a Rich Man”)

    “Dear God, you made many, many poor people.
    I realize, of course, you did this for my amusement.
    It is such an honour really!
    So, is it so terrible that I make them suffer more?”

    As a staunch Repub-tard,
    Ya ha deedle deedle, bubba bubba deedle deedle dum.
    All day long I’d pander to the rich
    Making friends with wealthy men.
    Common folk can work hard.
    Ya ha deedle deedle, bubba bubba deedle deedle dum.
    Help my friends get very very rich,
    Republi-turd is really what I am.

  13. Are there no tech entreprenuers on this site that will defend Cain’s out side the box thinking on trying to dismantel the abomination that is the IRS and tax code….where are the people of boing boing who hail the people who try to go against all conventional wisdom?!  Are there no ex lefties here who have taking real risks and have built great companies and arent afraid anymore of the social suicide in front of the collectivist set that used to be their peer group!? And why do we have to learn this all over again. JFK’s largest tax cut in history and Reagan’s 2nd largest in history worked – and many say the 2nd one  helped the whole tech boom take off! (see Bill Gates comments of the moment all of his father’s friends decided to invest in him and why)  or read this by Arthur Laffer in yesterday’s WSJ:

    S O’Connor.

    1. Reagan’s tax cuts on the wealthy also worked if your goal was to increase the US deficit by more than all other presidents, up to that point in time, combined.  Mission accomplished.

      1. Hmm. Read “The Triumph of Politics” by Stockman.

        1. Get Congress to agree to tax cuts and spending cuts.
        2. Congress passes tax cut (popular!) but says “eh, later” to the spending cuts (unpopular).
        3. Have someone imply on a web site decades later that the tax cuts were somehow the only part of the plan.

  14. ” I don’t want to pay taxes so someone else (richer than me) should pay for it. ”

    I don’t mind paying my taxes. I resent that I bear more tax burden than some one who happens to be richer and that this helps keep me from becoming richer, and even impacts my ability to survive. It’s disgusting. All I’d like to see is proportionate taxing instead of taxing the crap out of the people who make the least and then refusing to support their lives (since you’re stealing their livelihood you should be compensating them somehow) and refusing to invest in social good for the country. 

    Talk about investing stupidly! 

  15. All this shows is how much the rich contribute now to the tax revenue.  Remember, at the current time the top 1% pay 40% of all income taxes collected.  The Occupy movement points out that the top 1% have 40% of the wealth – but fail to mention that they also pay 40% of all the taxes too. 

    And for the bottom 50% who current pay zero, well anything that makes them pay something will raise their taxes considerably from zero. 

    That being said – I’d still rather see a flat tax or the proposal put forth by

    1. But, under a flat tax it’s still “the more you make, the more you pay”:

      9% of $25,000/yr = $2250 in tax
      9% of $500,000/yr = $45,000 in tax

      Sounds fair to me.

      I never understood this notion of “progressive” taxation, personally.  Why are we penalizing success?

      1. Is this intended to be obtuse, in a form of parody? Do you really think it’s as hard for someone earning $500k to scrape together $45k as it is for someone earning $25k to scrape together $2250?

        And have you not noticed that every year the wealthy get wealthier, while everyone else holds steady or gets poorer? Something about the way our society is constructed, including taxes, is clearly imposing less of a burden on the wealthy than on everyone else. Remember, this isn’t just their absolute wealth that’s growing, it’s their relative position.

        1. Yeah! Fuck you, half of all people!

          (You do realize that 50% of the population is going to be in the bottom 50% of earners even if everyone works hard all of the time, right?)

          [EDIT: this was intended as a reply to a now-deleted comment, not to Warren_Terra]

      2. Because wealth/economics/power is a positive feedback system, and without progressive tax systems (and even with moderate progressive system), the trend is that wealth continues to concentrate in the hands of the few.

  16. Here’s the thing about defining “fair” with respect to taxes and wealth: when the disparity between “poor” and “rich” gets too extreme, people start chopping off aristocratic heads. Right now everyone can be distracted by 21st century marvels but at some point that will change. We can either acknowledge the problem or blithely kick the can down the road to the next (and next and possibly next) generation.

  17. If a small business owner suffers and has to lay off an employee, but that ex-employee has enough opportunity to start their own business and hire two or three people, that’s a net gain to society… but in order for that to work, the lower-earning echelons need stability, stuff like healthcare and reliable access to post-secondary education. Having to give that stability is something most workers can’t do, and it creates a huge disincentive for the average American (age 35, 2.4 kids or whatever) to start their own business and possibly become a job creator — a job creator who then moves into a higher tax bracket and pays higher taxes themselves over the rest of their lengthy remaining life.

