Will 9-9-9 Hurt the Middle Class?

There's a lot of mish-mashed conservative talk out there about Herman Cain’s proposed 9-9-9 tax plan being a tax-hike for the middle class.  The latest came from Rick Santorum in last night's debate, in which he suggested that cutting corporate and income taxes to a flat 9% while applying a federal sales tax of 9% would equate to a tax increase for 84% of Americans, as reported in a recent tax analysis.  Exacerbating this travesty, he suggests, is that Cain’s plan allows no deductions for poverty stricken families and the middle class.

In trying to discredit Herman Cain, Rick Santorum discredits himself- by regurgitating scare tactics and broad, untrue statements akin to Obama's promise in 2008 to "cut taxes from 95% of American families."  

First, let's do some basic math.  Utilizing the current marginal tax rates, a family earning $75,000 annually finds itself in the 25% tax bracket.  With the progressive application of federal income tax, this tax is actually ~15% of wages.  This is 3% less than Cain’s suggested 18% that would be paid in federal income tax on wages earned and sales tax on items purchased.  Sounds like Herman might be giving the middle class a raw deal, huh?  Well, consider the payroll taxes that wage earners currently pay, and this same family will see an additional 7.65% of their wages garnished for Social Security and Medicare, for a grand total of 22.65%.  Cain’s suggested plan replaces these costs in the simplistic 9-9-9 plan, and this 18% is 4.65% lower than this number.

If I know anything about which number is lower than the other number, Cain’s 18% is a reduction in federal taxes for middle-class Americans, not a tax-hike.     

Second, consider that high corporate taxes account for added consumer cost, as companies generally pass these levied corporate taxes on to consumers in the form of higher prices.**  By reducing corporate taxes, prices will naturally fall for competing companies in multiple areas of production.  You don't have to call it "cutting taxes for the middle class" if that doesn't agree with you.  Let's just call it, "a plan to let the middle class keep more of their hard-earned money."

Finally, it’s clear that Santorum didn’t think through his accusation that the plan “eliminates” deductions.  Cain’s website clearly states that deductions on both income and sales tax will be applied via “empowerment zones” to lessen the burden on those who might need such support.  Herman kindly reminded him of this on the stage, another well-placed nail in the coffin containing Santorum’s presidential ambition.

Herman Cain's 9-9-9 plan does have some questions surrounding it.  For example, the aboliton of current tax code would decimate the accounting industry, harming growth and GDP while costing American jobs.  Another concern I have is that retirees, who generally keep income low to avoid higher taxation of retirement accounts, might see increases in taxes paid, which could harm their retirement outlook.  But how are we to address these questions and find solutions if Herman Cain is constantly having to deflect untrue claims that 9-9-9 amounts to a huge tax-hike?

William Sullivan

** Argument supporting this economic reality can be found here.

Federally financed abortions, and the sorrowful conclusion

In spite of the efforts of countless Americans and some of our more honest politicians, Barack Obama has just approved the first taxpayer funding for abortions, to the tune of about 18.5 billion dollars.

So we've been had. Again.

It's irrefutable. When Obama said his Executive Order would prevent federal subsidization of abortions to get the healthare bill passed, he was lying. When Pelosi and her ilk said "there is no public funding of abortion in these bills" to get the healthcare bill passed, she was lying.

Tom McClusky, senior vice president of the Family Research Council’s political action arm, says it perfectly.

“For our efforts to remove the bill's abortion funding, we were called 'deceivers' by President Obama and 'liars' by his allies. Now we know who the true deceivers and liars really are."

We cannot sugar-coat it anymore. There are lying, evil bastards running our country.

And thanks to them, we are all morally implicated. Just think, a month from now, a baby may be violently dismembered and siphoned from his mother's womb. And whether you're pro-life, pro-choice, or anywhere in between, you will have paid for it.

I feel sick.

