Over the weekend Mr. Cain won the Florida Straw Poll. And while many in the media are still dismissing him outright there are some who look at his 2 major talking points as having substance. First I would like to look at his so-called “Fix” to Social Security, what he calls the “Chilean Model” but is really just a re-packaged Privatization. Here’s where I have a problem. For those that didn’t see my post yesterday I will briefly elaborate. I am coming at these issues from the point of view of one of the MANY underemployed, well more specifically UNDERPAID, Americans. What I mean is, despite the fact that I work full time (and have since high-school), I make less than $25,000 per year. In fact the only time I ever broke that particular benchmark was the one year I worked a second job.
So here’s my problem with Herman Cain’s “Chilean Model” plan (though I would think it was obvious by now). I MAKE LESS THAN $25,000 A YEAR. So when I hear things like “Give people a chance to create their own savings accounts” I can help but think to myself – How am I possibly supposed to “save” for my retirement when, frankly I can barely afford my bills. Ok, so perhaps I’m not the one that he supposes will opt-out of Social Security, fair enough. So instead the more affluent individuals, lets say those with what, $50 or even $100,000 per year (I certainly know I could save money if I was making that much). Well, about 28% of the US population make $25K or less, and just over 50% of people make $50,000 or less. So as we talk about “fixing” Social Security, can you explain to me taking 50% of those paying out of the SS system, or in the case of those over $25K, 75% of those paying in. I suppose that would be great for those that are doing great in this troubling economy, but for the other 25-50% of us, what are we supposed to do?
Also, for those that don’t know, Social Security is only paid on the first $130,000 made annually. To be clear, this means that those of us on the lower end of the wage spectrum pay a MUCH larger percent of our wages than those that can most afford it. So if you are one of those lucky enough to make $250K then you only pay into Social Security for about half the year; that’s right, after 6 months you ALREADY opt-out for the rest of the year. If you make a $1 Million you are done in only 2 months. If you are making $2.5 Million you stop paying into SS in 3 WEEKS – that’s right – LESS THAN A MONTH.
So what are you really contributing if you are pulling down $10 or $20 Million. Their FIRST paycheck of the year takes care of ALL you Social Security contributions for the year. So those that can afford the least pay (relatively) much more. Finally, what happens if you do opt out, and somehow loose it all? What is Cain’s (or any other Privatizer’s) plan for those that save and somehow end up destitute anyway? Since they opted-out – there will be no Social Security to see them through. I guess they’re screwed.
Now as for Herman Cain’s 9-9-9 Tax Plan, seems fair on the surface, Right?. Again lets look at this rationally. For this example lets make it 10-10-10 for just a second to make the math much easier. So if you make $25,000, you pay $2,500 per year, so you need to live on the other $22,500 (not including Social Security, Medical Insurance if you are lucky enough to have it, and State taxes). This is a good time to point out that the LIVING wage about $29,000. At $250,000, you pay $25,000 (that’s right, at $250K, your taxes become MY ENTIRE INCOME before taxes), and so still have over $200K to live on.
So even though all these people work full time, one is expected to live on 1/100th the money as someone else? In other words, a progressive income tax system is actually an attempt to balance the great Inequity in pay that ALREADY exists in wages in this country. (Alternatively, CEO’s could take a little less pay so those of us on the bottom could at least make the living wage . . . anybody? Yeah- didn’t think so)
Ok, next, the 9% sales tax Mr. Cain is discussing. I would like to point out the GLARING Flaw in this plan. Most sales tax is STATE and COUNTY tax. This is important, because by putting a 9% sales tax on goods/services would actually end up being (where I am anyway) 17% sales tax, so nearly TWICE as much as it is now. Again, I make $25K, and now am expected to pay MORE for what I need to live than what I pay now. Can’t you see how this will affect most those that have the least? If you start with less, then paying a little more for everything JUST HITS YOU HARDER. If we were to implement just these two things, the Working Poor (and HOW CAN THAT TERM EVEN EXIST IN AMERICA?!?!?!?!) will be hit WAY harder than they even are now.
This doesn’t even take into account reducing the tax on Corporations by 25% (not including loopholes of course). How does Mr. Cain propose to keep the Budget Balanced by reducing revenues? That is a major problem with virtually all Republican proposals which call for cutting Federal Programs and reducing rates; oh, but they also include “Broadening the Base” (for my thoughts on that check out what I wrote yesterday) which really just means making those who have less take up more of the burden, while simultaneously cutting public services to those very same people.
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