Governor Rick Perry has unveiled his Tax and spending reform plan called "Cut, Balance and Grow" and he provides an overview at Wall Street Journal and downloadable PDF of the plan, Summary, Press Release and the Sample Tax Return (image shown to the left) which is one page. Perry's site provides an embeddable version which you will find below.From the Summary, this plan includes Instituting Individual Flat Income Tax Rate of 20% where individuals would be allowed to choose between the existing code or the flat tax system, preserving deductions for mortgage interest, charity and state and local taxes, it includes a standard deduction for individuals/dependents of $12,500 and standard exemptions and other deductions are phased out for filers with annual incomes above $500,000.
Cut, Balance and Grow eliminates taxes on Social Security benefits, tax dividends and capital gains, the death tax with no federal sales tax or value added tax.
Perry's plan also reduces the corporate income tax to 20% while eliminating corporate loop-holes and special interest tax breaks and transitions to a territorial tax system and it allows locked-up overseas capital to br brought back to the U.S. at a reduced rate of 5.25%.
The Cut, Balance and Grow plan also fixes the federal regulatory system by putting an immediate moratorium on all pending regulations, setting up a full audit of all regulations passed since 2008 (regulations that fail the audit will be repealed).
Federal regulations will automatically sunset unless renewed by Congress. Each agency will have an annual budget instituted and a searchable database with all regulations in force will be created.
Social Security reform under Perry's plan will include the preservation of benefits for current and near-term beneficiaries, provide protection to the Social Security trust fund, allow younger workers to invest in personal retirement accounts, allow state employees to opt-out of Social Security, gradually increase full retirement age to reflect gains in life expectancy and use price growth to index benefits for higher income beneficiaries.
The plan also addresses Medicare and Medicaid programs.
Last but not least, Balancing the Budget, which includes capping federal spending at 18% of the GDP to balance the budget by 2020, reducing the non-defense discretionary spending by $100 billion in the first year and demand a balanced budget amendment that does not raise taxes.
Full plan embedded below.
Cut, Balance, and Grow
Perry concludes over at WSJ:
Fixing America's tax, spending and entitlement cultures will not be easy. But the status quo of byzantine taxes, loose spending and the perpetual delay of entitlement reform is a recipe for disaster.
Cut, Balance and Grow strikes a major blow against the Washington-knows-best mindset. It takes money from spendthrift bureaucrats and returns it to families. It puts fewer job-killing regulations on employers and more restrictions on politicians. It gives more freedom to Americans to control their own destiny. And just as importantly, the Cut, Balance and Grow plan paves the way for the job creation, balanced budgets and fiscal responsibility we need to get America working again.
Conservative reactions:
The Club for Growth, a conservative economic group, praised the proposal.
Here is the Club for Growth statement:
“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.”
Grover Norquist, via Twitter states "Texas Governor Rick Perry's flat tax alternative is a great step forward. Doesn't create a VAT or sales tax that could grow" and "Perry's flat tax has the classic lines of a Steve Jobs' product. Seamless...... and Steve Forbes likes it. I'll take two."
[Update- My initial reactions while reading through the plan] This is a bold plan willing to address the harsh realities of a system that is in place which is unsustainable on many fronts.
Each of the areas, balancing the budget, Social Security, Medicare, Medicaid, tax reform and regulatory changes are issues that need to be dealt with.
Combined they would work toward the goals of balancing our budget and lowering unemployment by creating conditions favorable to job growth, creating revenue not only through the tax code but by having more workers paying in to the system as job growth commences and unemployment goes down and addressing the entitlement issue to which has been shown to be unsustainable long term if left as is.
More reactions from conservative groups are expected after everyone has had time to read through the plan.
Quick additional Note- I am only showing conservative reactions because in my personal opinion anything that addresses entitlement reform, balancing the budget and flattening tax rates will be opposed on principle by Liberals. If a plan does not include tax increases and spending increases then liberals will automatically hate it. So, it is a given that liberals will hate Perry's plan.
[Update] A few conservative pundit reactions are out, with Hot Air wondering if this could be a "game changer" and Riehl World View saying it is a "comprehensive plan worthy of significant discussion."
[Update] More conservative pundit reactions with Dan Mitchell at International Liberty grading the plan "Some Missing Homework, but a Solid B+," and Bryan Preston at PJ Tatler concluding "Rick Perry’s flat tax plan is a solid and serious effort that’s bold yet well within the GOP mainstream. It avoids gimmickry, deals with the mess that is our current tax code and introduces Social Security reform that could see to that program’s future viability. Overall it is a very pro-growth plan that rolls back much of the damage President Obama has done."
More coming as people dig into the meat and potatoes of the plan.
(Updates and corrections made to this post and sentence structure)