Perry Plan Would Grant Big Tax Break to Wealthiest- So much for protecting the middle class, eh?

[IntExp]

Article courtesy of the New York Times.

 

Perry Plan Would Grant Big Tax Break to Wealthiest

By RICHARD A. OPPEL Jr.

GRAY COURT, S.C. — Gov. Rick Perry of Texas unveiled a plan on Tuesday to scrap the graduated income tax and replace it with a 20 percent flat rate. By throwing out rates as high as 35 percent and eliminating estate and investment taxes, the plan would grant a major tax cut for the wealthy. It is the centerpiece of an ambitious proposal that aims to overhaul political sacred cows like Social Security and Medicare while slashing the federal budget.

 

Mr. Perry, a Republican presidential candidate, said his proposal would also offer benefits to middle-class Americans by giving a $12,500 deduction for every member of a household while preserving exemptions for state and local taxes, mortgage interest and charitable contributions for anyone making less than $500,000. He said anyone could still file under the current code, and he also pledged to lower the corporate tax rate to 20 percent, from 35 percent.

 

“Taxes will be cut on all income groups in America,” said Mr. Perry, who promised that taxes could be filed on a postcard-size form under his plan. “The net benefit will be more money in Americans’ pockets, with greater investment in the private economy instead of the federal government.”

 

The plan represents a gamble for Mr. Perry, who is trying to reinvigorate a once-high-flying campaign by capturing some of the energy Herman Cain generated with his flat tax plan and by drawing a sharply conservative contrast with Mitt Romney.

 

But in proposing what he called “bold reform” that may trim Social Security and Medicare benefits for many, Mr. Perry is also advocating potentially sweeping changes in entitlement programs that may open him to new lines of attack from Republican rivals, all at a time when polling shows many Americans want to see higher — not lower — taxes on the wealthy.

 

The plan also proposes reducing the scope of the federal government by requiring drastically austere federal budgets — compared with what exists now — that spend no more than 18 percent of the nation’s gross domestic product, which analysts said would most likely force big cuts in government spending at almost every level. That would equate to a cut of one quarter of the budget from 2011 expected levels, and it would mark the lowest level of spending relative to G.D.P. since the mid-1960s, though rising tax receipts during the roaring economy of a dozen years ago temporarily brought the level close to 18 percent.

 

To address the projected long-term financial shortfall within Social Security, Mr. Perry suggested raising the retirement age and potentially changing the age eligibility for Medicare and using a sliding scale to limit benefits based on income — two proposals that could face significant opposition in Congress. Mr. Perry, who said his plan would balance the budget by 2020, also proposed letting younger workers divert some of their Social Security taxes into private investment accounts, a longtime goal of economic conservatives.

 

Analysts said it would take time to examine the effects of the Perry plan. But Roberton Williams, a senior fellow at the nonpartisan Urban-Brookings Tax Policy Center, said: “There are two things we can say with certainty: It will lower revenue and be a great benefit to the wealthy.”

He said the poor who have children would likely do better under the current system, because refundable tax credits provide some with net payments from the government. But Mr. Williams said it was unclear how many among the middle class would benefit — though families with more children or bigger mortgages would be more likely to opt for his proposal.

 

Mr. Perry pledged to not cut any benefits of current Social Security retirees or those about to tap into the system. But to do that, and cut the budget to 18 percent of G.D.P., would require cutting at least one third of the remaining federal budget, said James R. Horney, the vice president for federal fiscal policy at the Center on Budget and Policy Priorities, a liberal research group in Washington. It would require “a dismantling of federal programs,” Mr. Horney said, and “draconian cuts in virtually every kind of spending.”

 

Ben LaBolt, a spokesman for President Obama’s re-election campaign, criticized both the Perry plan and one offered by Mitt Romney as “guided by the same principle: they would shift a greater share of taxes away from large corporations and the wealthiest onto the backs of the middle class.”

 

Mr. Romney, the former Massachusetts governor, has called for extending the Bush tax cuts, lowering the corporate tax rate to 25 percent and exempting investment income for taxpayers who make less than $200,000.

 

Conservative tax activists like the Club for Growth say the Perry plan would spur economic growth, but many economists warn that if put in place immediately anything that cuts the size of the federal government as severely as Mr. Perry’s proposal would throw the nation back into a recession.

 

What remains to be seen is how much appetite there is among Republican primary voters for such an ambitious reshaping of tax policy and, potentially, entitlement programs. A New York Times/CBS poll released Tuesday found that 65 percent of Americans say taxes should be increased on households earning $1 million or more, while 66 percent say money and wealth in the country should be distributed more evenly. Another 69 percent say the policies of Republicans in Congress favor the rich, while 67 percent say it is a bad idea to lower taxes for large corporations.

