867-5-9-9-9

So, with the race for the Republican Presidential Candidacy race off to a running start, Herman Cain has been the flavor of the month. At the forefront of his debate rhetoric has been his 9-9-9 plan - named for its nine (point one) percent tax levied across the board: 9.1% on personal income, 9.1% on corporate income, and introducing a 9.1% national sales tax. This sounds particularly simple, and that's one of the reasons why Cain has been surging in the polls. "THE DARN TAX CODE IS TOO COMPLEX!" yell a lot of Tea Party followers; they cite it as one of the reasons government it out of control, because no one person can really understand and know the entirety of the US Tax Code.

But I wondered. How would it change things? What kind of tax burden would this result in? How would it affect the revenue of the government? So, woo, another nice statistical diversion! Note that all data for this analysis comes from the 2010 US Census data, unless otherwise noted.

Anyway, the census looks at about 118,683,000 households. Within those households, I divided them into quadrants:

Lower quadrant makes underneath $29,670.75 gross income per year. Second quadrant is between this and $59,341.50. The third goes up to $89,012.25, and of course the top quadrant is unbounded at the top. These equate quite neatly to $30,000, $60,000, and $90,000, so for the sake of easier math, I'll round up in each case. Here are the various take-home amounts for someone making federal minimum wage along with all the other borders currently. Also included are a couple, much higher, incomes. To note, I am using the Single filer for a "worst case" (highest taxation) scenario.

$15,080 -> $13,243
$30,000 -> $25,925
$60,000 -> $48,875
$90,000 -> $71,183
$250,000 -> $182,603
$1,000,000 -> $672,686

Now, this is just the income tax, of course. Additionally, social security taxes and Medicare taxes are also levied. Social Security is taken at a rate of 4.2% up to $106,800 and Medicare at 1.45% of all wages. Presumably, Mr. Cain wishes to roll all these up, along with deductions, into the 9-9-9 plan. In order to deal with this, I have to use the average deductions for each income level along with the Medicare and Medicaid numbers. This is where it gets even more complicated, and so I have to break it out into "individual stories".

Our minimum-wage earner is paid $15,080 in gross income. Let's assume she's a single mother of one, and manages to deduct a fair amount of her income due to medical and taxation deductions, but makes no charitable contributions and does not save because she has to spend the majority of her income. After the 4.2% and 1.45% for OASDI and Medicare respectively, that comes to about $14,237. Assuming deductions of about $8,000 for medical and taxation (the average for $15k-$30k is about $10,000), her taxable income is about $6,237, which is taxed at 10%, about $624. Finally, since she has a child, she receives $3,050 in earned income credit. Thus, her final take home pay is about $16,663.

Whew, that was complicated! Anyway, without factoring in state income tax, our hypothetical person ends up with a little over 110% of her gross income in take-home pay, mostly thanks to her kid. Under Cain's plan, the same person would be taxed at 9.1% for income and another 9.1% on everything she purchases. Assuming she's reasonably thrifty (as anyone at this income level would need to be), she is likely to spend her income mostly on food and shelter. The latter would be untaxed, and would likely take 25-40% of her income. Assume 10% of it is spent on used items such as appliances or furniture. Thus, her final take-home pay less any taxation due to the sales tax, is about $13,146. So she's about 20% worse off in this system.

Next, I'd like to talk about our $60,000 earner. Let's assume he's unmarried as well, with no children. After OASDI and Medicare are taken out, it leaves about $56,646. Assume Mr. Sixty has a 401(k) and a few investments, spends relatively little on medical care, and earns a fair bit of interest on bank accounts, making his deductions total about $22,000 - again, fairly average for his bracket according to the IRS. That leaves a taxable income of about $34,600. The effective tax rate on this income is 13.8%, leaving a take-home income of $51,825.

Under the 9-9-9 plan, 9.1% is skimmed off the top, leaving $54,540. The average single filer making $60,000 is reasonably well off, so let's assume he spends 25% of his income on rent or mortgage payments, saves 20%, and spends the rest on food and entertainment. This results in a take-home income minus federal sales tax of $51,810. So he's about as well off as he was before under this plan.

