Rick Perry's Tax Plan Would Raise $4.7 Trillion Or $1.7 Trillion Less Than CBO Baseline

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The Rick Perry presidential campaign has sent me its revenue analysis of its new flat tax plan, an analysis performed by economic research firm John Dunham and Associates. Using static analysis, the Perry Plan would raise $23.8 trillion from 2014-2020, or $4.7 trillion less than the CBO baseline of $28.5 trillion over that span. Using dynamic analysis that assumes growth effects from the redesigned tax code, the Perry Plan would raise $26.8 trillion, or $1.7 trillion less than CBO baseline.

What any budget deficits or surpluses would look like would depend on how effectively and rapidly a President Perry would cut spending. As he wrote in a Wall Street Journal op-ed:

Under my plan, we will establish a clear goal of balancing the budget by 2020. It will be an extremely difficult task exacerbated by the current economic crisis and our need for significant tax cuts to spur growth. But that growth is what will get us to balance, if we are willing to make the hard decisions of cutting. We should start moving toward fiscal responsibility by capping federal spending at 18% of our gross domestic product, banning earmarks and future bailouts, and passing a Balanced Budget Amendment to the Constitution.

Here is how consultants JDA describe the revenue impact of the Perry tax plan:

John Dunham and Associates (JDA) was asked to review a series of tax proposals for RickPerry.org, Inc. to determine how they would impact federal tax revenues over the period from 2012 through 2020, how they would impact the distribution of personal income tax liabilities by income group and how they would impact overall GDP growth.Overall, based on the type of static analysis generally used by government tax estimators, JDA found that the tax plan would generate $2.781 trillion in federal income in 2014 – the first year that it would be assumed to go into effect and as much as $5.138 trillion by 2020. The revenues in 2020 would be equal to approximately 19.5 per cent of GDP. Based on a dynamic tax analysis, revenues would be $406.8 billion higher than those currently assumed in the Congressional Budget Office’s forecasts and will equal approximately 19.5 per cent of the forecast GDP, under a static analysis, revenues would be about $588.9 billion lower, and equal about 18.1 per cent of GDP.

In other words, the numbers look better the further out you go as the Perry Economy far outpaces the CBO Economy long term. And even under the static score, revenues return to their long-term average.

Or do the maths yourself. First, here is the CBO baseline:

Next here is the Perry Plan revenue estimates using static scoring:

Finally, here is the Perry Plan using dynamic scoring:

This post originally appeared on the American Enterprise Institute.

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