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- iHaveNet.com: Politics
by Alex M. Parker
Anti-tax, anti-Romney crowds pleased, but opt-out clause raises skepticism
In his effort to reboot his struggling presidential campaign, Texas Gov. Rick Perry
made a statement with a starkly conservative flat tax proposal. The plan would set personal income and corporate taxes at 20 percent, would eliminate the capital gains and estate tax, and would be paired with a commitment, and eventually a constitutional amendment, to bring federal spending down to 18 percentof gross domestic product. The plan was crafted with the help of magazine publisher Steve Forbes, who used a similar plan in his unsuccessful runs for the
Already, it may have succeeded by drawing a sharp contrast with his chief rival, former Massachusetts Gov. Mitt Romney, whose 59-point economic plan has been attacked for being too complicated, and for stopping short of a single-rate flat tax. Perry's plan may shore up support from the anti-tax, libertarian-leaning side of the conservative movement. "It's better than anything on the table right now," says Grover Norquist, president of Americans for Tax Reform. Norquist had been critical of businessman Herman Cain's "9-9-9" proposal, which includes a 9 percent flat income tax but would create a new national sales tax. Chris Chocola, a former Indiana representative and current president of the
But despite the support from die-hard anti-tax activists, the plan is raising questions from some conservatives.
For one thing, like Forbes' plan, it's optional.
Taxpayers could opt to keep their current rate, and whatever deductions they enjoy, rather than going into the
new plan. "It undermines the claim that he's sweeping away the very complexity of the current code," says
Alan Viard, an economist with the conservative
Even if taxpayers opt into the new system, if they make less than
The plan ensures that the government will collect less in revenue than it did before, Viard argued.
Even if it weren't optional, the new tax rates would amount to an overall tax cut at a time when the government faces gigantic deficits. But because it is optional, in a way it's more of a series of targeted tax breaks than a total tax overhaul -- those who would pay less in taxes would opt for the new system, those who would pay more would stick with the old. While that makes some activists such as Norquist happy -- he's long advocated lowering taxes as a way to eventually shrink the size of government -- Viard says it's dangerous to cut off government revenue while federal deficits continue to climb. While Perry also laid out some ideas of how to cut the federal budget, including eventually raising the eligibility age of
Despite the questions, Perry's flat tax proposal is likely just what his campaign needed, a chance to define himself as the serious conservative alternative to Romney. But he'll have to show he can master the details of complex policy before he wins over skeptics.
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Rick Perry Ups Ante With Flat Tax Plan | Politics
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