{"id":23988,"date":"2011-10-25T16:02:04","date_gmt":"2011-10-25T21:02:04","guid":{"rendered":"http:\/\/www.shotinthedark.info\/wp\/?p=23988"},"modified":"2011-10-25T16:02:04","modified_gmt":"2011-10-25T21:02:04","slug":"the-world-tax-is-flat","status":"publish","type":"post","link":"http:\/\/www.shotinthedark.info\/wp\/?p=23988","title":{"rendered":"The World<\/del> Tax is Flat"},"content":{"rendered":"
\"\"

Ask yourself, tax code, do you feel lucky? Do ya, punk?<\/p><\/div>\n

\u00a0Rick Perry stabs the tax system in the heart.\u00a0 But under the plan, is it dead or simply pining for the fjords?
\n<\/em><\/p>\n

Steve Forbes must feel like he’s stepped into a time machine.<\/p>\n

The 1996 & 2000 GOP presidential candidate briefly electrified the denizens of political wonkdom with his conception of a national flat tax to simplify – and eliminate – the current overcomplicated tax code over 15 years ago.\u00a0 Forbes’ idea of broadening the tax base while reducing the individual tax burden proved a temporary hit – too much of one as most of his 1996 rivals embraced similar policies.\u00a0 Unfortunately for flat tax advocates, the only candidate who didn’t rush towards the concept was nominee Bob Dole, and since then the tax as languished as more theory than practice despite its success in many former Soviet bloc countries<\/a>.<\/p>\n

That is until now, as Texas Governor Rick Perry has revived the concept, winning Forbes’ praise<\/a> and liberal scorn<\/a>.\u00a0 The headlines have screamed about Perry’s new tax rate of 20%, but in most reports, the lead has been buried<\/a>:<\/p>\n

\n

\u201cThe plan starts with giving Americans a choice between a new, flat tax rate of 20 percent\u00a0or their current income tax rate,\u201d Perry writes. \u201cThe 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.\u201d<\/p>\n

 <\/p>\n

The plan also drops the corporate tax rate to 20 percent and will temporarily lower the rate to 5.25 percent<\/strong>\u00a0to promote companies working overseas to move to the U.S. along with implementing a \u201cterritorial tax system,\u201d which will\u00a0 tax in-country income.<\/p>\n

 <\/p>\n

The plan will eliminate the death tax and end taxes on Social Security,\u00a0which would help\u00a0an estimated 17 million Americans receiving benefits today. It\u00a0would also cut taxes on qualified dividends and long-term capital gains.<\/p>\n<\/blockquote>\n

The drop in corporate tax rate would put the U.S. as the lowest in the world (among major competitors<\/a>; there are a number of nations with no corporate taxes).\u00a0 And with most foreign economies unable or unwilling to respond in-kind with similar corporate tax rate cuts, the U.S. could be looking at an immediate repatriation of up to $1.4 trillion<\/a> with the addition of a “territorial tax.”\u00a0 Does that mean an immediate increase in jobs?\u00a0 Not exactly, but a similar “repatriation holiday” for overseas corporations in 2004 spurred massive investments in capital and employment.<\/p>\n

Lost in the corporate tax discussion has been Perry’s proposal to cap federal spending to 18% of GDP, or what would be roughly $2.54 trillion<\/a>.\u00a0 That’s under the projected 2012 revenues of $2.627 trillion and significantly under the Obama adminstration’s desired $3.729 trillion of spending<\/a>.\u00a0 Perry is obviously expecting that projected $1.4 trillion to soften the blow as increased income would (hopefully) spur GDP growth, raising Perry’s 18% beyond projected 2012 revenue levels.<\/p>\n

The chief compliants from the right<\/a>, much like with Herman Cain’s “999” plan, are that Perry’s flat tax doesn’t go far enough.\u00a0 Indeed, both leading economic fixes from the GOP field disembowel the current tax system but keep it wrapped together in some fiscal Eraserhead<\/a> policy nightmare.\u00a0 Both Cain and Perry’s proposals have foreign models to work from – Cain’s VATesque vision which has hindered Europe; Perry’s opt-out Hong Kong-like system<\/a> which has worked well despite the complication of individuals being potentially able to switch back-and-forth from flat tax to the current system year to year.<\/p>\n

Ultimately, Perry’s flat tax needs to be seen as the beginning of a new policy discussion, rather than as a destination.\u00a0 A total overhaul of the tax code, while popular in spirit, likely polls poorly when the roughly 47% of Americans who don’t pay federal taxes figure out they might be forced to actually contribute to the system.\u00a0 As proposed, few Americans will find themselves benefiting from the policy<\/a>, but I think critics are thinking too short term and too little on the potential corporate effects of the plan.<\/p>\n","protected":false},"excerpt":{"rendered":"

\u00a0Rick Perry stabs the tax system in the heart.\u00a0 But under the plan, is it dead or simply pining for the fjords? Steve Forbes must feel like he’s stepped into a time machine. The 1996 & 2000 GOP presidential candidate briefly electrified the denizens of political wonkdom with his conception of a national flat tax […]<\/p>\n","protected":false},"author":425,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[56,68,16,105,13,123,74],"tags":[],"class_list":["post-23988","post","type-post","status-publish","format-standard","hentry","category-campaign-12","category-capitalism-v-socialism","category-conservatism","category-first-ringer","category-republicans","category-taxes","category-the-great-recession"],"_links":{"self":[{"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=\/wp\/v2\/posts\/23988","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=\/wp\/v2\/users\/425"}],"replies":[{"embeddable":true,"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=23988"}],"version-history":[{"count":9,"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=\/wp\/v2\/posts\/23988\/revisions"}],"predecessor-version":[{"id":23997,"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=\/wp\/v2\/posts\/23988\/revisions\/23997"}],"wp:attachment":[{"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=23988"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=23988"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=23988"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}