Republican candidate for the 2012 U.S. presidential nomination, Gov. Rick Perry today promises to “unleash job creation, address the current economic crisis, while at the same time generating a stable source of revenue to address our record deficit and put our fiscal house in order.”
The governor of Texas made the pledge while rolling out a broad economic plan, which he’s dubbed, “Cut, Balance and Grow.” It’s built around the option for Americans to pay a flat 20 per cent income tax rate, and is considered to be a critical element of his strategy to regain front-runner status for his struggling campaign, and to answer the threat of Herman Cain’s proposed “9-9-9 plan.”
Mr. Perry’s proposed flat tax would preserve key tax exemptions for families earning less than $500,000 a year and would increase the standard deduction to $12,500 for individuals, while also eliminating tax paid on the country’s largest estates upon the death of the properties’ owners.
The governor would eliminate taxes on Social Security benefits and allow young workers to invest part of their payroll taxes into private accounts. He also called for corporate tax reform, including a one-time reduced tax rate of 5.25 percent for businesses that bring home their profits that are “parked” overseas.
Gov. Perry said:
The flat tax will unleash growth but growth's not enough. We must put a stop to this entitlement culture that risks the financial solvency of this country for future generations. I mean the red flags are alarming.
The U.S. Chamber [of Commerce] estimates this one-time tax reduction would bring more than $1 trillion in capital back to the U.S. create up to 2.9 million jobs, and increase economic output by $360 billion.
As expected, President Barack Obama’s re-election campaign has already launched its counterattack, saying Gov. Perry’s tax plan seems guided by the principle of shifting the tax burden from large corporations “onto the backs of the middle class.” No surprise there.
Flat-tax seems to be the flavour of the month among Republicans. We’ll have to wait to see how this latest effort stands up to the barrage of criticism it’s sure to receive in the coming days.