    So it’s an investment in the future of the nation. The message here is staying competitive and keeping society functioning in the USA will take more than the richest people’s kids and the richest people’s ideas. Invest in your fellow Americans by providing them more of the basics so that they’re able to bring their best ideas, and best selves to the table. IMO that’s the best way to raise the quality of the average American worker, as well as the overall quality of life.

  18. This is a good chart, but I do think extending it to the top 0.1% is a bit silly. It makes for a tall graph, but .1% of Americans is what, 30 people? Who cares how the law effects 30 people? Pointing out the .1% detracts from the argument by making it look like the graph maker is trying too hard.

    [[ Note, the ridiculous math error was pointed out to me. Don’t know how that slipped through. ]]
    The stronger argument is how this taxation plan affects the lower four quintiles.

    Now as for simplicity, I do like that. One can imagine simpler tax codes (for example, eliminate all deductions and credits, and tax all income as ordinary income. And for the majority of people, whose income comes exclusively from interest, salary, and wages, those people wouldn’t need to file income taxes at all, because the government would already have all the information and through witholding, all the money). 

    But that’s not going to happen either. When have laws ever gotten simpler?

    1. It makes for a tall graph, but .1% of Americans is what, 30 people?

      315,000. And it illustrates the exponential nature of the effect.

  19. What we have in our current system is a runaway-leader problem.  The more you have, the easier it is to make more.  There is no incentive to redistribute wealth to those behind you in the race, because it decreases your ability to move farther ahead, and it becomes ever more difficult for someone to catch you from behind.  Income tax is one approach to solving that problem.  So how about if instead of taxing what you make (which historically worked pretty well until the upper bracket tax rates got to low), we tax what you *keep*.  Capital gains are treated the same as income earned from wages. Allow exemptions for amounts up to say 25% of your annual salary for investment in retirement plans, with a cap of 10 years salary total.  Anything invested in infrastructure or non-luxery tangible goods provides a deduction.  Investment in stocks, derivatives, commodities speculation, etc are explicitly non–deductible.  Business profits, if not reinvested in the business in a verifiable fashion (wages, employee benefits, etc).  

    You get the idea.  I’m sure some of the details might be tricky, but that’s always the case.  This would provide (I believe) a strong *disincentive* for the excessive concentration of wealth in the hands of a few.

  20. When the factory my mom worked at closed down in the ’90s because they were sending all the jobs to Honduras, the labor union forced the company into an agreement to pay for training and jobs programs for the workers who lost their jobs, and extended benefits.  As a result, my mom became a dental assistant, and made a lot more money than she did while working in the factory.

    Now I got laid off from my job last month.  They let us know one week ahead of time that we were getting laid off, we got two weeks of severance and an opportunity to pay for COBRA.  (I got two weeks having been with the company for 3 years, people who worked there for 10-30 years got 4 weeks.)  We had no union or anything.

    Now, my point is, unless there are organizations looking out for the workers and laborers, and the poor and destitute, corporations and billionaires will take no responsibility for the consequences of their actions.  They own the wealth in the country, and as such, they are responsible.  They’re expected to do everything the can to retain wealth, maximize profits, and eliminate competition.  It’s just the nature of the beast.

    The rest of us need institutions like the government and unions to act like cattle wranglers, herding and guiding those that control the money to do good things with that money.  Through taxes, tax incentives, contracts, and regulations they’re supposed to guide the money to where it works best for the country as a whole.

    Simply saying “let the rich do what they do, they know what’s best” is insane.  Capitalism may be a good system for money growth, but it has to be reigned in.  Laissez faire capitalism is a recipe for disaster.  Not for the rich, but for everyone else.  Capitalism has no loyalty to a country, or to people, or to the planet for that matter.  If you reside here in this country, if you make your money here, base your company here, and plan to do business here, you know that you will be taxed before you even start.

    And before someone tells me about ridiculous regulations and destructive taxes, yes, there are some elements in the equation that cause problems.  Just like there are billionaires who make poor investments (on the less criminal end of the spectrum), and outright liars and crooks (Enron, anyone?)

  21. I am curious, so I will question here instead of just googling: how much is Mr. Cain worth? How much does he make in annual taxable income? What percentage does he pay in taxes on that income? And how much capital gains tax does he pay based upon his long-term investments? Does he sit on the boards of major corporations? Have they contributed to his campaign fund?

