Engineering Thinking: "PolitiFact’s Analysis of Cain’s 9-9-9 Plan is Fatally Flawed"

We were slow to notice a fresh PolitiFact item by Ed Walker at his blog "Engineering Thinking" from October.

Walker swiftly skewers PolitiFact's treatment of a Herman Cain claim about his 9-9-9 tax plan:

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.

Indeed, it seems odd that PolitiFact would solicit volunteers* from the ranks of tax accountants to test Cain's claim rather than going to tax experts at a think tank.  Not that the latter route is totally unproblematic.

And Walker's second point:

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.

Walker is deadly accurate with his second point.  PolitiFact seems completely fooled by embedded taxes, formerly neglecting their existence in a fact check of Warren Buffett's claims about effective tax rates for the very rich.  I've coined the term "the Buffett fallacy" for that mistake.

A good fact check does not simply ignore important aspects of the issue it examines.

Walker's post is short, but it's worth a visit to read the entire thing.  So please do so.


* I have a very clear recollection of PolitiFact posting a request for readers with tax expertise to help evaluate Cain's plan.  Unfortunately, the Web page is either a bit hard to find or that item was scrubbed from PolitiFact's Web territory.

Sublime Bloviations: "PolitiFlub: The employee contribution to Social Security"

It's not often PolitiFact alters their standards so quickly on the exact same topic, but it happens. 

We spotted it right away and PFB editor Bryan White was on the case with his latest update regarding the recent flurry of tax related campaign flyers factchecks PolitiFact's been writing.

This one is pretty obvious. Let's see if our readers can spot it.

Here's PolitiFact's standard for determining tax contributions for Obama's hypothetical $50,000/year worker that pays a higher tax rate than someone making $50 million (bold added):

We asked two researchers at the [Brookings Institute] ... for their advice on how to factor in payroll taxes. They estimated that combining the workers’ share of the payroll tax with the employer’s share -- the usual practice among economists -- would mean an extra 15 percentage points for our hypothetical middle-class worker, and less than 2 additional percentage points for the high-income taxpayer.  Adding these to the percentages we previously found for the income tax alone produces a new, "final" rate of 22 to 23 percent for the construction worker...

Obama's final rating: Half True.

Here's their standard for determining the facts of Herman Cain's statement that "every worker pays 15.3 percent payroll tax":

What we found is that Cain is counting both worker and employer contributions to payroll taxes to arrive at the 15.3 percent number.

Uh-oh.

Cain said, "Every worker pays 15.3 percent payroll tax." That's not accurate. Workers only pay half that...You can reach that number only by including the half of the tax that employers pay.

If this sound went through your head just now; welcome to our world.

Instead of boring you with the rating they gave Cain, we suggest you head over to Bryan's article and read the whole thing. 

Once there you will find a deeper analysis as well as a handy chart Bryan has created that shows how PolitiFact has used one standard or the other in various tax fact checks.

Extra Credit: Guess which party benefits from the alternating definitions of what constitutes a tax contribution.

And if you haven't done so check out our recent reviews on this tax issue here and here.