 

Analysts also immediately raised questions about how many people would actually see their taxes simplified, one of Mr. Perry’s main claims: Many middle-class families would actually need to figure their taxes using both systems before deciding which one would save them more money, potentially increasing the amount of time they spend on taxes rather than making tax preparation easier.

 

Another question is how well Mr. Perry and his newly revamped campaign team can package and sell the tax proposal. That effort may have been undermined on Tuesday, when, many media outlets, instead of focusing on the tax plan, covered Mr. Perry’s statement in two interviews that he was not certain Mr. Obama was born in the United States. Those comments linked him to the “birther” movement, whose members question whether the president is occupying the White House legally.

 

Given an opportunity to play down the issue in an interview Monday night with CNBC and The New York Times, Mr. Perry refused, saying that “it’s a good issue to keep alive.”

 

John Harwood contributed reporting from Simpsonville, S.C., Michael D. Shear from Washington, and Catherine Rampell from New York.

 

 

Just goes to show ya, that the rich will keep getting richer, and income inequality will increase under these dipwads, especially with this one, with his brillant proposal. :mad::tdown:

[SubwayGuy]

And does this really surprise anyone who has a brain?

 

Here's what a flat tax really does: Note the data used for this liberally skewed article actually comes from a nonpartisan source, so while the URL may appear left-leaning, this article is actually fairly neutral save for some weasel words here and there:

 

http://www.huffingtonpost.com/dave-johnson/is-a-flat-tax-fair_b_1027601.html?ncid=txtlnkushpmg00000024

 

Is a Flat Tax Fair?

Posted: 10/23/11 09:03 PM ET

 

Conservatives are always pushing for a "flat tax." It sounds so simple: One easy rate, so we all pay the same, easy to calculate... Get rid of deductions and lower the tax rates. So simple, but it turns out it is a simple trick, a scam to enrich the 1%, like so much else that conservatives are selling. Don't fall for it -- it means taxes will go up for the 99% of us who aren't really, really rich. See if you can guess what happens if you are in the top 1%. Or, just scroll down and see the the chart.

 

What We Have Now

 

We have what's called a "progressive' tax system. This means as you make more you pay more taxes. The first "bracket" of XX dollars you make is taxed at a low rate. The next XX dollars are taxed at a higher rate, and so on. Many people think if you "go into a higher bracket" you pay more on all the money you make, but that is not how it works. If a bracket starts at $1 million, and you make $1 million plus $1 you only pay the higher rate on the $1 that is in that bracket. Yes, that means that a 5% increase on taxes over $1 million would mean that person pays a nickel. Yes, all that screaming by Republicans is over a nickel. Screaming is what they do best.

 

The reason we have a progressive tax system is because we have a democracy. People who make more do so because of the investment in government that We, the People make. We, the People pool our money collectively and use it to build the infrastructure that lets people make so much money. That's the roads, schools, police, courts, etc. -- the whole system -- that provides the foundation for our businesses to go out and compete in the world. And when our businesses do well, we ask them to pay back a dividend to the rest of us for enabling that to happen.

 

No Deductions

 

Conservatives always call for getting rid of deductions, because they are complicated. Get rid of deductions, they say, simplify the system, and you can lower tax rates. Here is the game they are playing. Suppose you have a small business, a grocery store. Suppose you buy $100,000 in inventory and sell it for $130,000. If you get rid of deductions that means the small grocery owner pays taxes on $130,000 because that is the income of the store.

 

If you say the business owner should be allowed to "deduct" the amount paid for inventory, we're back to deciding which deductions to allow. So we are right back where we started, except now the conservatives have lowered tax rates (at the top) and their big corporate sponsors will be gaming the system to give themselves more and more and more deductions just like they already do.

 

What Happens With A Flat Tax?

 

Conservatives object to the idea of the rich paying back more. They say that taxes are theft -- government confiscating money that people have earned, ignoring that our democracy enabled them to earn it in the first place. They call taxation "redistribution" of wealth. Of course, as AlterNet's Joshua Holland points out, redistribution is the core job of government. He points out that when government collects taxes and builds a sidewalk that everyone can walk on -- or homeless people can sleep on -- that is redistribution. Courts, schools, police, ports, airports -- all of it is redistribution of wealth.

 

So conservatives call for a "flat tax." Most notably Republican presidential candidates Rick Perry and Herman Cain are calling for various forms of this. This means everyone pays the same tax rate as everyone else, regardless of income. Because this is about scrapping democracy's progressive tax system, this necessarily means that the rich will pay a lot less. Guess who pays more to make up for that? A good example of this effect is the 9-9-9 tax plan.

