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Struggling Perry Proposes Flat Tax and Spending Plan

Photo by Ben Philpott, KUT News

Gov. Rick Perry, struggling in the polls as he pursues the 2012 Republican presidential nomination, released ataxand spending reform plan today aimed at luring away business-minded voters from Mitt Romney and Tea Party fiscal conservatives from Herman Cain — and convincing a skeptical public that he’s got the policy chops to be a serious contender against President Barack Obama.

At a plastics plant in rural South Carolina, on the same morning a new New York Times/CBS News presidential poll put him in fifth place with just 6 percent of the vote, Perry formally unveiled his much-anticipated “Cut, Balance and Grow” plan with its linchpin, an optional flat tax of 20 percent that Americans could choose over the current progressive income tax system.

“Taxes will be cut across all income groups in America,” Perry said. “…It’s the kind of economic stimulus that President Obama could’ve achieved if he wasn’t so hell bent on passing big government schemes.”

Perry’s tax proposal, which he says would allow “Americans to file their taxes on a postcard,” would maintain exemptions for families earning under $500,000 a year, and increase the standard deduction to $12,500 per person. It would abolish the estate tax, the capital gains tax and end the tax on Social Security benefits. And it would lower taxes for businesses — designed, Perry said, to give them the confidence and the resources to create more jobs and contribute to economic growth — while eliminating corporate loopholes.

It would also have to be approved by Congress, which economists and political analysts say is unlikely, given the reality that flat taxes tend to hit the middle class hardest and the rejection of previous, similar tax proposals.


“In the past, the virtue of the seeming simplicity of a common tax rate for all has met formidable resistance when the burdens of such a plan are estimated,” said RiceUniversitypolitical science professor Paul Brace.

Perry’s spending plan calls for balancing the federal budget within eight years. His proposal would cap spending at 18 percent of the gross domestic product, freeze federal civilian hiring and salaries, and ban earmarks and any future bailouts. He also called for raising the eligibility age for both Medicare and Social Security to save money.

“America is under a crushing burden of debt. And the president simply offers larger deficits and the politics of class warfare,” Perry said.

On the subject of Social Security, Perry laid out an initiative that would let young Americans establish personal retirement accounts for their contributions, and allow local and state governments to opt out of the federal program in lieu of their own, citing examples in Texas. And he suggested Medicare reforms such as giving patients greater flexibility to choose coverage levels, and better tackling waste and fraud.

Republican strategists have called Perry’s plan a shrewd political move, one that could draw tax reform enthusiasts away from Cain’s 9-9-9 plan, and provide an easy-to-understand alternative to Romney’s 59-point economic plan. (In his speech, Perry took a veiled jab at these other candidates, suggesting they were hawking “microwave plans with warmed over ingredients.”) And he has inspired confidence by designing his plan with the guidance of publishing magnate Steve Forbes, who ran for president in 1996 and 2000 on a flat tax platform.

“It is time to pass a tax that is flat and fair,” Perry said, “and that frees our employers and our people to invest and grown and prosper.”

But opponents suggest the cuts under his plan would be staggering — and borderline impossible to get through Congress. 

Emily Ramshaw investigates state agencies and covers social services for KUT's political reporting partner, the Texas Tribune. Previously, she spent six years reporting for The Dallas Morning News, first in Dallas, then in Austin. In April 2009 she was named Star Reporter of the Year by the Texas Associated Press Managing Editors and the Headliners Foundation of Texas. Originally from the Washington, D.C. area, she received a bachelor's degree from the Medill School of Journalism at Northwestern University.
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