Rick Perry’s Fix: 20% Flat Tax, Cap Spending at 18% of GDP

Texas Gov. Rick Perry tonight, in an op-ed for the Wall Street Journal,  previewed his tax and spending plan, officially called the  “cut, balance and grow” plan, which aims to revamp the tax code, balance the budget, reform entitlement programs and create jobs.

“The folks in Washington might not like to hear it, but the plain truth is the U.S. government spends too much. Taxes are too high, too complex,  and too riddled with special interest loopholes. And our expensive entitlement system is unsustainable in the long run,” Perry wrote in the Wall Street Journal.

“Without significant change quickly, our nation will go the way of some in Europe: mired in debt and unable to pay our bills. President Obama and many in Washington seem unable or unwilling to tackle these issues, either out of fear of alienating the left or because they want Americans to be dependent on big government.”

The plan, which Perry will officially unveil Tuesday in Gray Court, S.C., proposes an optional 20 percent  flat tax rate, allowing taxpayers to submit their taxes on a postcard.

“The plan starts with giving Americans a choice between a new, flat tax rate of 20 percent or their current income tax rate,” Perry writes. “The new flat tax preserves mortgage interest, charitable and state and local tax exemptions for families earning less than $500,000 annually, and it increases the standard deduction to $12,500 for individuals and dependents.”

The plan also drops the corporate tax rate to 20 percent and will temporarily lower the rate to 5.25 percent to promote companies working overseas to move to the U.S. along with implementing a “territorial tax system,” which will  tax in-country income.

The plan will eliminate the death tax and end taxes on Social Security, which would help an estimated 17 million Americans receiving benefits today. It would also cut taxes on qualified dividends and long-term capital gains.

Perry sets a goal to balance the budget by 2020 by capping federal spending at 18 percent of GDP, banning earmarks and future bailouts and passing a balanced budget amendment.

Until the budget is balanced, Perry’s plan would freeze federal civilian hiring and spending, and place a moratorium on all pending federal regulations, along with auditing any regulations, instituted since 2008.

Perry promises the repeal of President Obama’s health care plan, Dodd-Frank and Sarbonnes Oxley.

On entitlement reform, Perry says his plan will stop the “raiding” of the Social Security Trust Fund and allow younger generations to set up personal retirement accounts.

“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,” Perry wrote.

“Cut, balance and grow strikes a major blow against the Washington-knows-best mind-set. 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.”