Governor Rick Perry unveiled his 20% flat tax and spending plan tonight. The plan will give individuals the option of paying a 20% flat-rate income tax. It will also cap federal spending at 18% of GDP. Another selling point – the simple 20% flat tax will allow Americans to file their taxes on a postcard, saving up to $483 billion in compliance costs.
Steve Forbes was impressed. He endorsed the plan on Monday.
The National Journal reported:
Republican presidential candidate Rick Perry unveiled a sweeping economic agenda Monday, highlighted by a plan to level a voluntary 20 percent “flat tax” on all taxpayers who will accept it in place of what they’re paying now.
The plan, outlined in a Wall Street Journal op-ed column a day before the Texas governor was set to announce it in South Carolina, also calls for capping federal spending at 18 percent of the country’s GDP while allowing younger earners to privatize their Social Security accounts — a controversial proposal that echoes President George W. Bush’s failed 2005 attempt to overhaul the retirement program.
But the most significant feature of Perry’s plan is his call for a flat tax rate of 20 percent. Taxpayers who don’t want to pay a 20 percent flat income tax, he said, can keep their current rate.Current marginal income tax rates range from 10 percent to 35 percent, depending on taxpayers’ income.
Perry offers several proposals that appear designed to sweeten the offer — and to counter criticism that the flat tax is regressive, taking a proportionally bigger bite from smaller incomes. His plan would preserve popular deductions for mortgage interest and donations to charity for households earning less than $500,000 a year. It would increase the standard deduction to $12,500.
But Perry would eliminate other tax breaks. He argues that a streamed-down tax code (so simple, he says taxpayers can file on a postcard), along with spending cuts and entitlement changes, will stimulate the economy.