The long-awaited Rick Perry tax plan is out- and it ain’t half bad. Which is to say, it is more than half good. A little addition by subtraction would make it even better. Before the knives come out, Gov. Perry comes with other baggage that makes him unsuitable for moderates of either stripe, and his lack of debate preparation suggests that perhaps someone else did his homework for him on this proposal. Nevertheless, the ‘Cut, Balance and Grow’ plan makes more sense than anything else floating around presently- including 9-9-9.
The good stuff. A 20% flat tax OR the current tax regime, whichever is better for the taxpayer. All the important deductions, such as mortgage interest and charitable contributions, stll in place, plus an increase in the standard deduction to $12,500. This all applies to the $500,000 or less income club. Likewise, a flat 20% corporate tax rate with no loopholes. A return to the Al Gore ‘locked box’ Social Security concept. No more Federal raiding of the people’s piggy bank for bridges to nowhere.
The real eyebrow-raiser, however, is the mandate to limit Federal spending to 18% of GDP by 2020. If enacted tomorrow, this would represent nearly a trillion dollars lopped off the budget. All great ideas, it seems to me.
A few things Mr. Perry could delete and be stronger for it. The biggest mistake is exempting capital gains and dividends from the tax plan. Why? Once again, Warren Buffett would be largely exempt from paying taxes, as well as these ‘Wizards of Wall Street’ hedge funds and private equity clubs. He also adds an exemption from taxes on foreign earnings. Again, why? 20% is a darn fine number, and one palatable to every earner and investor. Not to mention that soon-to-be $16 trillion debt that has to be paid. Same with the temporary tax holiday of 5.25% to encourage corporate repatriation of foreign-held reserves. ‘Lower it and they will come’. No need to give the store away.
A couple of other minor quibbles. Minor, because they have no chance of happening, and are just a bone for the base. Privatizing Social Security is a bad idea. Treating Social Security like any other pension fund, a much better approach. Also, the notion of a Constitutional Balanced Budget Amendment might well have unintended consequences should a World War 3 break out.
In general, the idea to substantially reduce spending, while generating more revenue across a very broad base, encouraging domestic corporate investment, while leaving well-off alone for those who are currently just getting by, meets all the benchmarks Americans would like to see (assuming Mr. Perry embraces these humble suggestions for improvement).
Of course, now the problem is to find a social liberal with a stronger work ethic to embrace Gov. Perry’s plan. Or maybe just hire that underling who came up with it.