Editorial: Perry's tax plan would fall flat
Republican presidential candidate Texas Gov. Rick Perry holds up his version of the tax form that American's would fill out as he outlined a broad economic proposal of a flat 20 percent income tax rate (Oct. 25, 2011) Credit: AP
If you believe the wealthy should get a massive tax cut, you want government benefits and services gutted, and you don't much care about federal deficits, Rick Perry has a tax plan for you.
The fading candidate for the Republican presidential nomination would give taxpayers a choice: Pay the existing federal income tax or opt for a 20 percent flat rate.
That would be a bonanza for the wealthiest filers, who now pay a top marginal rate up to 35 percent. Perry would also eliminate taxes on capital gains, dividends and estates, and cut the top corporate rate from 35 percent to 20 percent.
The nation badly needs a simpler, flatter tax, and Perry advances that goal by offering a bold plan. It's also a bad plan. It would blow a new hole in a federal budget already hemorrhaging red ink. But not to worry. Perry promised to cut federal spending by 25 percent as a share of the total economy by 2020. That would require drastic changes in Medicare and Medicaid and much else government does. But Washington is better at cutting taxes than cutting spending, so deficits would likely surge.
In unveiling his plan Monday, Perry waved a postcard and declared that with his plan, that's what a tax filing would look like. Maybe, but only for those who opted to pay the flat 20 percent. Nine in 10 taxpayers currently pay a lower rate. For many of them, filing on that postcard would mean higher taxes.
Perry's plan is an audacious bid to resuscitate his foundering candidacy. But it's not a realistic tax plan. hN