Finally, for now at least, is the $250,000 earner. Let's say this is a married couple making this amount jointly, and filing jointly. After SS and Medicare, that leaves $241,889. Both have 401(k)s, several investments, and they have a single child. Their deductions total about $65,000, which is again, fairly average for their income level. This leaves about $177,000 as taxable; after federal income tax at a rate of 21.26%, they take home $204,369. They earn nothing from their child or children, as they earn too much to qualify for the Earned Income Credit.

Under the 9-9-9 plan, 9.1% is skimmed from the top of their income, leaving them with $227,250 in take-home pay. Assume they have a nice home and spend about 20% of their income on the mortgage and manage to save about 40% of their income per year, leaving them with $90,900 to pay for everything else. This is taxed at a 9.1% consumption tax rate, leaving $218,978 in total income. So they're about 7.1% better off.

So we can see that this system is inherently a bit more regressive than the one we have now. Now, on the flip side, I'll take a look at revenue differences in the two systems.

In the United States Budget for Fiscal Year 2009, the IRS counts government receipts via taxes at $2.7 trillion. An estimated $340 billion comes from corporate taxes, which we'll deal with later. It hasn't been stated whether excise and customs taxes will be removed for the 9-9-9 plan, so we'll remove that $100 billion to add back in later, assuming they will be kept. That leaves about $2.26 trillion that comes out of personal income taxes, payroll taxes, and estate taxes.

Going back to our data from before, there are about 118 million households in the country. This totals an average of about $19,152 per household. Mean income was about $60,500 in 2004 - following inflation, this would be about $71,000 today. Thus, the average effective rate on all households is 27% when factoring in all federal taxation.

Given that information, the average household under the 9-9-9 plan would be paying $6,461 in federal income tax, generating $762 billion in revenue. For the national sales tax, we need to take a look at consumer spending in the United States. The Gallup organization has it broken down nicely for us, and below are spending numbers on an annual basis:

$6.42 trillion on home improvement, furniture, etc., excluding rent/mortgage

$6.62 trillion on food and drink

$2.75 trillion on travel and leisure

$5.56 trillion on car repairs and gas

$8.83 trillion on generic shopping

$8.16 trillion on health and wellness

The only category that would possibly not be eligible for the 9-9-9 plan's national sales tax is "health and wellness", since it includes taxes on insurance plans. The total of the other categories is $30.18 trillion, taxed at 9.1%, generating $2.74 trillion in revenue. Finally, we add in the corporate tax rate. Currently, the rate is capped at 35%. Obviously, corporations find ways around this - there's no real reason to believe more corporations will pay their mandated amount. Let's assume that 33% more corporations will be willing to part with their money due to this, generating about $120 billion in revenue.

So, what do we end up with? Well, a 34% increase of revenue to about $3.6 trillion, the majority coming from the national sales tax. So what are the problems with this? I'll have to continue this post once again!

Trivia Taken Too Far

Recently, I discovered the wonder of the Slate Daily Podcasts. Although my usual interest in politics was what caused me to find the podcasts initially, but since I've been listening to the various pop culture and sports related programs as well.

The Slate sports podcast is titled "Shut Up and Listen" and it gives a very accessible viewpoint of sports, which I appreciate; sports talk radio can be pretty interesting to listen to, but the problems are various:

1) Homers annoy the hell out of me. If your sports radio show continually assesses that their team is either the stupidest or the best team when neither is clearly true, you're probably going to lose me.
2) Even though I listen regularly to Ron and Fez, whose callers aren't exactly stellar, sports radio callers (outside the occasional gem) are complete idiots.
3) The seeming unwillingness to argue both sides of a point; one-sided arguments tend to get me heated just because they're incomplete and don't tell the whole story.

That said, Shut Up and Listen is a very well-put-together show. It has the cadence of an NPR politics program, though the topic just happens to be sports. And that brings me to the purpose of this post. Every week, Shut Up and Listen presents a trivia question for listeners to ponder. Being the data-obsessed nerd I am, the question this week was of particular interest:

"What countries of the world have stadiums which can hold at least 1.5% of the population of said country?"

And off we go!

