Perry flat tax plan has opponents disputing numbers

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by BRAD WATSON

WFAA

Posted on October 26, 2011 at 11:44 AM

Governor Rick Perry unveiled a sweeping economic plan Tuesday that he hopes will keep him a contender in the presidential race.

Perry says his proposal called "Cut, Balance and Grow" will free Americans from burdensome tax law.

The plan sets a flat 20 percent income tax rate, but also gives the taxpayers the option of sticking with the current tax system.

Perry wants to reform Social Security including raising the retirement age for younger workers but also allowing them to invest some payroll taxes in private investments.

He said he would lower the corporate tax rate to 20 percent from 35 percent now.

Political theater needs props as Perry showed in announcing his flat income tax plan. He pulled a single sheet of paper from his pocket saying this would the return under his plan.

"This is the size of what we're talking about right here,” said Perry. “Taxpayers will be able to fill this out and file their taxes on that."

Perry's plan would set the tax rate at 20 percent and still allow popular deductions for mortgage interest, charities and local taxes.

Leaving it “optional” left critics claiming it's not so simple.

Since Perry would end taxes on capital gains, dividends and estates, Democrats said his plan would cut taxes on the wealthy and shift the burden to the middle class which he disputed.

“Taxes will be cut across all income groups in America. And the net benefit will be more money in Americans pockets," Perry said.

He claimed he would be tough on tax breaks.
 
"My plan closes those corporate loop holes it ends the special breaks for special interests," said the Texas governor.  

Yet in response, Texas Democrats said Perry has taken no significant action as governor to end $32 billion in tax exemptions in Texas.

Perry again asserted how he wants to control spending.

"But to truly protect taxpayers, we need the extra protection of a balanced budget amendment to the United States Constitution," he said.

Critics question the effectiveness of such an amendment since Perry just signed a state budget that is technically balanced, but underfunded Medicaid $4 to $4 billion by 2013.

Lawmakers will likely draw the money from the rainy day fund.

Perry hopes for sunnier days ahead with the roll out of this second part of his economic plan that steers the campaign narrative away from his debate performances and illegal immigration.

He needs all the help he can get right now. A CBS/New York Times poll out Tuesday put Perry fifth with just six percent support. Herman Cain led the poll.

E-mail bwatson@wfaa.com

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