Monday, October 24, in a Wall Street Journal op-ed column, Rick Perry, Republican presidential hopeful, announced and summarized the high points of his flat tax plan.
Perry’s “Cut, Balance and Grow” tag may not be quite as catchy as Herman Cain’s “9-9-9″ but it perhaps is a meatier name for a meatier flat tax plan — one, that most economic and political analysts agree has raised the GOP presidential primary stakes a bit higher. Perry touts the 20% flat tax plan as so simple it ” will allow Americans to file their taxes on a postcard”.
In Perry’s ” Cut, Balance and Grow” plan – so simple for individuals to file on a postcard, it appears that all they would need to know about the plan is that it
- Preserves mortgage interest, charitable and state and local tax exemptions for families earning less than $500,000 annually
- Increases standard deductions to $12,500 for individuals and dependents
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Providing “certainty” is in Perry’s opinion, the best part of the plan – and it’s that “certainty” that Perry is counting on to restore “American competitiveness in the global marketplace and provides strong incentives for U.S.-based employers to build new factories and create thousands of jobs here at home.”
There’s lots of other plums in the flat tax plan, including choice. If a taxpayer would rather stick with the old plan, so be it. Also the plan would
- to preserve benefits for current and near-term Social Security beneficiaries, a permanently stop on politicians from raiding the program’s trust fund – modeled after the Highway Trust fund
- abolish the death tax
- lower the corporate tax rate to 20%
- encourage the swift repatriation of some of the $1.4 trillion estimated to be parked overseas by temporarily lowering the rate to 5.25%
- transition to a “territorial tax system”
- eliminate the tax on Social Security benefits
- eliminate the tax on qualified dividends and long-term capital gains
In addition Perry suggests that to make the tax reforms meaningful, controlling federal spending would be a priority. To do that, Perry proposes that caps on federal spending amounting to 18% of our gross domestic product, a ban on earmarks and future bailouts, and adding a Balanced Budget Amendment to the Constitution, plus a freeze on federal civilian hiring and salaries until the budget is balanced.
Perry would go after federal regulations with an an immediate moratorium on all pending federal regulations and a close look in the form of a full audit of any and all regulations passed since 2008 to determine if they are needed and the positive or negative impact on job creation. Perry maintains that “ObamaCare, Dodd-Frank and Section 404 of Sarbanes-Oxley must be quickly repealed and, if necessary, replaced by market-oriented, common-sense measures.”
This is just a bit of the plan that Forbes promised would be “mouth-watering.” Once analysts have dug in, America will most certainly learn more.