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Title: 10 Weeks to Iowa: Perry Proposes 20% Flat Tax
Source:
Bloomberg
URL Source: http://www.bloomberg.com/news/2011- ... for-individuals-companies.html
Published: Oct 25, 2011
Author: Julie Hirschfeld Davis
Post Date: 2011-10-25 12:35:55 by Brian S
Keywords: None
Views: 1716
Comments: 1
Republican presidential candidate Rick Perry proposed a tax overhaul that would cut corporate rates and give individuals the option of paying a 20 percent flat tax on their income.
“Taxes will be cut across all income groups in America,” Perry said in a speech today at ISO Poly Films, a plastics company in Gray Court, South Carolina. “The net benefit will be more money in Americans’ pockets, with greater investment in the private economy instead of the federal government.”
The plan would lower the corporate tax rate to 20 percent from 35 percent and give multinational companies a temporary incentive to bring home foreign-earned income at a far lower rate of 5.25 percent, Perry wrote in the article.
The Texas governor, seeking to recapture momentum for his 2012 bid, is trying to harness Americans’ distaste for the complicated tax code and capitalize on enthusiasm -- evident in Herman Cain’s surge in the polls as he promotes his 9-9-9 tax plan -- for major changes.
Perry’s plan calls for balancing the budget by 2020 and capping federal spending at 18 percent of gross domestic product. He said he supports raising the Social Security retirement age, limiting benefits for future beneficiaries and letting young people invest some portion of their payroll taxes in private accounts.
10 Weeks to Iowa
Perry announced his proposed overhaul -- an attempt to distinguish himself from his Republican primary rivals -- 10 weeks before the first voting in Iowa, where the Texas governor is starting a major advertising campaign this week.
In an interview broadcast today on CNBC, Perry said he doesn’t believe the country should have a progressive tax system, adding that the idea of giving large tax cuts to the wealthy doesn’t bother him because it will create jobs.
“If that’s what comes, I’ll take that criticism. Because what I’m interested in is getting Americans working,” he said.
In the CNBC interview, Perry also continued to question the authenticity of President Barack Obama’s birth certificate, an issue raised by some social conservatives who say Obama isn’t eligible to be president. In April, Obama released his birth certificate, issued by the state of Hawaii, which shows his birthplace as Honolulu.
“It’s a good issue to keep alive,” Perry told CNBC. “It’s fun to poke him a little bit,” he said of Obama, adding that while the issue is a “great distraction,” he is “not distracted by it.”
Differences with Romney
Perry’s plan sets him apart from Mitt Romney, the former Massachusetts governor and second-time presidential candidate who is leading in Republican primary polls. Romney last month released a 59-point, 160-page jobs proposal that keeps the existing tax system while extending income tax cuts now set to expire and reducing investment taxes and the corporate rate.
Obama’s campaign criticized both men’s plans as extreme ideas that wouldn’t create jobs. “Both the Romney and Perry economic plans embrace a far-right vision for our tax code,” James Kvaal, the campaign’s policy director, wrote in a memo. “Under both plans, the most fortunate Americans would pay less while the middle class would pay a higher share.”
Perry drafted his proposal with help from Steve Forbes, who proposed a flat tax when he ran for the Republican presidential nomination in 1996 and 2000 and has endorsed the Texan’s candidacy. It also echoes a plan promoted by Dick Armey, a Texas Republican who was U.S. House majority leader from 1995 to 2003 and now leads the Tea Party-aligned group FreedomWorks.
‘Radical Simplicity’
Forbes, in an Oct. 23 interview with Fox News, said voters “love the idea of radical simplicity” in the tax code. He said that because Perry’s plan wouldn’t include a federal sales tax, it would be “more appealing” than Cain’s proposal.
Cain’s campaign said it is opening a new Internet site and starting radio advertisements on Rush Limbaugh’s show in Iowa
today. His proposal to create 9 percent income, business and sales taxes has come under criticism from Republican candidates and independent groups who say it would require middle-income earners to pay more.
A flat tax -- even an optional one -- by definition would be less progressive than the current system, where the top individual income and corporate tax rates are 35 percent. The highest earners currently pay a higher percentage of taxes while those who earn less owe a lower percentage, with the lowest earners paying no income taxes.
Taxpayers’ Choice
Perry’s proposal would let individuals continue under that system or opt for a 20 percent tax on income. It would preserve popular deductions, including those for mortgage interest and charitable contributions, and exempt $12,500 for each individual and dependent. The plan also would eliminate taxes on Social Security benefits, inheritances, dividends and long-term capital gains.
Perry’s bid for the Republican nomination surged after he entered the race Aug. 13, though he has lost momentum in recent weeks following lackluster debate performances and as Cain’s tax plan captured support from fiscal conservatives. Subscribe to *TeaParty Economics on Parade*
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pRick Perry, a dumber shade of Boooosh.
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