  22. what bothers the idea of a 9% FEDERAL Sales Tax on top of the 8% state tax I already pay on ‘every new purchase’. That’s the stake in the heart of the poor right there.

    1. No, it’s cool, you only pay that federal sales tax on new goods.  All the poor need to do is buy all those extra used goods and they’ll be right as rain! 

      Used clothes, used furniture, used toys, used houses, used food, it’s like they’re getting a 9% discount over the rest of us!

      You know, mentioning that, maybe we ought to consider an alternative minimum tax, where if they don’t pay any taxes because they buy all this used stuff we just tax them 5% just in case…

        1. You raise a good point, but as prostitution (except in few areas) is illegal, we’re not collecting a lot of taxes on them in the first place.

          However, your point is still valid and I believe in that particular case only the first person to rent that particular carnal event would be charged taxes.

          Boy, 9-9-9 is getting more and more complex the more we look into it…

          (Thanks for picking up on used food, I thought it went over a lot of heads)

    2. Of the three 9s, the Fed sales tax is the one fiscal conservatives say is the hardest sell. Whether they’re thinking about the poor, well – couldn’t say. I think they just consider it the dreaded “new” tax. I will say this about the first two 9s. Would save a ton of trees vs the density of the current tax code.

      1. Would save a ton of trees vs the density of the current tax code.

        True, but simpler isn’t always better and it certainly isn’t always more fair. The simplest form of government is “do whatever the Emperor says.”

  23. I’d like to point out that if Obama had proposed a plan that had three nines in it the religious right would have pointed out what would happen if you turned the number upside down by now.

    [Edit- never mind, they already did.]

  24. I don’t understand why this is so difficult for some people to understand. The more money you have the less of a negative impact taxes have on you. The less money you have the more likely it is additional income will be spent immediately rather than saved. Our government needs more revenue and our economy needs more spending. Logically, any changes in taxes should focus on having the greatest positive impact on the economy and the least negative impact on individuals: Raise taxes on the wealthy, lower taxes on the poor.
    It is that simple.

    I think the question of how has an easy answer as well, and it’s not this 9-9-9 non-sense. No sales taxes, it reduces spending and has a greater negative impact on people the lower their income is. No corporate taxes, the race to the bottom has already been lost. Tax all income, no more distinctions between capital gains, dividends, and salaries. If you accumulate wealth you pay taxes. The less you accumulate the lower the percentage you are taxed. If your income is below the national median you don’t pay taxes. The further above the median the greater the percentage you are taxed.

    1. You made the most sense in the least amount of time. I would like for someone to address why this is not even considered.

      (Forgive me if this double-posts, internet is being wonky)

      1. Thanks for the compliment. My concise theory for why this is not considered:
        Our nation is dominated by stupid assholes. There have always been stupid assholes ignorantly shitting on the world, but due to various social processes our popular culture has been producing them in ever greater amounts for the past several decades. I think it was sometime during the early to mid 1990’s when they hit critical mass, we’ve been stuck inside their event horizon ever since.

        1. There have always been stupid assholes ignorantly shitting on the world, but due to various social processes our popular culture has been producing them in ever greater amounts for the past several decades.

          Nah, there’s just less to keep them in check. In a well-structured society all the stupid assholes are terrified that they’re gonna get screwed over by all the other stupid assholes, so everybody agrees to some basic rules to prevent one group of assholes from rigging the whole game.

        2. Any ‘they’re all stupid assholes’ argument is kind of rantish, but what I have noticed being produced the past few decades – since you bring it up – is an Orwellian scrutiny of any person who runs for office. And for anyone they appoint. The level of microscopic nitpicking, and the ease of its dissemination, is a deterrent for any sane would-be public servant. Who needs it? What’s left over seems to be hard-headed egocentrics immune to minute-by-minute criticism or frozen do-nothings who won’t act just to avoid it. High office used to take a fire in the belly. Now, it takes something practically Xanaxian.

          1. …what I have noticed being produced the past few decades – since you bring it up – is an Orwellian scrutiny of any person who runs for office.

            It might be Orwellian, but it certainly isn’t working to find the dirt before they get elected.