 

The 9-9-9 Plan

 

The Tax Policy Center takes a look at Republican candidate Herman Cain's "9-9-9" tax plan, in a post titled, Herman Cain's 9-9-9 Tax Plan

 

Herman Cain's plan would eliminate the current individual income tax, corporate income tax, payroll tax, and estate and gift tax and substitute three taxes imposed at a 9 percent rate: 1) a 9 percent "national sales tax" 2) a 9 percent "business flat tax", and 3) a 9 percent "individual flat tax."

 

They have a table here that shows how people's taxes would change under the 9-9-9 plan. Jared Bernstein made a chart illustrating these numbers in his post 9-9-9 in One (Really Long) Graph.

 

So here you have it: the change in tax liabilities, compared to current tax policy, under 9-9-9, for different income groups, in one incredibly unsettling graph.

 

In the following chart the blue lines that are above zero illustrate how much more most of us will pay. The red lines below zero show how much less the rich and really rich will pay. The blue lines -- representing taxes on most of us -- go up. The red lines -- representing taxes on the top few -- go ... well, see for yourself.

 

 

[SoSpectacular]

That's a really, really long red bar. SMH

[lilbluefoxie]

for the record, im goin for Romney

[checkmatechamp13]

Delete.

[checkmatechamp13]

And does this really surprise anyone who has a brain?

 

Here's what a flat tax really does: Note the data used for this liberally skewed article actually comes from a nonpartisan source, so while the URL may appear left-leaning, this article is actually fairly neutral save for some weasel words here and there:

 

http://www.huffingtonpost.com/dave-johnson/is-a-flat-tax-fair_b_1027601.html?ncid=txtlnkushpmg00000024

 

Just one question, why is the bar for the top 20% in blue when the amount they are paying is decreasing?

 

And yeah, that is a loooooooong red bar. :eek:

[SubwayGuy]

Just one question, why is the bar for the top 20% in blue when the amount they are paying is decreasing.

 

No idea, that's just the way whoever made the graph depicted it.

[Joe]

More ******* garbage. Place most of the tax burden on the group of people that will struggle the most to pay for it -- EXCELLENT IDEA, MITT.

[MHV9218]

Please, watch the Nazi Banksters Crimes Ripple Effect at http://jforjustice.co.uk/banksters

[Via Garibaldi 8]

Oh that'll fix it won't it, I'm sure Mitt is concerned more than absolutely ANYTHING about the middle class. Pandering to the rich, Mitt? Naw.

 

Least he's real honest about his policies too!

 

Oh and let me guess, he's also a racist in your book too right?

 

Well here's my answer... Mitt Romney in 2012... :cool:

[IntExp]

Oh and let me guess, he's also a racist in your book too right?

 

Well here's my answer... Mitt Romney in 2012... :cool:

 

Nah, for me (I dunno about MHV9218) he's more like a hypocrite who backtracks on everything he did as Mass. governor, and now panders to the Tea Party...it makes me sick, his level of hypocrisy.:mad:He ain't a racist, just a filthy hypocrite. I support Huntsman for this election (even though I can't vote for another for another 3 years, I still follow politics very much, lol:):cool:), he'd make a great candidate for the Republicans and provide an excellent Fall election season w/ Obama- but he'll never get the nomination, even though he's the most electable, b/c he is just too moderate for the crazy nutjobs that now dominate the Republican primares.:cry:

[lilbluefoxie]

Oh and let me guess, he's also a racist in your book too right?

 

Well here's my answer... Mitt Romney in 2012... :cool:

 

yeaaaa

[SubwayGuy]

Romney wants to cut taxes and limit deductions, which disproportionally benefits the rich.

 

I want to see someone who will overhaul the tax code by greatly reducing corporate rates and increasing a staircase structure to individual and couple taxation that allows people to keep their earnings to a certain point, and gets progressively more punitive at levels above that to both the individual receiving the compensation as well as the corporation which would have the tax deductibility capped...acting as an incentive to encourage businesses to pay their so called "top performers" more in line with other countries that have better income spread among economic classes. If redistributed to the working people of America, this increases the nation's buying power and standard of living, and jump starts the economy when the spenders have more discretionary income (and don't need to rely on credit). Coupled with tax penalties for companies that offshore jobs, that would be a start.

 

But I don't see anyone in either party talking about any of these things. Only more hyperbole and things that they will back down from, or wolves in sheep's clothing like that "flat tax" or "9-9-9" arguments that we're hearing from those who want to rob even more from the poor and working to give to the rich. Not like they didn't already get that from 2007-2010, they're back for more those MFers...

[MHV9218]

Please, watch the Nazi Banksters Crimes Ripple Effect at http://jforjustice.co.uk/banksters