15 October 2011

Call Me a Communist, But...

So another weekend skiffles along full-pat, a stomach full of shepherd's pie and a mug of wimpy tea to salve a crampy cold I've succumbed to.  Uncharacteristically of me, for the first time in perhaps a week I've finally looked at the online news stories - Times Square and various city spaces around the world have been occupied by protesters decrying wealth disparity and a perceived lack of representation in government direction, Steve Jobs has suddenly passed on, Sonic Youth fronts Moore and Gordon separate (marriage now, band soon?), and the Treasury has delayed its final ruling on the fairness of China's currency valuation.

And then in lighter news, there's an interview with presidential-candidacy-hopeful Herman Cain on the NPR.  When asked by interviewer Scott Simon about the economic ramifications of Cain's proposed 9-9-9 tax scheme - in this case, instancing the proposed nine-percent sales tax on the price of bread paid by both prince and pauper - the Godfather's Pizza magnate responded:
On a gallon of milk or a loaf of bread, Bill Gates and every rich person is going to pay the same tax as someone who's on the lower end of the spectrum. But Scott, I'm not going to play the class warfare card. You have to compare the taxes they pay today. If you pick a certain income level — and I'll pick one and walk you through it, OK?  (Simon: "Sure.")  I'm going to use $50,000 a year, since that's approximately what the median income is for a family in this country. [For a] family of four, $50,000 a year. Under the current system, based upon standard deductions and standard exemptions, they're going to pay $10,200 in taxes. Under the 9-9-9 plan, the middle 9, they're going to pay $4,500. That leaves $5,700 to apply to that milk and bread in terms of the taxes. You have to go through the numbers of each individual situation.
Golf clap, Mr. Cain.  As suggested, going through the numbers every rich person will pay the same tax, in dollar amounts rather than proportionally.  The $5,700 that average family may save still has to go towards the mundane (and now more expensive) task of paying for the groceries, the wares, the thingamajigs.  That average American family spends nearly all its cash on (you guessed it) these expenditures, with little by way of money to save.  An overall raising of the levy on purchased goods will really do little by way of a tax break for the Jones', and in many cases will end up being a tax hike.

Believe it or not, but beyond the investment of assets and grandiose luxury purchases, the very wealthy consume roughly the same by way of living necessities as their less-than-wealthy peers.  Check out this informative graph.  The top fifth of American earners spend roughly $65K a year of their average $145K income, proportionally less than the middle fifth's $35K/$45K or the bottom fifth's deficitous $18K/<$10K.  There's only so much money a family can really spend on consumer goods before the rest of that money simply piles up to multiple zeros on a banking ledger.  Rather than further improving the affluent's quality of life any, beyond a certain point the money apparently makes no difference.

Not that I'm a commie!  But I'm simply saying that a consumptive-based tax plan is a bad shake for the majority of Americans.  9-9-9 - basically a flat tax scheme - is just another thinly veiled proposal to make the wealthy wealthier at the spending class' heavy expense.  You (dearest reader) and I are essentially indentured servants in this life, scraping together the dough (by serving the proverbial Man) to buy the essentials, enjoy/discard/replace the baubles, and live in the apartments of (or pay the mortgages to, if You are a home-owner) said loosely-defined and still very metaphorical Man.  Mind you, that's just one way to look at it.  Negative lens, mayhap.

But that's largely what the Occupy Your-City-Here movements are so miffed about, for those who've until now not 'got it'.