          2. Well, some stuff may slip by. But it’s what qualifies as “the dirt” I’m talking about. Imagine JFK’s straying in today’s arena. Smoking a joint in college? Bill had to defend it with a whopper. The deeper digging of the 4th Estate, and the 4.1 Estate, into any misstep that speaks to character instead of politics narrows the field to those practically devoid of any human frailty. A DUI in high school? How does that speak to someone’s leadership qualities in their 30s or 40s? To me, there’s little difference between the state of “investigative” digging on this level and the communist hunts of the ’50s. Wait’ll someone comes forward and says Cain once fired a single Mom with three kids. (Just hyperbole here, not evidential!) I say it’s one big reason for the failing quality of our electable public servants. Waxier and waxier candidates.

  25. How is it his “share” of living in the society he was born in? Taking money away from people inflicts harm on them, the less money they have the greater the harm. Our system of taxation should be designed to inflict the least amount of harm possible on the least number of people possible. It does not make any kind of sense that the guy making $25K should have a greater harm inflicted on him than the harm inflicted on a wealthy person. Your sense of fairness is fucked. 

    1. Why is taxation always considered harm by you people?  That’s right, I went there… you people!

      All seriousness, the government can’t operate without taxes.  Every year, I pay them and don’t bat an eye.  Because while I think it’s crap that every other year congressmen seem to vote themselves a raise, and that some people take advantage of the welfare system, I don’t think it’s crap that some soldiers got flak jackets, some kids got school books, and a family poorer off than I am got to eat.

      Why are there so many people out there crying out how much it hurts?  If you’re rich, you know the taxes are coming.  Do what you’re telling the low and middle classes to do while you shake your fingers at them and blame them for the recession… budget accordingly.

  26. Wow, really embarrassing math error on my part. And to think, I design life saving equipment for a living. Yes, .1 % of 300 million is 300 thousand, and not 30.

  27. A modest proposal, the 40/40 federal income tax plan. 

    I did a quick income distribution & tax search.  The current federal income tax brings in just over one trillion dollars.  A flat 9% tax will bring in about the same amount, but including other taxes, and the fact that for people with zero excess income (income minus basic cost of staying alive), it’s not terribly fair (yeah, opinions vary…)

    The Break Even Plan: 
    a flat 11% tax, but the first $11,000 is exempt.  That will roughly equal the current fed income tax.

    The Pay Down the Debt Plan:
    a flat tax of 40%, but the first $40,000 is exempt.  That will bring in an extra $1.6 trillion per year.
    (A 50/50 plan would bring in almost 2 trillion extra.)

    So under the 40/40 plan, a person earning $50,000 pays an equivalent of 8%.
    Earn $80,000:  20% tax rate.  Earn $100,000:  24%.   $200,000:  32%.  $1,000,000:  38.4%

    Of course there nothing magic about having the percentage rate equal to the income in k$, but here in America we like something with a catchy name…

    a couple of my sources:

    1. You’ve assumed that increasing taxes have no side effects.

      Increase taxes, and people move money to overseas corporations, or companies move offshore. 

      It’s’ the effect in the UK at the moment. Companies are leaving. 

      Customers then have a choice. Do they buy the services or not?

  28. A tax based on wealth. Let’s say it’s an annual 10% on my 50 million net worth. That’d be 5 million per year. Were I wealthy, guess I’d move my wealth offshore. If that didn’t work, I’d move myself. If you’re sick of putting up with the uber-rich in America, that’d work darn pretty well.

    1. That’s not generally how taxes work.

      And regardless, I don’t think anyone is going to be dredging up sympathy by threatening to take their toys and go home.

        1. Does the government generally take money out of your bank accounts that you didn’t spend or earn that period? I would look into that.

      1. True, taxes don’t work that way. Taxes are based on annual income and interest from accounts and investments. My response is about someone’s massively dopey idea of taxing wealth – one’s total net worth. Suppose your folks own a house, maybe a vacation place and some modest investments, a pension, etc. Maybe they have a net worth of 3 million. Not outrageous for a lifetime of work. You tax that wealth at just 10% annually, that’s 300 thousand a year. 300 thou every year. That’s neither wealth redistribution nor the looniest approximation of fair. That’s grand larceny.

        1. My response is about someone’s massively dopey idea of taxing wealth – one’s total net worth. Suppose your folks own a house, maybe a vacation place and some modest investments, a pension, etc. Maybe they have a net worth of 3 million. Not outrageous for a lifetime of work. You tax that wealth at just 10% annually, that’s 300 thousand a year. 300 thou every year.

          A 10% annual flat tax on total wealth would be pretty extreme, which is probably why nobody suggested such a thing. Any tax plan that can fit on the back of a cocktail napkin is bound to have shortcomings, which is one reason the “9-9-9” thing is more of a ploy for votes than a real proposal. Luckily there are more reasonable tax rates and approaches that would still have the effect of taxing wealth. For example, my folks DO pay taxes on their property- it’s called a “property tax” and it’s pretty darn common.

