How flat will Rick Perry's flat tax be?
Rick Perry is going to propose a flat tax plan soon. He’s said it’s going to be 'flatter and fairer' than Herman Cain’s signature '9-9-9' proposal, which has been hammered by his rivals.
Rick Perry is going to propose a new flat rate income tax system sometime soon. He’s said it’s going to be “flatter and fairer” than Herman Cain’s signature “9-9-9” proposal. So just how flat is it going to be?Skip to next paragraph
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We ask that question because Mr. Perry’s plan, depending on its details, could be open to some of the same criticisms that GOP rivals have leveled at Cain’s triple 9 strategy.
The current income tax is levied in a stair-step of increasing rates the higher one’s income rises. A true flat tax, which would tax all income at one rate, thus would lower taxes for the wealthy and likely raise them for the poor and some percentage of the middle class, if it is to bring in anything close to the same amount of money produced by today’s system.
Rick Santorum, among others, hammered at this aspect of a flat tax in this week’s CNN debate. Speaking of Cain’s”9-9-9”, Santorum said, “I love his boldness ... but the fact of the matter is, reports are now out that 84 percent of Americans would pay more under his plan ... we’re talking about major increases in taxes on people”.
Cain’s already tweaking his proposal, carving out exemptions for those near the poverty line in order to soften what outside experts judge to be its regressive nature. Can Perry avoid such a retreat?
One of his economic advisors says he can. “People’s mouths will water” when they see the details of the Perry flat tax, said businessman Steve Forbes, who’s working with the Perry campaign on this matter.
Mr. Forbes himself ran for the GOP presidential nomination on a flat tax platform in 1996 and 2000. A look back at the Forbes plan might thus give a hint of what to expect from the current Texas governor.
In 1996, for instance, Forbes called for a flat 17 percent tax rate on all income. This was not a complete flat tax proposal, however, as it also included relatively generous income exemptions for individuals and children.
“A family of four would pay no taxes on the first $36,000 of income”, wrote the Forbes campaign at the time.
Perry’s proposal likely will contain a similar feature to soften its effects at lower income levels.