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Posted on 10/25/2011 8:58:55 AM PDT by casinva
From Perry's article in the WSJ last night, it looks like a serious and substantive proposal based on time tested conservative principles. A tax reform plan straight out of the Reagan playbook.
Less taxes, less spending, less government. Woohoo!
Same as exemptions on income tax now.
Dependents.
You, spouse? , Each Child, possibly elderly parent that lives with you that you support.
I have to run out for a few, so hopefully someone else will fill you in.
Yes, this is VERY substantive. Check the linked url and get a copy of his speech, pdfs, other downloads, outlines, etc. Tons of reform.
Before I go, I’ll share one of MY favorite parts with you.
_________________________
Eliminate Corporate Loopholes and Special-Interest Tax Breaks
Many Americans are rightly outraged by news stories that corporations like GE somehow pay nothing in taxes after earning more than $14 billion in profits.24 Due to the mind-boggling complexity of the tax code, large corporations can implement the most effective tax avoidance strategies money can buy, while American taxpayers are forced to send thousands of dollars to the federal government instead of spending it on their families. And unlike small businesses that cannot afford to house an army of lawyers and tax accountants, large and sophisticated corporations have the means to find and use every tax avoidance strategy that lies buried in the tax code. The myriad tax breaks, loopholes, and so-called tax expenditures available within the corporate tax code need to be phased out over time to ensure a level playing field for family-owned small businesses and multi-national corporations.
No More Earmarks
Individuals who depend on programs like Medicare and Social Security will never trust Washington to reform those programs as long as lawmakers spend billions of dollars on Bridges to Nowhere. In order to be trusted with vital entitlement programs, Congress and the president must first prove that they can be trusted to not waste money on smaller items like earmarks. A permanent ban on earmarks will demonstrate to American taxpayers that Washington is serious about tackling the nation’s unsustainable fiscal problems.
___________________________
End Baseline Budgeting and Require Common-Sense Scoring Rules
Current Washington budget rules assume that new programs and spending increases continue forever, an assumption that has led directly to the massive increase in federal spending over the last decade. In contrast, tax relief provisions are often assumed to expire at the end of a five- or ten-year window. The result is upward pressure on spending and tax collections, all due to arbitrary scoring rules written in the mid-1970’s.
Unlike Congress, families struggling to make ends meet cannot assume an infinite stream of money to make ends meet. Every single federal agency and program should be required to justify every dime of funding they wish to receive from taxpayers, instead of continued funding being treated as a given. It is time for Washington politicians to treat taxpayer money just like taxpayers do.
Dynamic scoring should also be required for tax legislation. The current system of static scoring ignores the fact that people and companies behave differently depending on how they are taxed. Dynamic scoring would take into account the incentives of different proposed tax policies and the increased economic growth and job creation that can result from lower tax rates and long-term predictability of the tax code.
_______________________
No More Bailouts
The Troubled Asset Relief Program, also known as TARP, was wrong when it was signed into law in 2008, it is wrong today, and it will be wrong tomorrow. Instead of bailing out irresponsibly managed banks with taxpayer money, policy makers should focus on removing the government-created incentives that created the financial crisis in the first place. Although alternatives to TARP had been proposed prior to the legislation’s ultimate passage, including a proposal from the Republican Study Committee, Washington politicians preyed on the fears of a financial collapse to ram the bailout through Congress.
Contrary to the claims of many TARP proponents that the bailout would allow troubled banks to expand lending and potentially prop up the faltering economy, lending contracted even further. According to an analysis of TARP expenditures by the Washington Post, lending declined in the immediate months following TARP’s passage and banks that received TARP money “reduced lending more sharply than banks that didn’t.”82
I like it.
Demand a Balanced Budget Amendment that Does Not Raise Taxes
American prosperity has been gravely threatened by runaway spending, increasing debt and deficits, and a political class that refuses to make the tough decisions necessary to restore order to the nation’s fiscal house. A balanced budget amendment to the Constitution that limits spending and protects families from tax increases will force Washington lawmakers to finally make the tough decisions about federal spending priorities.