          It’s also quite reasonable in an equitable society, because as long as my folks own any kind of property they benefit from taxpayer-funded services. The road that leads to their home is maintained by the government. If someone trespasses on their property the police will show up. If their home catches on fire the fire department will put it out. If someone steals from their bank the FDIC will make sure they aren’t left in the cold. And they share the (theoretical) benefit of living in a country protected by the most expensive military in the history of the world. Why shouldn’t they continue to help pay for all these things if they have the means to do so?

          1. Agree 10% was a strawman, but nobody suggested anything, so I did.
            And your parents already make their contribution to tax-funded services. They’re the taxpayers. They pay less than some and more than others based on their taxable income and addenda on property taxes. And they do continue to pay – and have paid all their lives. Moreover, taxpayers pay for the services they use and for the ones they don’t. Millions pay for our free public elementary and secondary education without having children or without having their own children attend them. But, I would like to know if this net worth tax applies to everyone’s net worth? Or just to some – and where does that starting gate begin?

          2. I won’t pretend that I could personally write a complete and fair tax code, especially in the context of a blog comment. But I do believe that any fair code would have the effect of taxing people based on how much they have, not how much they “earn.” Just because you’re not doing any work to bring in more money doesn’t mean you shouldn’t have to share the tax burden with everybody else.

            A working-class family shouldn’t have to fork over a bigger chunk of their wealth to the government than a trust fund billionaire. If that’s the effect of the tax code we have now, then it’s a problem that needs to be fixed. I’m open to new ideas but Cain’s plan would make this problem dramatically worse.

          3. Fair enough. But this Scrooge-McDuck-diving-into-his-coin-vault view of the wealthy is awfully skewed. People with big bucks do work or have worked or have started businesses or run companies or made music or films or inventions or any number of things. Not every wealthy person has had wealth handed to him/her. People have worked for it and had some luck with their sweat. I’d love to know what percent of the “1%” are actually mojita-sipping trust-fund billionaires. And why it is they haven’t hired me as a leisure counselor.

          4. But this Scrooge-McDuck-diving-into-his-coin-vault view of the wealthy is awfully skewed. People with big bucks do work or have worked or have started businesses or run companies or made music or films or inventions or any number of things.

            Yes, many of them have. But I very much doubt that the rich work several times harder proportionate to the general population today than they did a generation ago, so the ever-growing disparity between the rich and the poor doesn’t seem to make sense from a meritocracy perspective. Nor does the fact that the rich pay less of their money in taxes now than they did during times of great economic expansion.

          5. Every time you say “the rich” I get this feeling you picture some feet-up hedge fund manager. Think a good heart surgeon doesn’t work as hard today as a gen ago? Or carry as much stress? Or deserve the money they make? A surgeon and a plumber may both be hardworking, and merit success, but it’s about the perceived value of their relative skills. I get the nobility of a good carpenter. But the good architect pulls down more money because her skills are simply worth more – provided either of them are getting calls in these tough times.

          6. And if I’d ever said we shouldn’t have any rich people, that would be a good counter-argument.

            Now, I’m curious if you have an explanation for the rapidly growing disparity between the rich and the poor. Are the rich becoming more productive and hard-working, the poor less so, or is there some other force at work? Do you think it might just possibly have negative consequences for a democratic society if a handful of billionaires have as much power and influence as everyone else put together?

          7. Q1: The smart boys sent the housing market to shit. The sure thing. The American Dream – gone to shit. That set off the tidal wave. Unemployment, market dive, and those with debt are taking the brunt.

            Q2: Handful of billionaires? You mean the Koch Brothers and George Soros? They cancel each other out.

            You can scan back to my very first comment about occupyblahblah and see I thought the protesters ought to focus on one thing: Campaign Reform. Not a laundry list of gimme this and stop that. One thing that can actually change things in a voting society. Vaporize the money; neutralize the influence.

            uh, you don’t have scan back, I pretty much said that.

          8. Seriously, “perceived value of their relative skills”? No, it’s about how much money a hospital can squeeze out of an insurance company. Which is about how much an insurance company can squeeze out of you and me.

          9. Fine. If the perceived value of relative skills between a heart surgeon and a plumber doesn’t work for you, pick one that does. Lawyer vs court reporter. Foreman vs journeyman. Auto designer vs line worker. Game developer vs game retail clerk. Author vs proofreader. Director vs best boy. Blogger vs commenter.

