* New poll underscores Perry's challenge
* His answer to Herman Cain's 9-9-9 plan
* Vows to balance the federal budget by 2020
By Steve Holland
GRAY COURT, S.C. (Reuters) - Republican Rick Perry
proposed a broad economic plan Tuesday centered on letting
Americans pay a flat 20 percent income tax rate that he hopes
will reinvigorate his fading presidential campaign.
Perry's challenge in regaining the attention of influential
conservative voters in the race to decide the Republican
presidential nominee in 2012 was underscored by a new CBS/New
York Times poll.
It said Perry stands at 6 percent, down from 12 percent
earlier this month, lagging four other contenders led by
businessman Herman Cain with 25 percent support and former
Massachusetts Governor Mitt Romney at 21 percent.
Perry's flat tax proposal, which he said would allow
Americans to file their taxes on a postcard, is his answer to
Cain's simple 9-9-9 plan and distinguishes himself from Romney,
who has said a flat tax would benefit the wealthy.
The Texas governor was laying out his "cut, balance and
grow" plan Tuesday in a speech at a South Carolina plastics
factory, where conservative voters are dominant and a state
Perry would need to win for any chance at the nomination.
Perry gave a preview of his plan in a Wall Street Journal
opinion article. The aim is to generate the economic growth to
create jobs and reduce America's 9.1 percent unemployment rate.
That is the key issue in the 2012 campaign and the reason why
Democratic President Barack Obama is considered beatable.
Perry would give Americans a choice: pay a 20 percent flat
tax or keep their current rate. To blunt criticism that a flat
tax would cut taxes on the wealthy and increase them on the
middle-class, he offered some sweeteners.
His proposal would preserve popular tax deductions for home
mortgage interest, charitable donations and state and local tax
exemptions for families earning less than $500,000 a year.
Perry is proposing the plan after consultations with Steve
Forbes, the Republican who offered a flat tax plan in 1996 when
he ran a losing race for the party's presidential nomination.
Forbes endorsed Perry on Monday.
Perry would lower the corporate tax rate to 20 percent from
from 35 percent. He would give corporations that have parked
$1.4 trillion in profits overseas hoping for tax reform at home
the opportunity to pay a discounted tax rate of 5.25 percent
temporarily to encourage swift repatriation of the money.
Companies have been lobbying Congress hard for legislation
to create a repatriation "tax holiday." Its fate may have been
hurt by recent studies finding that an earlier tax holiday
failed to create new U.S. jobs, as had been promised.
Perry said he would move the United States to a
"'territorial tax system" -- as in Hong Kong and France, for
example -- that only taxes in-country income."'
He said he would eliminate the tax on qualified dividends
and long-term capital gains to "free up the billions of dollars
Americans are sitting on to avoid taxes on the gain."
To help older Americans, he would eliminate a tax on Social
Security retirement benefits and help those who see their
benefits taxed if they continue to work and earn income in
addition to Social Security earnings.
Perry said he would also establish a goal of balancing the
federal budget by 2020 but admitted it would be hard given the
tax cuts he says are needed to re-energize economic growth.
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