The Perry Tax Plan Is Undoubtedly What America Needs

Today, as promised, it’s the Rick Perry tax plan. As Perry said when he proposed it yesterday, “My plan does not trim around the edges.”

The key points in the Perry “Cut, Balance and Grow” tax plan are:

1. Individuals would have the option to pay a 20% flat tax. They could also opt to remain in the old system, for example, (a) lower income taxpayers who get a better deal under today’s tax code, and (b) those whose personal financial planning was designed with the old system in mind.  

2. Individuals would have the right to establish retirement accounts outside the Social Security system.

3. The corporate tax rate would be reduced from 35% to 20%.

4. Taxes on dividends and capital gains would be eliminated.

5. There would be deep, but as yet unspecified, cuts in federal spending.

Perry also saves the most popular middle-class deductions - for state and local taxes, mortgage interest and charitable contributions - for those who earn less than $500,000.

“Taxes will be cut across all income groups in America, and the net benefit will be more money in Americans’ pockets with greater investment in the private economy,” Perry said to his audience of more than 200 in a small South Carolina town.

Perry is clearly courting tea party conservatives who have been reluctant to back Romney. In almost every way, he presents policies that are more conservative than those of the former Massachusetts governor. Overall, Perry’s proposal would call for much larger tax cuts and spending cuts than Romney’s proposals. It creates an even larger divide between him and Obama.  

“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,” Perry said. “Cut, Balance and Grow” strikes a major blow against the Washington-knows-best mindset.”

He dismissed the view that his plan would cause greater income inequality.

“We went through, ‘what are the ways to really give incentives to those that are going to risk their capital to create the jobs?’ Those that want to get into the class warfare and talk about, ‘oh my goodness, there are going to be some folks here who make more money out of this, or have access to more money,’ I’ll let them do that,” Perry said.

But, Perry also stepped up to the budget question, calling for a balanced-budget amendment to the Constitution and the repeal of Obamacare. Perry, like the other Republicans, calls for ending the estate tax and the repeal of a bill to reform Wall Street practices, known as the Dodd-Frank bill.

Perry’s plan makes Romney’s “trim around the edges” plan, as Perry puts it, seem more of the same old Washington heifer dust (as Perry, being Texan would probably like to add).

Perry also takes on Cain’s flat tax proposal head-on. On its face, Herman Cain’s flat tax plan is more “flat,” that is, it has fewer opt-out exceptions. And, because the individual flat tax is not optional under Cain’s proposal, those most likely to be hurt by it, primarily lower-income Americans, would suffer.

This undoubtedly makes the Perry plan more interesting as a campaign platform. For example, Cain’s plan was received very favorably until people began to consider the 9% national sales tax included in it. Americans have been saying “no” to a national sales tax for several decades, and Cain has not yet sold the idea, even to GOP voters, half of whom do not favor it, while 75% of conservatives and independents react positively to the idea of a flat tax system.   

Perry held up a single-page pocket-sized sample IRS form. That has got to get the average taxpayer’s adrenalin flowing.

Perry also called for raising the retirement age for Social Security and the Medicare benefits eligibility age, but he offered no details, saying he would work with Congress on the specifics.

“My plan balances the budget as fast as any serious plan that is being offered out there,” he said.

Perry, repeatedly attacking what he called the “federal nanny state,” said he would look to review and potentially repeal all regulations on businesses passed under the Obama administration.

“This is a change election and I offer a plan that changes the way America does business,” he said.

Amen, Governor. Now go out there and sell it to America.