          10. Let’s compare heart surgeons to CEOs, Teller.  Heart surgeons do great, important, stressful, difficult work and get paid a lot for it.  But I doubt very many of them are in the 1%.  So what do Jamie Dimon et al. do to justify getting paid on the order of 1000% of what a heart surgeon does?  Why do conservatives always pick doctors as examples?  They’re in the bottom of the top 20% mostly. 

    2. A wealth tax is not an unreasonable idea, but I think it needs to be small enough that it’s less than the average annual real market returns. If you have your money productively invested, you shouldn’t automatically *lose* that money to taxes if you’re assets are performing at market rates.

      1. Well, when you invest, some will be productive, some won’t be. Investment has its risks. 

        What your saying is that the government can take the benefits, for no work, and for no risk. ie. It doesn’t pay the citizen when the risk doesn’t work out. 

        That’s the biggest something for nothing problem with government.

        So why do you need the taxes? Why can’t people keep their money and decide how to spend it? 

        When you look at the poor, their biggest expenditure is tax. 

      2. Maybe you could provide a for-instance % of this wealth tax. I said 10%. And I’m assuming everyone’s net worth will be targeted regardless of annual income, or is there a particular level of net worth where this tax begins?

        figurative: think the Administration recently adjusted its definition of wealthy to an income higher than 250k. Or simply moved on to another plan suggested by Warren Buffett.

        1. Read the wikipedia article on wealth tax. The countries that have them have about a 1% wealth tax on wealth over some amount.

          It would need to be progressive, because most people ought to have significant savings they’ll need for retirement. (Example: for a couple to retire and reliably derive $100k/yr income from investments, they’ll need about $2.5-3 million in their account). If I were to say that an income over $250k were wealthy enough to pay a wealth tax, that would imply it kicked in on wealth over ~$10 million.

          1. Read link, thanks. I’ll stick with the arguments against. Capital flight, cost of governing wealth tax 5x more costly than governing income tax – admittedly a debatable projection. Donald Trump’s suggestion (one-time 14.5% wealth tax) sounds good and I think he should do it.

  29. Witness how in the original link’s comments (and some here) conservative shit-for-brains still are repeating the whole “but the top 1% pays the bulk of the taxes” bullshit. They’ll never get it. Conservatives are always a century behind, always on the wrong side of history.


  30. Q1: The smart boys sent the housing market to shit. The sure thing. The American Dream – gone to shit. That set off the tidal wave. Unemployment, market dive, and those with debt are taking the brunt.

    That’s an overly simplistic explanation for the growing gap between the rich and the poor considering how long the trend has been continuing. I’m not talking about how much the gap has grown since 2008, I’m talking a long-term trend spanning the last couple of generations.

    Q2: Handful of billionaires? You mean the Koch Brothers and George Soros? The cancel each other out.

    No they don’t. Just because they oppose each other doesn’t mean they represent you and me. Whichever side they are on, billionaires can’t really understand all the issues that effect the people on the bottom any more than the average American knows what it’s like to be a subsistence farmer in a third world country. They can try to help, but it’s so far removed from their daily lives that it borders on the theoretical.

    Money is power. Power to control the media, influence legislators (even with campaign finance reform), shape industries, you name it. Power cannot and should not be distributed equally among the entire population, but nor should the bulk of it be concentrated into the hands of the very few. We need more balance than we have today. Cain’s plan would create more imbalance.

  31. Well, why don’t you just jump to your answer for controlling the consolidation of power. 

    I gave you my solution for inordinate influence: Campaign Reform. I don’t know another way to – I can’t believe I’m saying such a thing – purify our elected officials. You want to nationalize the media and energy industries? You really mad at Exxon and Rupert?

    1. Campaign reform is a necessary but insufficient means of controlling consolidation of power. Even with ideal campaign spending laws a well-positioned billionaire could make or break potential candidates through less direct means, control of the media being just one example.

      The only way to get to the root of the problem is to control the growing wealth imbalance, a complex problem that probably requires a complex solution. Most other developed countries don’t have the degree of wealth distribution disparities that we do, maybe we can take a peek at how Australia or Sweden or Japan or some other country structure their tax codes.

      1. Okay, that’s your thought.
        I don’t know how you could grab enough wealth to hobble their power without committing a crime. But if you want to do it legally, you’d have to pass it through Congress. And that means hello campaign reform. I think we wore this one out, my friend.

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