Tea Party politics buoy Herman Cain’s bid for President, but questions remain

No dearth of material has been published in recent weeks about the bad math in Herman Cain’s 9-9-9 tax plan. It would effectively scrap the current tax system and replace it with a 9% business flat tax, a 9% individual flat tax, and a 9% national sales tax. Did he steal it from Sim City? Is it the price of a pizza? The work of the devil? We can only guess.

What is pretty clear, however, is that Herman Cain’s plan would mean a significant tax increase for the roughly 30 million low-income Americans who pay neither income nor payroll taxes as… Read more…

New Yorkers collectively groaned in outrage when the proposed ‘fat tax’ got closer to passing with the help of a survey of health care experts. But is it really such a great plan? And are the experts really experts?

The argument behind the ‘fat tax’ is pretty simple: people who drink non-diet soda (for example) weigh more, are less healthy, and thus end up costing more taxpayer money in medical expenses and lost tax revenue. Simple dollars and cents — and yet common sense seems to be absent from the debate.

Why not look into what actually happens when you substitute diet drinks for the regular kind? The results aren’t pretty: if one study is any guide, New Yorkers… Read more…

Although most people were paying closer attention to the Presidential election, some local votes might have a bigger impact in the long run:

• Massachusetts voted against a ballot initiative to end their state income tax, surprisingly basically nobody. According to the AP, “virtually every elected official in the state” opposed the initiative. Interestingly enough, one third of the voters supported it, even though opponents spent ten times as much on ads. Apparentlty the voters in Massachusetts have a hard time electing anyone who feels the way they do about taxes.
• On the other hand, Maine voters decided to abolish taxes on beer and soda, thanks in no part to funding from the beverage industry. In a move

… Read more…

That’s actually a fairly complicated question. From an accounting standpoint, you’re paying all of the taxes. But from an economic standpoint, the question of who pays the taxes depends on the elasticity of the product.

Elasticity refers to how use responds to price changes. For a product that’s competing directly with lots of other, similar products, elasticity is very high: if a gas station raises their prices 5%, but the one across the street keeps prices constant, nearly all of first station’s customers will desert it.

But for a low-elasticity product, the opposite is the case. If you consider an addictive product (like cigarettes or alcohol), or a cheap product that you have to buy repeatedly to make an expensive… Read more…