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Saturday, October 29, 2011

Nein Nein Nein

A few weeks ago, an article about Herman Cain's "9-9-9" flat-tax plan, mentioned the following:
"In an interview, Mr. Cain, a math major in college, said he had asked Mr. [Rich] Lowrie [Cain's financial guru, whose day job is at a Wells Fargo in Pepper Pike, Ohio--I did not make that up] to do a 'regression analysis' that would allow the government to eliminate all existing taxes, including those on capital gains and estates, and collect the same revenue from just three streams. 'The number came up to be 9 percent,' Mr. Cain said. 'And that’s how we came up with 9-9-9.'"
Now, what I don't know about math could fill a book--specifically, a math book. But still, something bothered me about that passage.

A "regression analysis" is a statistical procedure that allows people to examine the effect of different independent variables on a given outcome.  If, for example, one wonders what factors affect a person's income, one might gather various pieces of data on a sufficiently large population.  This would include income data (the dependent variable), but one would also gather data on other independent variables that might have an impact on income (e.g., education level, parents' income, IQ, uh. . . .let's say height).  By plugging these various data points into an insanely complicated equation--or, far more preferably, a computer--one could generate a formula that would show the impact of different inputs on the dependent variable (holding other inputs constant).

So why did Herman Cain call for a "regression analysis" to determine an appropriate level of flat taxation that would generate, theoretically, the same level of revenue the government currently receives?  Wouldn't that simply require knowledge of the amounts generated by the three revenue streams Cain identified as "acceptable" (personal income, corporate income, and sales income), weighting them proportionately, and then figuring out what percentage of those three streams would equal the needed governmental revenue?  A regression analysis seems like far too much work.

Maybe that's the point, though.  Maybe Herman Cain is demonstrating his willingness to do the heavy lifting, to go the extra mile, to leave no stone unturned in his quest to improve life for the American people.

Either that, or he's just a pretentious blowhard.  Not sure which.

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