Photo: eschipul via flickr
Texas Gov. Rick Perry just revealed his tax plan in a column on the Wall Street Journal website.The plan implements 20 per cent flat income tax, and lowers the corporate tax rate to 20 per cent.
He says his plan would allow families to file their taxes on a postcard “saving up to $483 billion in compliance costs.”
The flat tax component is optional — allowing lower-income earners to maintain their existing lower tax rates — sidestepping a key problem with Herman Cain’s 9-9-9 plan, but not providing lower income Americans much in the way of a new benefits.
The wealthy, who will see their tax rate decrease to 20 per cent from some higher percentage, stand to gain the most from the plan. They also benefit from the elimination of the capital gains and estate taxes, neither of which have a significant effect on middle- and lower-income Americans.
The column does not reveal how Perry will pay for the lost federal income, other than promising unspecified spending cuts and a balanced budget amendment.
Here are the details:
- “The plan starts with giving Americans a choice between a new, flat tax rate of 20% or their current income tax rate. The new flat tax preserves mortgage interest, charitable and state and local tax exemptions for families earning less than $500,000 annually, and it increases the standard deduction to $12,500 for individuals and dependents.”
- Elimination of the estate tax
- Cut the corporate tax rate to 20 per cent.
- Temporarily lower corporate tax rate to 5.25 per cent to encourage repatriation.
- Transition to “territorial” tax system that only taxes in-country income.
- Eliminates the tax on Social Security benefits
- Eliminates the capital gains tax
Perry says he wants to immediately repeal the Affordable Care Act, Dodd-Frank and Section 404 of Sarbanes-Oxley. He also calls for balancing the federal budget by 2020 — by passing a balanced budget amendment to the Constitution and capping federal spending to 18 per cent of GDP.
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