First, we need good data on the populations of the 195 countries in the world. Pretty easy, in the advent of a world with Wikipedia. Anyway, I won't list them all here, but that's my source. Countries have a wide range, with the Vatican City coming in at 800 people and Nauru at 10,000 people; on the other side of things are China and India, with 1,340,120,000 and 1,189,070,000 respectively.

I utilized Wikipedia for data on stadium capacities, as well as the World Stadiums website to find the largest capacity in the country. Because of the nature of the data (stadiums found ranged from Vanuatu's 1,500 person capacity Vaiaku Stadium to the North Korean Rungrade May Day Stadium, holding 150,000, literally a hundred-fold larger), some of it can be imprecise. I couldn't find data on a Vatican City stadium, so I threw that data away. If you can find stadiums with capacities larger than those listed, by all means let me know!

Anyway, I matched stadiums up with countries and did the number crunching. Here are some random facts before the presentation of the data.

• Predictably, the largest countries had the smallest percentages in terms of how much of the population could fit in a single stadium. With populations above one billion, India and China run up the rear when it comes to this metric; China can hold 0.006% of its population in the Guangdong Olympic Stadium, and India can hold 0.0101% of its population in its Salt Lake Stadium.
• The top ten percentages, predictably, are nations which are populated by less than 110,000 inhabitants. It's pretty easy to fit 10% of your population in a stadium if you've got 75,000 people; stadiums are expensive, but small ones aren't prohibitively so for small nations.
• The median percentage of the population that could fit in a country's largest stadium is 0.4643%.
• If you took the largest stadium from each country and pooled the space, you could fit approximately 0.1128% of the world's 6,862,077,107 people in them. The largest stadiums from each country could hold 7,740,214 people total.

And now, the top ten countries for the metric:

1. Monaco's Stade Louis II holds 18,500 people in a nation of 33,000. This means that over half of the people in Monaco could pack into the stadium; about 56%. The stadium was built during the 1980s and primarily hosts football and track and field events.
2. Nauru's Meneng Stadium holds 3,500 people, a tiny stadium on international standards. As aforementioned, Nauru is the smallest nation with an actual stadium. Approximately 35% of the country's populace can pack into the stadium, which is mostly just a big empty field. From 2001 to 2007, Australian government officials detained refugees from various countries, including Afghanistan and Iraq, in the stadium after intercepting them from crossing into New Zealand or Australia.
3. San Marino has a population of 31,794, its Stadium Olimpico seating 7,000. It holds about 22% of the population of San Marino and mainly hosts football games. It serves as the national stadium of the country.
4. A second small, island nation in the middle of the South Pacific called Palau is home to 20,000 people. Its National Stadium holds 4,000 people, or 20% of the local population. National Stadium hosts primarily football and track and field events in the city of Koror.
5. The first North American nation on the list is Grenada, a small island nation northeast of Venezuela. Its Queen's Park is the largest stadium yet mentioned in this list, holding 20,000 out of a population of 104,000, or about 19.23%. The People's Republic of China funded its construction in 2007. The stadium is used primarily for the sport of cricket.
6. Dominica's Windsor Park clocks in at 17.91% of the country's 67,000 population. The stadium holds 12,000 and hosts primarily cricket matches. Dominica is another small nation in the Caribbean, where cricket is apparently wildly popular.
7. Liechtenstein, a tiny country sandwiched between Austria and Switzerland has a population of only 35,904. Apart from being blessed with the highest per capita GDP of any nation in the world, it's the only country to be completely within the mountain range known as the Alps. Liechtenstein's Rheinpark Stadion can hold 6,127 people for its football matches, about 17.07% of the populace.
   
8. The largest country in terms of population in the top ten, Saint Vincent and the Grenadines is a group of islands in the Caribbean. Popular sports played at the 18,000-person capacity Arnos Vale Stadium include cricket and football. The stadium can hold 16.51% of the nation's 109,000 citizens.
9. Tuvalu is another nation in the South Pacific. It has roughly the same population as the aforementioned Nauru at 10,000, and is only slightly larger than Nauru at ten square miles. However, its Vaiaku Stadium is less than half the size of Nauru's with a capacity of 1,500, large enough to hold 15% of the nation's populace.
10. Finally is Seychelles, the smallest African nation in terms of population. It's a small island a bit north of Madagascar off Africa's eastern coast, and is home to about 85,000 people. Its Stade Linite holds 10,000 people, about 11.76% of the population. The Stade Linite is home to the Seychelles National Football Team.

