Perry Flat Tax Plan Wins Conservative Fans

Tuesday, 25 Oct 2011 12:45 PM

By Martin Gould and Michelle Lopata

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Texas Gov. Rick Perry was widely praised by conservatives on Tuesday as he issued his flat tax plan, which he hopes will revive his struggling campaign for the White House.

The plan, which reduces corporate and income taxes to 20 percent, would “immediately add trillions of dollars in new wealth to the economy,” Club for Growth President Chris Chocola said, while of Americans for Tax Reform leader Grover Norquist called it “a great step forward.”

Perry outlined his proposal, which he calls Cut, Balance and Grow, in a Wall Street Journal Op-Ed and later announced it at a news conference in Columbia, S.C. The plan is in direct contrast to those of his chief Republican rivals for the presidential nomination. It differs from businessman Herman Cain’s 9-9-9 by not including a national sales tax and from former Massachusetts Gov. Mitt Romney’s 59-point plan, which calls for tax reductions but no flat tax.

Editor's Note: Get Rick Perry's Best-Seller "Fed Up" FREE! Click Here Now.


The plan would allow taxpayers to pay at the current rates or to adopt the flat tax plan. During his speech, Perry waved a postcard saying that would be the size of the average American’s tax return as he compared it with a tax code of 72,000 pages. He claimed the plan’s very simplicity would save $483 billion in tax compliance costs.

“Each individual taxpayer will have a choice,” he said. “You can continue to pay your taxes, as well as the lawyers and accountants, or you can file on a postcard.”

Perry’s plan also eliminates the death tax and taxes on Social Security payments, while maintaining deductions for mortgage interest, charitable giving, and state and local taxes for families earning less than $500,000. It increases standard deductions to $12,500. It also gets rid of the long-tern capital gains tax.

It would give corporations a one-off opportunity to repatriate earnings from abroad, which he estimated at $1.4 trillion, with a reduced tax rate of 5.25 percent. He described that as “the kind of economic stimulus that President Obama could have achieved if he wasn’t so hell-bent on passing big government schemes that have failed American worker.”

Perry said his plan would “shut down the cottage industry of corporate tax evasion,” and offer an incentive for companies to invest once more in America.

“The flat tax will unleash growth, but growth is not enough,” Perry said in his speech. “We must put a stop to this entitlement culture that risks the financial solvency of this country for future generations.”

Every child born in America immediately owes the federal government $46,000, he said.

In his Wall Street Journal article, Perry said, “Fixing America's tax, spending and entitlement cultures will not be easy. But the status quo of byzantine taxes, loose spending and the perpetual delay of entitlement reform is a recipe for disaster.

“Cut, Balance and Grow strikes a major blow against the Washington-knows-best mind-set. It takes money from spendthrift bureaucrats and returns it to families. It puts fewer job-killing regulations on employers and more restrictions on politicians. It gives more freedom to Americans to control their own destiny. And just as importantly, the Cut, Balance and Grow plan paves the way for the job creation, balanced budgets and fiscal responsibility we need to get America working again.”

Chocola immediately hailed the proposal. “A flat tax like the one proposed by Perry would unleash years of economic growth if it is passed into law,” he said.

“Perry clearly understands that revitalizing the economy should start with a complete overhaul of a tax code that has nearly choked economic growth to death. Conservatives looking for a champion to carry the banner of a pro-growth tax reform will surely rally behind this bold proposal.”

Norquist tweeted his reaction. “TX Governor Rick Perry’s flat tax alternative is great step forward. Doesn’t create a VAT or sales tax that could grow.”
In a second tweet, Norquist added, “Perry’s flat tax has the classic lines of a Steve Jobs’ product. Seamless . . . and Steve Forbes likes it. I’ll take two.”

Forbes, who ran for president on the GOP ticket in 1996 and 2000 with a flat tax as his main platform, is an adviser to Perry and helped draw up the plan. He called it a “win-win all around” because of its simplicity.

Forbes said the time has come for a flat tax. “People want it, they hunger for it,” he told Fox News. “You saw the reaction to Herman Cain’s plan, even with the sales tax part of it. Rick Perry does not have a sales tax, which is going to make the plan even more appealing.”

“It’s going to be very exciting,” he added. “A very low rate, generous exemptions for adults and for children, make it worthwhile to invest in America again, drastically simplifying the tax code, lowering the corporate tax rate.”

Other Republican strategists were equally enthusiastic about Perry’s plan. “Team Perry is drawing that bright line distinction not only between himself and Romney, but between himself and Cain,” said Ford O’Connell, an adviser to the John McCain/Sarah Palin ticket in 2008.

“This is about winning the anti-Romney voting block and getting them to come together around one candidate.”

But the Obama administration immediately attacked Perry’s plan, saying in a campaign memo penned by policy director James Kvaal, “the most fortunate Americans would pay less while the middle class would pay a higher share.”

And Chuck Marr of the left-leaning Center on Budget and Policy Priorities predicted that people will find flaws as they examine the plan more closely. “Flat tax proposals tend to be popular on a first blush basis but fall apart once people realize what the effects are,” he said. “There’s a superficial appeal, but when it comes out that middle-class people tend to lose big, it loses its popularity.”

Editor's Note: Get Rick Perry's Best-Seller "Fed Up" FREE! Click Here Now.

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