TEXAS GOVERNOR Rick Perry yesterday joined other Republican presidential candidates in calling for a one-size-fits-all flat tax for all Americans.
“Taxes will be cut across all income groups in America, and the net benefit will be more money in Americans’ pockets with greater investment in the private economy,” Mr Perry told an audience of several hundred at a factory producing plastic film in South Carolina.
Mr Perry repeatedly attacked “the federal nanny state” and said “the status quo of Byzantine taxes, loose spending and the perpetual delay of entitlement reform is a recipe for disaster”.
Critics of Mr Perry’s proposal for a single 20 per cent US income tax rate point out that it would dramatically reduce the tax bill for affluent Americans, who in theory pay 35 per cent, while increasing taxes for those in lower brackets.
When Mr Perry announced his candidacy on August 13th, he said he was “dismayed at the injustice that nearly half of all Americans don’t pay any income tax” because they are deemed too poor to do so.
Mr Perry would give Americans the option to continue under the present system, de facto establishing two taxation systems and making a nonsense of his claim that his flat tax would be simpler.
The plan is similar to one proposed by Newt Gingrich, another Republican candidate, who proposes an optional 15 per cent flat tax. Mitt Romney, the front-runner – who is known for adopting middle-of-the-road positions – says he wants “flatter” tax rather than a single flat tax.
Herman Cain, who overtook Mr Perry for the number-two slot in the Republican race, has captured the imagination of the right with his proposal for a “9-9-9” system that would charge a 9 per cent income tax, a 9 per cent corporate tax and a 9 per cent national sales tax on all Americans.
Mr Perry’s proposal was seen as an attempt to upstage Mr Cain. He said he would cap federal spending at 18 per cent of gross domestic product, compared to the 20 per cent proposed by Mr Romney.
The US government currently spends 38.9 per cent of GDP (compared to 42 per cent of GDP by the Irish Government), according to a study by the conservative Heritage Foundation and the Wall Street Journal.
The Perry plan would preserve deductions for mortgage interest and contributions to charity. It would do away with inheritance tax and tax on dividends and long-term capital gains.
The Obama campaign issued a statement saying: “Both the Romney and Perry economic plans embrace a far-right vision for our tax code . . . Both plans would cut taxes on wealth and investment income, shifting the tax burden onto work and wages . . . And under both plans, the most fortunate Americans would pay less while the middle class would pay a higher share.”
The Republican obsession with reducing taxes for the wealthiest Americans is helping US president Barack Obama’s re-election campaign to portray the president as warm and caring compared to his “heartless” Republican rivals.
Liberal commentators, for example on MSNBC, almost routinely describe the Republicans as Scrooge-like.
When Mr Obama unveiled a plan to help indebted homeowners refinance their mortgages this week, it was a direct rebuttal of Mr Romney, who said “the right course” in dealing with the collapse of the US property market “is to let the markets work”.
Mr Romney told the editorial board of the Las Vegas Review-Journal: “Don’t try to stop the foreclosure process. Let it run its course and hit the bottom.”
In Las Vegas late on Monday, Mr Obama criticised Republican senators for blocking the $35 billion (€25 billion) Bill that he had broken off from his much larger American Jobs Act – also blocked by Republicans.
In an incredulous tone, Mr Obama shouted: “Their leader, Mitch McConnell, said that – and I’m going to make sure I quote this properly – saving the jobs of teachers and cops and firefighters was just – and I quote – ‘a bailout’. A bailout.”