Furthermore, the following countries come in at 1.5% of the population or more being able to fit within the single largest stadium in the respective nation:

Antigua and Barbuda (11.24%); Barbados (10.89%); Tonga (9.62%); Samoa (8.38%); Saint Kitts and Nevis (7.69%); Saint Lucia (7.47%); Brunei (7.37%); Maldives (6.96%); Andorra (4.76%); Bahrain (4.34%); Malta (4.32%); Sao Tome and Principe (3.94%); Fiji (3.51%); Suriname (3.44%); Marshall Islands (3.17%); Iceland (3.14%); Qatar (2.95%); Cyprus (2.85%); Montenegro (2.67%); Gabon (2.66%); Bahamas (2.63%); Kiribati (2.5%); Belize (2.33%); Kuwait (2.13%); Bhutan (2.12%); Trinidad and Tobago (2.01%); Luxembourg (1.99%); Guyana (1.97%); Uruguay (1.93%); Solomon Islands (1.87%); Ireland (1.84%); Micronesia (1.80%); Swaziland (1.66%); Armenia (1.58%); Cape Verde (1.56%).

Just missing the cut is New Zealand, with 1.37% of its population being able to squeeze into the 60,000-person capacity Eden Park. In total, there are 45 countries with a stadium capable of accommodating 1.5% or more of their populations.

On the other end of the spectrum, you have the predictable opposite of the countries above. Of the top ten with the largest population to capacity of largest stadium ratio, the smallest is Ethiopia, clocking in at almost 85 million people.

Now, data! I was interested, first, in how the size of the population impacted this little experiment. Obviously, it was much more likely for a small nation to build a stadium which could fit a larger percentage of its populace. This is likely due to the fact that massively large stadiums have an exponentially increasing cost and engineering complexity as they go up in size. The largest stadium I found was North Korea, with a capacity of 150,000 people. The Rungrado May Day Stadium is eight stories tall and hosts athletic events, dance performance, and even the occasional and gruesome public execution. Countries have less of a constraint when it comes to their population; land area is the biggest one, but also the ability of nations to keep themselves entirely sovereign is an important factor.

Below is a graph depicting the populations of each of the 194 included countries (in logarithmic scale) versus the capacity of their largest stadium:


Notable outliers are highlighted on the chart, along with the United States. 105 countries are above the trendline and 89 are below. Using the above equation, it can be determined which countries have particularly small largest stadiums for their size and those which have remarkably large ones. First, the top five undersized stadiums:

1. Comoros; expected capacity = 15,247, actual capacity = 2,000
2. Vanuatu; expected capacity = 10,885, actual capacity = 2,000
3. Micronesia; expected capacity = 8,396, actual capacity = 2,000
4. Equatorial Guinea; expected capacity = 15,262, actual capacity = 4,000
5. East Timor; expected capacity = 18,111, actual capacity = 5,000

And the top five oversized stadiums:

1. Monaco; expected capacity = 5,651, actual capacity = 18,500
2. North Korea; expected capacity = 48,515, actual capacity = 150,000
3. Ireland; expected capacity = 28,041, actual capacity = 82,300
4. Kuwait; expected capacity = 24,754, actual capacity = 65,000
5. Uruguay; expected capacity = 25,575, actual capacity = 65,000

And as food for thought, the average per capita GDP of the undersized stadium countries is $8,451 (median $2,521) and for the oversized stadium countries $32,048 (median $38,984). Pretty telling, actually, and logical. Rich countries have bigger stadiums!

As for population density, the top ten countries with undersized stadium countries have an average population density of 502 people per square mile (median 386.45). The oversized stadium countries have an average density of 4,653 people per square mile (median 473.8). However, if Monaco is thrown out (highest population density in the world at 39,217 per square mile), that average drops to 813. Thus, it doesn't really seem that population density and stadium size correlate.

Finally, another little graph, showing population of countries versus the percentage of that population which will fit in its largest stadium. Are we finally done with this statistical analysis? For now!


Check out my quick and dirty Excel spreadsheet action here.