“Those who don’t pay taxes under the current plan will use that and continue not to pay taxes. Those who would pay less under the new plan will use that and cut their tax burden. It does nothing to widen the tax base and does nothing except reduce the tax receipts.”
The intention of most conservatives going back to Reagan is to REDUCE the tax burden, not increase it. It was proven by JFK in the 60s, Reagan in the 80s, and Bush in the early 2000s that cutting taxes stimulates economic growth, which in turn INCREASES tax receipts. I see no reason why this plan can’t produce similar results, especially since he also eliminates capital gains and dividends taxes, which is a very smart thing to do if you want to spur investment and create jobs.
As for spending, part of Perry’s plan is to reduce spending to 18% of GDP, from the current levels of around 25%. This would put us back to spending levels of the late 1990s, when we were running budget surpluses.
As for Perry overall, there are a few issues to be concerned about, but I don’t believe his economic plan is one of them.
In the long term tax cuts may spur investment, may create jobs, and may cause greater tax revenue. In the short run it will cut federal receipts and increase the deficit. That was true under Reagan, there is no reason to believe it won't be true under Perry. So without massive and immediate cuts in spending, Perry's plan create even greater deficits than we have right now into the $2 trillion range. And those cuts are missing from Perry's proposal. All I've seen is a token $100 billion cut in non-defense discretionary spending. That isn't a proposal, that's a joke.
As for spending, part of Perry’s plan is to reduce spending to 18% of GDP, from the current levels of around 25%. This would put us back to spending levels of the late 1990s, when we were running budget surpluses.
And how will he do that? Even to make the Cut, Cap, and Balance proposal of spending at 22.5% of GDP by 2012 would require a budget of $2.9 trillion and cuts in the $800 billion range from 2011. Again, where are these cuts going to come from? If Perry honestly believes he can bring spending down to 18% of GDP, and I wonder if he realizes what that means, then he should have some ideas. He has said non-defense discretionary spending is off the table, in fact he's talked about increasing that. In order to get the rest of the savings out of discretionary funds he would literally have to do away with every single department and agency other than Defense and Homeland Security. Everything, top to bottom. And even that may leave a deficit.
So let's get serious here and start addressing the problem. The government spends too much. Where is he going to cut?