William Sullivan

Amnesty and the Social Security Paradox

Republican governor Charlie Crist, who is running for a Florida Senate seat as an independent after trailing badly in the primary to candidate Marco Rubio, has argued that Social Security and immigration reform go hand in hand, and that the support of immigration reform is a useful step in assuring the solvency of Social Security funding. He uses this argument to campaign for a much shorter path to citizenship for illegal aliens.

The broad idea behind this strategy is that while immigration reform is a heated conflict where two sides of an ideological debate clash, the preservation of Social Security is an endeavor that will likely find backing in the prized body of independent voters. He appears to believe that saving Social Security is a cause that a great number of Americans can rally behind.

There are two problems with this strategy.

First, Americans are sick of hearing that the answer to their prayers is comprehensive federal overhaul, and the legislation of amnesty for illegal aliens would be exactly that. Beyond this, there is a growing anxiety about the taxpayer liability represented by illegal aliens, as millions of them take advantage of healthcare, education, and welfare programs that they are not entitled to exploit as non-citizens.

Second, many Americans are not exactly enamored with Social Security in general. Particularly, younger Americans view it as a complex and obscure investment, and few of them believe that they will reap the benefits of their investment.

Crist’s is among latest suggestions to offer fast tracks to citizenship or amnesty to illegal aliens, which would require them to contribute more into Social Security and thereby help to rectify the universally recognized fiscal shortfall of the Social Security Trust Funds.

On the surface, this seems like a rational hypothesis. If more money goes into the Social Security piggybank, it would seem that there will be more money to spend on the benefits of the program. But this logic is tragically flawed. By legalizing these aliens we would be increasing the burden upon the system by drastically increasing the number of those receiving Social Security benefits. Providing unjustified payment to millions of new recipients that have paid a pittance into the system is not only logistically destructive, but it is also ethically unjust to those who spent their entire lives funding the system.

Beyond this, it is also obvious that the massive influx of low-income wage earners would drain Social Security rather than increase its solvency, because they will inevitably receive far more in benefits than they would contribute to the system.

Amnesty for illegal aliens will certainly not stabilize Social Security, despite the liberal agenda telling us that it will. They appear to be desperately seeking the means to protect Social Security funding, but paradoxically, it is the policymaking of the left that provides the greatest obstacle to the application of more useful solutions.

If immigration law were more tightly enforced, for example, employers would likely offer increased wages for unskilled American laborers. Higher wages and more American workers would yield increased contributions. As another example, if extended entitlement programs like welfare were limited rather than expanded, more Americans would be encouraged to join the workforce, thereby increasing American employment and increasing contributions.

The most significant boon for Social Security would be for Americans to increase fertility rates to assure replacement levels to sustain the system. But even that possibility is stifled by liberal sensibilities. For decades, a European-style agenda has caused a decline in fertility rates that has assured that Social Security cannot support itself, the result of incessant campaigns about detriment to the planet’s resources or carbon footprints. All the while, Democrats in America strive to provide unlimited contraception, and some even advocate federally funded abortions as means to keep our population from growing.

Honestly, it seems apparent that it is the liberal agenda that is both the creator and destroyer of Social Security.

Of course, none of this will be addressed once Congress finds the “appetite” to tackle immigration reform. But I can assure you that we will see the left spewing variations of Crist’s argument that amnesty could provide a boost to Social Security funding. They will suggest in broad tones that it makes sense fiscally, and supporters will be assured of this belief over and over by Barack Obama’s soothing tenor. And educated by nothing beyond the left’s propaganda, legions of zealots will argue the soundness of the idea, and chant their mundane mantra about opposition to amnesty being choreographed by racists.

The argument tying Social Security and immigration reform has taken definite shape, and I would wager it will become common rhetoric for Democrats in their march to legislate amnesty for illegal immigrants. After all, what better way to make a push for amnesty than to argue that we could save Social Security for all Americans by levying a mandatory tax upon the fifteen to twenty million illegal aliens that are working in this country? That way, a massive federal program like Social Security could appear sustainable and illegal aliens could be granted amnesty and a legitimate vote in future elections.

Talk about two birds for the Democratic Party.

William Sullivan