“Cut, Balance and Grow” plan offers optional 20% flat tax; cuts federal spending, repeals job-killing regulations, sets path to balanced budget
GREENVILLE, S.C. – Texas Gov. Rick Perry today unveiled his Cut, Balance and Grow plan, which provides taxpayers with the choice of a simple, 20 percent flat tax rate, cuts federal spending, ends earmarks and includes a federal Balanced Budget Amendment. He announced his plan at ISO Poly Films near Greenville.
The governor’s plan addresses five primary areas of reform, which include replacing the current tax code with an optional 20 percent flat tax for individuals and corporations, simplifying our regulatory system by freezing new and auditing pending regulations, fixing Social Security, Medicare and Medicaid entitlement programs, balancing the federal budget by 2020, and repealing job-killing federal laws like Obamacare, Dodd-Frank and parts of Sarbanes-Oxley.
To view Gov. Perry’s Cut, Balance and Grow plan, please visit http://www.rickperry.org/cut-balance-and-grow-html/.
“My Cut, Balance and Grow plan reorders the way they do business in Washington by reinventing the tax code and restoring our nation to fiscal health through balanced budgets and entitlement reform,” Gov. Perry said. “Central to my plan is giving every American the option of throwing out the three million words of the current tax code and the costs of complying with that code in order to pay a 20 percent flat tax on their income.
“My plan offers the kind of bold reform needed to jolt this economy out of its doldrums and renew American prosperity. This is a change election, and I offer a plan that changes the way Washington does business.”
As president, Gov. Perry will work to implement a plan that cuts taxes across all income groups, leaving more money in Americans’ pockets and encouraging greater investment in the private economy instead of federal government.
The new tax code, featuring the 20 percent flat tax, will be simple enough to file taxes on a postcard, providing deductions for only mortgage interest, charitable giving and state and local tax payments for families earning $500,000 or less. It will also eliminate taxes on Social Security, the death tax, capital gains tax and taxes on dividends, while increasing the standard exemption for individuals and dependents to $12,500 for those earning $500,000 or less. Overall, taxpayers will save money through lower taxes and lower tax compliance costs since the new form will be simpler.
Regarding corporate taxes, the governor’s plan creates a tax that is lower and fairer, closing corporate loopholes and ending special breaks for special interests. It offers a lower rate of 20 percent, the average corporate rate among developed nations, replacing the current combined corporate tax rate of 39.2 percent, which is currently the second-highest in the world.
Cut, Balance and Grow also implements two major reforms that will incentivize corporations to invest in America again. First, it will transition to a territorial tax system on corporate income earned overseas, so companies pay the appropriate corporate tax in the country where income was earned, but aren’t taxed a second time when that income is moved back into the United States. Second, the plan provides a temporary, one-time reduced tax rate of 5.25 percent on repatriated earnings that are currently languishing overseas.
Gov. Perry noted, “My Cut, Balance and Grow plan will unleash job creation to address the current economic crisis, while generating a stable source of revenue to put America’s fiscal house in order. It provides employers and investors certainty, which is critical to getting investment capital back into the economy. In contrast, the president’s plan provides temporary tax relief, which does nothing to encourage long-term investment, because it doesn’t provide the private sector certainty. The way to stimulate the economy is not through temporary tax relief or government spending, but by stimulating private spending through permanent tax relief.”
The corporate flat tax plan will bring more jobs and economic investment back to America, unleashing job creation that will remedy the current economic crisis and generate a stable source of revenue to address the nation’s record deficit.
Gov. Perry’s plan will also establish firm policies to effectively reform entitlement programs.
- To save Social Security for the long term, Gov. Perry proposes five principles:
- Protect existing benefits for current retirees and work with Congress on the exact age when those nearing retirement are grandfathered out of changes to the program.
- Protect the solvency of the Social Security Trust Fund, by stopping Congress’ borrowing against the fund with IOU’s
- Allow younger workers to invest a portion of their payroll taxes into private accounts if they so choose.
- Allow state and local governments to return to pre-1983 law and opt out of Social Security, allowing their employees to instead pay solely into state or locally run retirement programs. This has been done around the country in the past with better results.
- Work with Congress to determine the right formula, beginning at the right age, to raise the retirement age for younger workers on a gradual basis that reflects the longer life-span of today’s Americans.
To reform Medicare and save it for future generations, Gov. Perry will work with Congress on several options, including:
- Giving patients greater flexibility in choosing the plan that best fits their unique needs through bundled premium support payments to the individual, or as a credit against the purchase of health insurance.
- Considering gradually raising the age of Medicare eligibility.
- Considering adjusting Medicare benefits to be paid on a sliding scale based on the income of the recipient.
- Tackling the $100 billion in annual Medicare waste and fraud.
The governor’s plan also restructures Medicaid, returning control over the program and the dollars needed to administer it to the states, giving them flexibility to fix the program and control its costs.
Gov. Perry’s plan sets a course to a balanced federal budget by 2020. In his remarks, the governor noted that to truly protect taxpayers, a Balanced Budget Amendment to the U.S. Constitution is absolutely necessary. He pledged to reduce spending across several agencies including the Department of Education, Department of Energy and Environmental Protection Agency, while returning greater regulatory control of those responsibilities to the states.
Gov. Perry’s plan to balance the budget will cut federal spending to 18 percent of GDP from the current rate of about 23 percent and will reduce non-defense discretionary spending by $100 billion in the first year. It will also institute other fiscal reforms, including elimination of baseline budgeting, an end to non-emergency spending in emergency bills, and the elimination of earmarks.
Regulatory reform is also key to Gov. Perry’s plan. That reform will begin on his first day in office, when he will freeze all pending federal regulations and immediately begin a review of all new regulations implemented since January of 2008.
“Today the Federal Register contains 165,000 pages, and the index alone is eleven hundred pages long,” Gov. Perry said. “Somehow, despite not having any of these new regulations for our first 219 years, America not only survived, we thrived. Heavy-handed federal regulations are keeping our economy in the ditch, and it is time to review and scrap regulations that harm jobs and growth.”
Lastly, the governor pledged to lead the charge to eliminate the Dodd-Frank banking regulations which impede investment in our economy and block access to credit in a time when small businesses need it most. His plan also calls for the repeal of Obamacare and of the onerous Sarbanes-Oxley Section 404 regulations on small businesses.
“The great issue facing this nation is whether we have the courage to confront spending and the vision to get our economy growing again,” Gov. Perry said. “We need a tax code that unleashes growth instead of preventing it, that promotes fairness, not class warfare, that sparks investment in America instead of overseas interests. It is time to create incentives for American companies to invest in American workers.
“The future of America is too important to be left to the Washington politicians. My plan unleashes American ingenuity for a new American Century, restores the hopes and dreams of our people, renews our great promise, and entrusts the fate of this nation into the hands of our people, setting them free.”
To view Gov. Perry’s entire Cut, Balance and Grow plan, please visit http://www.rickperry.org/cut-balance-and-grow-html/, and to view an outline of the plan, please visit http://www.rickperry.org/content/uploads/2011/10/Cut-Balance-and-Grow-Summary.pdf. To view a sample tax return, please visit http://www.rickperry.org/content/uploads/2011/10/sample-tax-return.pdf.
To view the governor’s remarks, please visit http://www.rickperry.org/news/text-of-gov-rick-perry-cut-balance-grow-speech/.