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RonPaulCult
10-27-2011, 11:14 AM
I took the time to read Rick Perry's new tax plan. And when I say "took the time" I mean I drank a whole pot of coffee and stayed up all night reading it....because that's how long the thing is!

To save you (some) time, I'm going to give a summary of what's in it. Then, in case you care, I'll give you my opinion of the plan.

His lengthy essay begins with a long explanation of our current complicated tax system, and how much it costs us all to file our taxes. This goes on for about 10 pages and it's a snooze fest. Then he starts to get into details:

Rick Perry wants to throw out the current income tax system, and replace it with a 20% flat tax

He claims this will be better because we won't have to spend money at H&R Block. He claims filing can be done with a postcard under his plan. It's THAT easy!

But wait: The 20% flat tax will be optional

So if you like the current tax system, you can continue to pay those taxes. Under the current income tax system, a lot of people pay little to no taxes. So I think people MIGHT want to go with that one, rather than pay 20% flat on most if not all of their income. At the same time, those paying 35% just might "opt" for the 20% plan. You think?

There will be a "generous" deduction of $12,500 for individuals and their dependents

So Kate plus 8 is gonna get a huge tax break.

"the new optional flat tax system will also include deductions for mortgage interest, charitable contributions, and state and local taxes."

Wow...this is all really going to fit on a postcard? Get out! No seriously, get out of this race Rick Perry (I kid)

No income tax on social security payments

It's an obvious ploy to win elderly votes, but it's long overdue so good on him for including it.

No federal sales tax or VAT

Which we don't have at the moment anyway, so this is just a cheap shot against Cain. I enjoy cheap shots so again well done.

Eliminate dividends and capital gains taxes

Another huge selling point for the average conservative. Seems like a plan aimed at pleasing everybody.

Eliminate the death tax

Ok, confirmed: a plan that's trying to please everybody in the Republican party.

Eliminate Corporate tax loop-holes

Did I say everybody? Maybe not GE. This is the only part of the plan that would increase (or replace) government revenue that I can see.

Reduce Corporate tax rates to 20%

Rick Perry seems to contradict himself. He keeps saying that corporations have the highest corporate tax rate in the world, but elsewhere he mentions that corporations avoid paying most and sometimes all of their taxes. Which one is it? I'm all in favor of closing loopholes and creating tax equality for all businesses....but it's a little disingenuous to suggest that corporations are overtaxed while at the same time beating up on them for not paying enough. Is he raising their taxes or lowering their taxes?

Transition to a territorial tax system

Perry wants to make sure that companies are only taxed once for their profits overseas, which usually means being taxed by the country they profit in. Then when they bring the money back to the states, they won't be taxed for it. This part of his plan would be very controversial.

Allow "locked-up" overseas capital to come back to our shores at a reduced tax rate

Similar to the territorial tax system, this would address money that is "on the sidelines" overseas right now, so to speak. Perry wants to tax the money, but to tax it at a lower rate in order to immediately stimulate the economy. Perry claims that going forward such money wouldn't be taxed at all. GE is happy again!

He then goes on to talk about reform for things like social security, medicare and regulations. I will perhaps break that down in another post. Then we get to his budget:

Rick Perry wants to balance the budget by 2020

Ok, that's a little ways off, but I'll take it. So how are you going to do that Gov. Perry?

Pass a balanced budget amendment and cap spending at 18% of GDP

A balanced budget amendment would be GREAT, but amendments take quite a bit of time. Capping spending is a good idea too, and it's nice that' he's throwing a number out there, but he's really thin on details about what he'd cut.

Reduce Non-Defense Discretionary Spending by $100 Billion in the First Year

That's all you've got? 100 Billion? He doesn't even mention which programs he'd cut, other then saying he'd cut half the budget of the department of education (not even the whole thing). In comparison, Ron Paul has suggested 1 trillion in spending cuts his first year as President, and he gave a very detailed breakdown of what those cuts would be. Rick Perry only matches 10% of those cuts, and without specifics.

No More Bailouts

He ends this VERY long essay with a pledge to not bailout anybody. It's good to see, but I recall him writing a letter in support of TARP at the time of its passage....when many of us were calling congress asking them not to pass TARP. Rick Perry was on the wrong side of the bailouts then, and one can only wonder if you can trust him to be on the correct side in the future.

