Commentary Magazine


Contentions

Mixed Reviews for Perry’s Optional Flat Tax

Rick Perry just gave a red-meat-heavy speech on his “Cut, Balance and Grow” plan (which he also outlined this morning at the Wall Street Journal). But he was light on specifics. Here’s what we know about the plan so far:

  1. He’s proposing an optional flat tax of 20 percent, allowing Americans to keep their current income tax rate if they prefer.
  2. The new rate “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.”
  3. His plan abolishes the death tax.
  4. It lowers the corporate tax rate to 20 percent.
  5. Eliminates the tax on Social Security benefits.
  6. Caps federal spending at 18 percent of GDP, freezes federal wages and hiring.
  7. Allows younger workers the option of placing their Social Security contributions in private accounts.

Perry also touched on Medicare and Medicaid reform (he proposes raising the age of Medicare recipients and handing over Medicaid to the states, among other ideas). It was a good speech. Perry was articulate. The question is whether he’ll be able to make the same arguments off-the-cuff. Based on Perry’s Q&A with the New York Times this morning – in which, as Jonathan wrote, he veered off once again into birtherism while trying to sell his plan – this is definitely a concern.

As for the substance of the plan itself, there is a lot for conservatives to love. James Pethokoukis writes:

It creates a flattish consumption tax that reduces penalties on work, saving, and investment. That could add at least a half percentage point to long-term GDP growth going forward with an immediate boost from reduced business/investor/consumer uncertainty. And if it does kill the healthcare tax exclusion, that would go a long way toward creating a consumer-driven healthcare market.

But of course it also has its faults. The most obvious one at the moment is the fact that it’s “optional” – Americans can choose to keep their current income tax rate over the flat tax. Pethoukis calls this “gimmicky.” Not only that, it seems to contradict Perry’s key argument that his plan would simplify the current tax system. Adding another element to the current system could actually make it more complicated.


Join the discussion…

Are you a subscriber? Log in to comment »

Not a subscriber? Join the discussion today, subscribe to Commentary »





Welcome to Commentary Magazine.
We hope you enjoy your visit.
As a visitor to our site, you are allowed 8 free articles this month.
This is your first of 8 free articles.

If you are already a digital subscriber, log in here »

Print subscriber? For free access to the website and iPad, register here »

To subscribe, click here to see our subscription offers »

Please note this is an advertisement skip this ad
Clearly, you have a passion for ideas.
Subscribe today for unlimited digital access to the publication that shapes the minds of the people who shape our world.
Get for just
YOU HAVE READ OF 8 FREE ARTICLES THIS MONTH.
FOR JUST
YOU HAVE READ OF 8 FREE ARTICLES THIS MONTH.
FOR JUST
Welcome to Commentary Magazine.
We hope you enjoy your visit.
As a visitor, you are allowed 8 free articles.
This is your first article.
You have read of 8 free articles this month.
YOU HAVE READ 8 OF 8
FREE ARTICLES THIS MONTH.
for full access to
CommentaryMagazine.com
INCLUDES FULL ACCESS TO:
Digital subscriber?
Print subscriber? Get free access »
Call to subscribe: 1-800-829-6270
You can also subscribe
on your computer at
CommentaryMagazine.com.
LOG IN WITH YOUR
COMMENTARY MAGAZINE ID
Don't have a CommentaryMagazine.com log in?
CREATE A COMMENTARY
LOG IN ID
Enter you email address and password below. A confirmation email will be sent to the email address that you provide.