While some inside the Beltway have advocated a so-called “balanced” approach that would raise taxes on middle-class families who are already struggling to pay their bills, innocent American families should not be forced to forever pay the tab run up by spendthrift politicians. Congress must send a balanced budget amendment to the states as soon as possible to begin the process of getting the federal government’s spending and debt problems under control.
Cap Federal Spending at 18% of GDP and Balance the Budget by 2020
If the federal budget is ever going to be balanced – the first step that must be taken before America’s enormous debt burden can be reduced – federal spending must be capped at 18% of GDP to avoid a tax burden that far exceeds the national historical average. Since 1960, the ratio of total federal tax receipts to GDP has averaged 18%.71
The country’s debt and deficit problems were not created overnight and will not be solved overnight. Further, the current economic crisis requires immediate tax reform and tax reductions to spur growth that will increase the time it takes to get to balance, but will put the nation on stronger long term footing. A gradual step-by-step process that acknowledges the political realities of deficit reduction will be required to put the country back on the path to fiscal sanity.
Credible and workable plans to balance the budget within ten years by reforming entitlements and curbing discretionary spending have been proposed in both houses of Congress. A proposal put forth by Sen. Pat Toomey of Pennsylvania balances the budget by 2020 and sets federal spending equal to 18.4% of GDP.72 The Republican Study Committee budget proposal in the House also balances in 2020 at federal spending equal to 18% of GDP.73 Workable balanced budget proposals have also been proposed outside Congress. The “Saving the American Dream” plan prepared by the Heritage Foundation reduces federal spending to 18% of GDP by 2019 and reaches balance by 2022.74
By working with committed lawmakers who have put forth detailed and credible budget proposals, the president and Congress and eliminate the federal deficit by 2020.
Reduce Non-Defense Discretionary Spending by $100 Billion in the First Year
Americans who depend on entitlement programs like Medicare and Social Security will not trust lawmakers to tackle entitlement reform until they have proven they can eliminate waste and duplication from the discretionary budget. By cutting non-defense discretionary spending by $100 billion and restoring it to 2008 levels, Washington can demonstrate that it is serious about making the tough decisions necessary to balance the budget. Sen. Tom Coburn recently proposed $9 trillion worth of specific ideas on how to reduce federal spending.
Consolidating Department of Education funding for all elementary and secondary programs, reducing it by 50 percent, and returning the rest of the money to the states would save $25 billion in the first year.75 Reducing the portfolio of investments by government-sponsored enterprises like Fannie Mae and Freddie Mac would save $26.5 billion over ten years.76 And repealing the Davis-Bacon Act and paying market-based wages would save $11.4 billion.77
Institute Automatic Government Shutdown Protection
American troops overseas and senior citizens should not have to worry about their income security because Washington politicians refuse to do simple things like pass a budget or fund the government. They should not be used as hostages in a partisan political battle to see which party can hold out the longest before the other blinks. Automatic government shutdown protection would fund discretionary federal spending at the previous year’s level of spending if no budget or specific spending bills were signed into law before the end of a fiscal year.
OK, based on this data that I got from ABC News:
“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,”
Let’s calculate the taxes for a family of 4 (2 children), the average household income of which is $50,000, with a monthly mortgage interest of $15000/yr and living in say, Ohio ( where average state and local taxes are about 10%). Assuming the family is generous and gives $500 to the church or charity a year. Maybe the family invests in a dividend bearing stock which gives $600 a year
YOUR INCOME : $50,000
SUBTRACT: Exemptions: 2 X $12,500 : $25,000
SUBTRACT: Mortgage Interest : $15000
SUBTRACT: Charitable Contributions : $500
SUBTRACT: State & Local Taxes : $5,000
SUBTRACT: Capital Gains and Dividends : $600
YOUR TAXABLE INCOME: $3900 X 20%
TAXES OWED : $780.00
I did mine using this flat tax plan compared to my 2010 income tax data.
It lowered my taxes by $2,113.00.