My Take


Rick Perry is just a politician politicking. He wants to lower taxes for everybody. But he is calling for massive tax cuts for the rich.

He is allowing the poor to continue to pay little income tax (which is fine by me) but only if they stick with the current system. Only the rich will get to send in their (heavily reduced) tax filings on a postcard. Those who are less off will have to still use the complicated forms. And will they understand that they will pay less by doing it the old way? The poor are usually the ones with the fewest resources. Seems odd that the rich, who likely have accountants anyway, are the only ones that get to file with a postcard.

But much more importantly, what would all of this tax cutting do to our debt? Sure Perry calls for a balanced budget. That's great, he can call for Friday to be part of the weekend also. Saying it doesn't make it happen. If the government is taking in far less revenue, and you are unwilling to make drastic cuts, not only will our debt problem not get fixed it will get WAY worse. Perry just wants to promise lower taxes and, typical politician, pass the debt burden on to a future generations.

The Bush tax cuts were wrong because they were financed by debt. I am ALL for cutting taxes, but ONLY if you find a way to pay for it first. Washington has a spending problem, and as much as I hate taxes, you have to make spending your number one priority. Otherwise, our country will collapse and the tax rate won't matter much any longer because we'll all be jobless.

I know Rick Perry is a second tier candidate at this point anyway, but what do you guys think? Is this the plan that can save America? :toady:

ShaneEnochs
10-27-2011, 12:12 PM
Hot damn, RPC, +1. Nice overview.

Wouldn't the territorial tax thing be an incentive for corporations to ship jobs overseas?

JorgeStevenson
10-27-2011, 12:27 PM
THE fundamental problem with his proposal, IMO:

He claims that the optional flat tax will reduce the hassle & cost of compiling your tax return. However, in order to determine which of the two tax systems gives you the lowest taxes, you will have to compute your income tax payable under both schemes and then compare them. For example, how will I know that his system will save me money unless I compute my tax payable under both the old system and his new system? Since I will have to compute both tax amounts, this only increases the hassle of filing taxes.

And just an aside, there's no way that all fits on a post-card. Would all of this fit on a post-card?

W-2 Wages
Dividend Income
Capital Gains
Social Security Income
Mortgage Interest Paid
State and Local Taxes Paid
Charitable Contributions
# of Dependents

^ I believe that would be all of the information required on the "postcard". The postcard would also need directions on where to find the information and how to calculate the amounts. It would have to be a pretty lengthy postcard.

RonPaulCult
10-27-2011, 12:30 PM
Hot damn, RPC, +1. Nice overview.

Wouldn't the territorial tax thing be an incentive for corporations to ship jobs overseas?

Exactly right, and that's why I said it would be very controversial.

RonPaulCult
10-27-2011, 12:33 PM
THE fundamental problem with his proposal, IMO:

He claims that the optional flat tax will reduce the hassle & cost of compiling your tax return. However, in order to determine which of the two tax systems gives you the lowest taxes, you will have to compute your income tax payable under both schemes and then compare them. For example, how will I know that his system will save me money unless I compute my tax payable under both the old system and his new system? Since I will have to compute both tax amounts, this only increases the hassle of filing taxes.

And just an aside, there's no way that all fits on a post-card. Would all of this fit on a post-card?

W-2 Wages
Dividend Income
Capital Gains
Social Security Income
Mortgage Interest Paid
State and Local Taxes Paid
Charitable Contributions
# of Dependents

^ I believe that would be all of the information required on the "postcard". The postcard would also need directions on where to find the information and how to calculate the amounts. It would have to be a pretty lengthy postcard.

As I said in my post, if you are paying well above 20% as it is, you KNOW you will want the new tax plan. But those in the middle will have to compute both rates....so one way or another you will have to either go through the old tax laws yourself or hire somebody. It's a pretty foolish plan. I'm just a guy on a computer and I can figure it out, why can't team Perry figure this out?

And you are absolutely right, there's not a chance in hell you can fit all of those things on a postcard. It could be a one page form though.