Perry’s tax plan falls flat

Samantha Katsounas

Early last week, presidential candidate Rick Perry debuted his new tax and spending reform plan in an effort to revitalize his floundering campaign. Advertised as straightforward, Perry’s Cut, Balance & Grow proposal is a mash-up of conservative ideology that will create unprecedented budget problems for the federal government.

Seeking to differentiate his plan from front-runner Herman Cain’s 9-9-9, Perry emphasizes a flat income tax instead of a national sales tax. Advertised as “simple,” Perry’s income tax offers Americans two choices: pay a 20-percent flat tax on income or keep your old tax rate. Not only is the plan far from simple, it will tilt the tax code drastically in favor of­­ the wealthiest Americans.

According to calculations performed by the nonprofit Tax Policy Center, “the highest-income households in every structure of family analyzed benefit from opting into the Perry plan.” Besides, this assessment only analyzes employment-based income. For wealthy Americans who earn money through capital gains, the tax figure shrinks even further. Famed billionaire Warren Buffett would pay a miniscule 0.2 percent income tax under Perry’s plan, according to the Houston Chronicle.

Perry latched onto the concept of a simplistic tax code that allows individuals “to file their taxes on a postcard.” In reality, the plan is far from effortless. Perry slams the current system for “forcing” taxpayers to hire professionals to help navigating the intricate tax code. However with Perry’s plan, taxpayers will still have to calculate whether their current rate or the new rate would be a better deal for them. Most analysts seem unable to find a way this simplifies matters, since the plan adds more layers onto the already complicated tax system.

Moreover, it seems Perry’s system will have a net effect of lower tax revenue since wealthy Americans would be the only ones receiving tax cuts. Congress has dealt with unprecedented deficits in the past few years, and this plan would compound the situation. Combined with Perry’s proposed balanced budget amendment, there is serious concern that lowering tax revenue could have catastrophic effects on the federal budget.

Perry offers up a study delivered by the Cato Institute, a libertarian think tank, as support for his plan. According to Perry and Cato, two dozen countries have successfully adopted flat tax systems. The countries in question? Economic powerhouses such as Kyrgyzstan, Slovakia, Serbia and Iraq. Bewilderingly, Perry is actually using countries with some of the most corrupt governments in the world as support for his flat tax proposal.

But Perry’s plan goes far beyond taxes: it encompasses corporate taxes, the federal regulatory system, Obamacare, social security reform, Medicare and Medicaid. Cut, Balance & Grow is an agglomeration of ideas that tries to cover all of Perry’s political bases. These proposals are often at odds with his strident stances in the past.

While Perry has famously reiterated over the past few months that Social Security is a “Ponzi scheme” and a “fraudulent system,” he now claims an avowed desire to “save Social Security” in his plan. While Perry insists in his plan that the famous 2008 TARP bailout “was wrong when it was signed into law,” he wrote a 2008 letter to Senate Majority Leader Harry Reid to “strongly urge Congress to leave partisanship at the door and pass [TARP].” While Perry is well-known for Tammany Hall-style patronage for generous donors, he decries the corporate tax code that allows “loopholes and special interest tax breaks.”

What outsiders see as capricious changes in policy, Texans recognize as true to form flip-flopping. Perry has displayed an unwavering commitment to his as-the-wind-blows methodology, as evidenced in his rise from Democratic state legislator to Republican presidential candidate.

Try as he might, Perry can’t have his cake and eat it, too. While he plans to slash taxes on the upper crust of American earners, he refuses reductions in defense spending, which has doubled in the past 10 years. The programs that will feel the pain of Perry’s plan will unquestionably include education. During the recent legislative session, Perry showed no qualms in approving draconian budget cuts for public and higher education to satisfy budget constraints. There’s no reason to expect him to change positions now. Students, take note. In Perry’s system of back-room politics, you won’t come first.

Katsounas is a finance and government sophomore.