Plus I would save the $700.00 I pay my CPA.
Tax cut and accountant savings for me = $ 2813.00.
I could be wrong but I think you include yourself and your spouse as an exemption?
That would be 4 x 12,500 = 50,000.?
Let me revise my calculations based on the understanding that EACH INDIVIDUAL ( Spouse and Dependent Kids) get a $12,500 exemption.
Let’s calculate the taxes for a family of 4 (2 children), the average household income of which is $50,000, with a monthly mortgage interest of $15000/yr and living in say, Ohio ( where average state and local taxes are about 10%). Assuming the family is generous and gives $500 to the church or charity a year. Maybe the family invests in a dividend bearing stock which gives $600 a year
YOUR INCOME : $50,000
SUBTRACT: Exemptions: 4 X $12,500 : $50,000
(IGNORE THE REST )
YOUR TAXABLE INCOME: 0 X 20%
TAXES OWED : $0
Which means that family has NO SKIN IN THE GAME ( paying no taxes like the 47% that currently pay nothing ).
We’re back to where we are today.
... eliminate the federal deficit by 2020.
Which is it? Balance the budget by 2020 or eliminate the deficit by 2020? There's a $15,000,000,000,000 difference. In his speech he said "balance the budget by 2020" which means increase the deficit for up to eight more years. If I'm interpreting this wrong I would appreciate someone explaining it to me. Please use simple terms that even I can understand and don't spam me. Thank you.
Do you think someone making $50K/yr would be making a mortgage payment of $1250.00/mo interest + Principle +
taxes would make that person’s
house payment close to $3,000.00/mo. ?
Their house payment would be around $ 36,000.00/yr/
That would leave them a little over $1,000/mo to live off including groceries and utilities.
The $18,000 I have for mortgage payments ASSUMES they pay $1500/month in interest.
But if you DROP that figure, their total TAXES OWED goes UP, which means more taxes paid.
But all this is moot if our understanding is each individual gets a deduction of $12,500. If this is the case, the family of 4 that makes $50,000 PAY NOTHING.
In fact, with this Perry Plan, people making up to $70,000 potentially will pay NOTHING in taxes depending on their mortgage, dividends and charitable deductions.
And the more kids you have, the more likely you are to pay NOTHING.
The Perry plan also seems to encourage INVESTMENTS and SAVINGS because of the dividend deductions.
Yeah, I was wondering about the “Self-Employment Tax.”
Small business owners, the self-employed, have to pay both end of Social Security, about 14% up to $106,000.
That’s a huge tax, which disappears under Cain’s 999 plan.
So, I’d still have to pay it under Perry’s plan?
I’ve always resented being forced into the government Ponzi scheme known as Social Security against my will.
There is an AMT under Perry’s plan - an Alternate MAXIMUM Tax.
You would have the option to ditch the current tax code and file under the 20% flat tax while keeping deductions for charity, mortgage interest and generous personal exemptions for you, yor spouse and dependents.
There is an AMT under Perry’s plan - an Alternate MAXIMUM Tax.
You would have the option to ditch the current tax code and file under the 20% flat tax while keeping deductions for charity, mortgage interest and generous personal exemptions for you, your spouse and dependents.
| Current | FairTax | Cain 999 | Perry FlatTax | |
|---|---|---|---|---|
| Net Rate (% gross income) |
14.0% | 7.5% | 7.9% | 10.9% |
| Marginal Rate (includes federal taxes on payroll, income, and sales) |
30.7% | 23.0% | 17.3% | 25.7% |
| Increased Disposable Income | reference | 22.3% | 10.9% | 10.4% |
| Reduced Federal Taxes | reference | 46.6% | 44.0% | 22.3% |
| Estimated retail price reduction | reference | 10% | 8% | 5% |
I heard Rush say that he likes Perry’s Plan.
He called it fabulous!
That’s a good endorsement!
BTW The “Cut, Balance, and Grow” Plan includes many of the reforms supported by the Tea Party.
Thank you so much for this.
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