Thursday, October 20, 2011

Defining Income, Redistributing Income

I can't promise this will be my last post on Herman Cain's 9-9-9 plan, but here are two more relevant things to know.

First, Ed Lotterman weighed in on the plan this morning. Gee, I sure love him. He points out that "income" is not the simple thing one might generally think it is, and the details are essential to understanding what a plan like Cain's would mean. Does it include payments for rent or royalties, or for entitlement payments like Social Security, or other sources such as student financial aid and scholarships? Would employer-provided health insurance be considered income?

He writes, "if you exempt one source of income from capital or property, you set up all sorts of incentives for legal finagling to convert higher taxed income to something in an exempt category. The existing provision that lets hedge fund managers treat their earnings as a lower-taxed capital gain is the most notorious example, but there are many others."

And continues: "Cain would exempt Social Security benefits, but this is another slippery slope. If even well-to-do retirees could get $2,000 Social Security payments tax-free, why should a blind person have to pay on her $600 SSI check? And if SSI is excluded, why not the value of food stamps received by the same handicapped person?"

Second, a brilliant data visualization by Brian Highsmith of the Center on Budget and Policy Priorities, showing the redistribution of wealth from the plan. And that's redistribution as in robbing the poor to pay the rich, not the other way around. It starts out like this:

And then the graph continues for another 8 or 10 screens worth of those two red bars: the one for the top 1% finally runs out at a savings of $240,000, while the bar for the top .1% goes on all the way to a savings of $1.35 million.

No comments: