On Tuesday I will announce my “Cut, Balance and Grow” plan to scrap the current tax code, lower and simplify tax rates, cut spending and balance the federal budget, reform entitlements, and grow jobs and economic opportunity.
The plan starts with giving Americans a choice between a new, flat tax rate of 20% or their current income tax rate. The new flat tax 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.
This simple 20% flat tax will allow Americans to file their taxes on a postcard, saving up to $483 billion in compliance costs. By eliminating the dozens of carve-outs that make the current code so incomprehensible, we will renew incentives for entrepreneurial risk-taking and investment that creates jobs, inspires Americans to work hard and forms the foundation of a strong economy. My plan also abolishes the death tax once and for all, providing needed certainty to American family farms and small businesses.
Corporate taxes drop from 35 percent down to 20…
My plan restores American competitiveness in the global marketplace and provides strong incentives for U.S.-based employers to build new factories and create thousands of jobs here at home.
First, we will lower the corporate tax rate to 20%—dropping it from the second highest in the developed world to a rate on par with our global competitors. Second, we will encourage the swift repatriation of some of the $1.4 trillion estimated to be parked overseas by temporarily lowering the rate to 5.25%. And third, we will transition to a “territorial tax system”—as seen in Hong Kong and France, for example—that only taxes in-country income.
The mind-boggling complexity of the current tax code helps large corporations with lawyers and accountants devise the best tax-avoidance strategies money can buy. That is why Cut, Balance and Grow also phases out corporate loopholes and special-interest tax breaks to provide a level playing field for employers of all sizes.
Other highlights include zero taxes on Social Security income, which ought to give Perry some leeway with older folks to continue criticizing the program, private account options for younger workers to opt out of Social Security and building a firewall between Social Security taxes and Congress so what comes in can’t be spent like it currently is.
Perry also gets rid of taxes on long-term capital gains and some dividend income. And his plan calls for a balanced budget by 2020, along with a cap on spending of 18 percent of GDP and a Balanced Budget Amendment. He’s looking for a salary freeze for federal employees until the budget is balanced, as well as a hiring freeze for civilian employees, and a moratorium on new federal regulations as well as a complete review of all of Obama’s regulatory moves with an idea toward throwing out as many of them as possible.
And he wants to get rid of Obamacare, Dodd-Frank and Section 404 of Sarbanes-Oxley – the part which talks about financial reporting in quarterly corporate reports and which has been held up for years as one of the most onerous and wasteful regulatory burdens in all of federal law.
The whole thing sounds terrific. It’s an aggressive presentation of stuff business, Republicans and conservatives have been pining for. This is the Rick Perry folks wanted to see and didn’t in the debates – the guy who shows he’s serious when he says his goal is to make Washington as inconsequential in American life as possible.
Not the guy who lights into Mitt Romney about Mexicans on his lawn.
Mitt Romney can’t touch this economic/tax plan. Romney put out a 59-point program which did little other than tweak around the edges of economic and fiscal policy. What Perry needs to do with this program is challenge Romney to match it – and when he won’t, rightly point out that Mitt Romney is for leaving things as they are rather than try for reform.
Perry needs to put himself forward as the reform candidate, and the policy he’s put forward in the last two weeks makes him credible in that regard. If he can do that, he’ll rectify a GOP failure going back to 2008. That year, the McCain campaign failed to sell itself as a reform candidacy when reform was what the American people wanted. And because McCain failed, Obama was able to grasp that mantle. Obama wasn’t about reforming the system, he was about destroying it.
We need to restore and reform the America that has worked for more than 200 years. Simple, unburdensome and unambitious government which allows individuals to pursue their dreams in as uninhibited a fashion as possible.
Perry has the most aggressive program to do that. Now he’s got to sell it.
“Rick Perry’s plan for tax reform would be massively pro-growth,” said Club for Growth President Chris Chocola. “A Flat Tax like the one proposed by Perry would unleash years of economic growth if it is passed into law. Furthermore, eliminating the tax on dividends and capital gains would immediately add trillions of dollars in new wealth to the economy, benefiting all Americans. Perry clearly understands that revitalizing the economy should start with a complete overhaul of a tax code that has nearly choked economic growth to death. Conservatives looking for a champion to carry the banner of a pro-growth tax reform will surely rally behind this bold proposal.”
“I continue to be disappointed that Governor Romney has yet to embrace a flat or fair tax,” added Club for Growth President Chris Chocola. “He would be wise to avoid using class warfare when comparing his current proposals to those of Governor Perry or Herman Cain. The Club for Growth is looking for bold leadership on tax reform from the Republican nominee – not demagoguery or platitudes.”