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What you need to know for 01/24/2018

Editorial: No, no, no to 9-9-9

Editorial: No, no, no to 9-9-9

Another thinly veiled tax cut for the wealthy, at the poor's expense

Republican presidential candidate Herman Cain will get no argument here, or in many other places, that America’s tax code could benefit from some simplification. And while his 9-9-9 tax plan is indeed a model of simplicity — one that would likely put tens of thousands of accountants out of work — it’s not a particularly fair way for the government to raise money. Unless, that is, you think all Americans — rich or poor, individual or corporation — ought to pay the same percentage of their income in taxes.

Some Republicans and tea party-types like Cain do think so, but if that were to happen, it would create an even larger disparity between this country’s rich and poor. The rich, currently taxed at a rate of 35 percent, would get a huge tax cut; those with low and middle incomes, including seniors, who currently don’t pay any income tax, would get slammed: They’d not only have to pay the same 9 percent income tax that rich folk would pay, but a 9 percent sales tax on most of what they buy. (Cain’s claim that they’d get a break on the sales tax because he wouldn’t apply it to used goods is insulting, and has negative implications for manufacturers of new goods like cars and houses.)

Sales taxes are particularly regressive in that they take a larger share of a poor person’s income than a rich person’s. For example, if a person making $1 million paid an $1,800 sales tax on a $20,000 car, he would scarcely feel the hit; but if a person making $30,000 had to pay the same $1,800, he’d likely be struggling to absorb the hit for the rest of the year.

Nowhere is it set in stone that income (or other) taxes have to be progressive, but the notion that wealthier people can afford to pay more and thus should do so has been a guiding principle of the U.S. tax code since the early 1900s. It should remain so, regardless of what may or may not be done to simplify it.

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