Rick Perry was in a terrible bind. His initial campaign boomlet had busted; his debate performances turned off millions of Republicans; and he was in danger of becoming irrelevant in the 2012 race for President. He was – and maybe still is – desperate. This is precisely the time when politicians tend to do incredibly dumb things. Perry didn’t; instead, he brought forth an economic plan that is politically doable and will be a clear benefit to the country (even if parts of it are rather opaque).
Today, Perry will put forth an economic plan outlined in his Wall Street Journal op-ed. He proposes a nearly-flat 20% income tax rate. I say “nearly” because personal exemptions go up to $12,500, and charitable, home-mortgage, and state/local tax deductions are still in place. Personally, I could have really done without the last one (it is a back-door encouragement to government growth at the state and local levels). For a family of four, income tax is absolute zero. Corporate tax rates would also be 20% (after a one-year 5.25% temporary rate to encourage firms to reshift profits here – not sure that wil matter much, but the permanent reduction is essential).
Perry is now the only candidate other than Herman Cain to present a specific tax plan, and Perry’s has several advantages. For starters, Perry’s plan does not include a value-added tax, a horrific silent tax that governments in Europe have used as unseen ATMs for decades. More importantly, Perry doesn’t strain for a revenue-neutral plan like Cain does; he openly calls it a tax cut, and admits additional spending cuts will be needed to balance the budget in 2020.
Sadly, Perry presents no details as to how will bring spending down in nine years (he wants it to be 18% of GDP) – although no one besides Ron Paul is willing to be specific about that.
All in all, though, it is probably the best plan we’ve seen for providing the economic growth that uniquely comes with tax reductions, while avoiding future tax increases that the Cain plan practically guarantees.