Governor Perry has finally announced his flat tax plan.
CBS news reported yesterday, “The tax plan put forth by Republican presidential candidate Rick Perry would mean a significant reduction in how much money the government takes in.”
Lest we forget, our government (& Universities) are the only entities that can’t do with less.
Perry’s plan is quite simple. It is an opt-in plan which taxpayers can remain in the current system or choose a 20% flat tax. Opting in is something new for Perry. He’s more of an opt-out kinda guy. But I digress.
Obviously lower income people would stand pat while the dirty rich would choose the 20% flat tax.
“That would add up to a substantial decrease in revenues”, says Ted Gayer, the co-director of the Economic Studies program and a Senior Fellow at the liberal think tank, Brookings Institution. That’s a shame. Less money for the government to waste.
Perry is maintaining a number of deductions under his flat tax plan, including deductions for home mortgage interest and donations to charity. Not a fan of that. If one is to propose a flat tax plan, why reinvent the wheel? Steve Forbes & Dick Armey had the ideal flat tax. Why not just reintroduce it.
A conservative blogger at RedState writes, “Any static score of its effect on revenues would be disastrous because it keeps all of the low and middle income revenue the same, while drastically diminishing the revenue from higher income earners. Although, the CBO wouldn’t be able to score this as a loss because the entire flat tax is optional.”
I’m stunned at this remark. Commonsense (amazing how uncommon it is) dictates it can not and should not be statically scored. Static scoring assumes the saved money would simply evaporate. That it wouldn’t be reinvested in the economy. That’s the same dopey arguement against lowering the corporate tax rate.
Many of the periphery details of the tax plan are excellent:
A 20% flat corporate tax with credits only for R&D and capital investments.
Corporations would also get a one-time repatriation rate of 5.25%, while moving towards a territorial system in the long-run that will only tax in-country income.
Elimination of Capital Gains, dividends, and death taxes.
Perry also joins some of the other candidates (except Romney) in endorsing an option for private retirement accounts.
All in all I really like the plan. It is bold & simple. I’m a bit suspect that he was merely forced to respond to Cain’s 9-9-9 plan.
Regardless of motive, it’s refreshing to see most of the candidates proposing something other than simply tinkering around the edges of the status quo.
It doesn’t need to be complex to work…..Mitt.