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PolitiFact’s Analysis of Cain’s 9-9-9 Plan is Fatally Flawed

21 Oct


PolitiFact, as we’ve mentioned before (“PolitiFact Earns ‘Pants On Fire’ Rating“), has the annoying habit of claiming to impartially fact-check various statements made by public officials. Unfortunately, PolitiFact does not really analyze (using the accepted science definition of the term), it simply offers two-cent opinions masquerading under the haughty label of “analysis.”

Case in point: PolitiFact claims to have analyzed Herman Cain’s statement that his 9-9-9 plan will result in lower taxes for someone making less than $50,000 a year, and rates the claim “Mostly False.” (“Cain’s ‘9-9-9’ plan no pal of working poor,” headlines the edited version in the 17 Oct 2011 edition of the St. Petersburg Times; the full online version is here).

1. The first major problem with PolitiFact’s analysis is that it was not shown to be objective. PolitiFact selected three tax accountants to provide an opinion, but since Cain’s 9-9-9 plan — if implemented — will substantially reduce the need for tax accountants, they are the last folks that should be asked for an assessment.

(Oddly, after touting the three accountants, Politifact barely mentions them. The newspaper version of the article only cites the comments of one of the three, who happened to be very critical of Cain’s plan. The online version quotes a second accountant who had a positive comment. There is no mention whatever of the mysterious third accountant.)

2. Politifact states in the online version, “For this fact-check, we’ll only be talking about the personal income tax and the sales tax since the business tax directly affects only business owners and corporations.” This assertion is nonsense, however, since everyone’s effective income is directly impacted by the prices that business owners and corporations charge their customers, and those prices are greatly affected by federal corporate and payroll taxes.

PolitiFact completely ignores such taxes, which are often hidden taxes that the Cain plan eliminates. For example, when most folks purchase a loaf of bread, they are aware of the state sales tax that’s added at the checkout counter, but they may not be aware that a portion of the price tag on the bread contains hidden federal taxes; i.e. the basic price is not only what the baker charges to bake the bread, it also includes an extra amount to cover some or all of what the baker has to pay the federal government in taxes.

Bottom line: PolitiFact’s analysis is fatally flawed. Its analysis of Mr. Cain’s 9-9-9 plan does not prove anything, one way or the other.

-Ed Walker

 

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2 responses to “PolitiFact’s Analysis of Cain’s 9-9-9 Plan is Fatally Flawed

  1. David Key

    November 4, 2011 at 8:23 pm

    So what would be your analysis of the 9-9-9 plan, then? Because I’m still torn about it.

     
    • N. E. Walker

      November 5, 2011 at 3:29 pm

      Thanks for the inquiry.

      A brief ET analysis of Herman Cain’s 9-9-9 plan [1]:

      From a consumer’s viewpoint, taxpayers should clearly know the price they are being charged for government services, so they can objectively evaluate the value of those services. At present, this is not the case. In particular, the average employee is usually not aware of the hidden pass-through of corporate payroll and income taxes. These company-paid taxes are not free to the employee or the consumer. To the contrary, to pay for these taxes the company will generally either keep salaries and benefits lower than they otherwise would, or will include the costs of the taxes in the prices of their goods and services.

      The Cain 9% individual income tax and 9% national sales tax will be clearly seen by the taxpayer. And the Cain plan also eliminates the hidden payroll tax. However, the 9% corporate income tax will be passed on to the employee or consumer as explained above. This part of the Cain plan simply perpetuates the myth that corporate taxes have no effect on salaries, benefits, or the cost of goods and services.

      Note 1: 9% national sales tax, 9% flat individual income tax, 9% corporate net income tax (approximate; see http://www.hermancain.com/999plan)

       

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