2012 GOP presidential hopeful and Texas Gov. Rick Perry released a tax plan last week that would institute a 20 percent “flat tax,” while giving taxpayers the option of continuing to use the current tax code and all of its deductions and credits. Perry claims that he will be able to balance the budget while making the tax code simpler and fairer.
We already knew that Perry’s plan is the epitome of complicated and unfair, as it layers a new tax code on top of the old, and makes the new code incredibly advantageous to the wealthy by entirely exempting investment income from any taxation at all. And according to a new analysis by the Tax Policy Center, Perry’s plan would blow a gigantic hole in the deficit, while increasing taxes for those at the lowest end of the income scale.
In fact, compared to a current policy baseline (where tax revenue is already at historic lows), Perry’s plan would cost $570 billion in one single year. That’s more than half a trillion dollars in revenue, or more than 25 percent of the total revenue that will be collected this year.
At the same time, compared to current policy, 40 percent of Americans would pay higher taxes under Perry’s plan (due to many provisions of the current tax code that are set to expire in 2012, which the Perry campaign has not said would be extended). Meanwhile, millionaires would receive an average tax cut under Perry’s plan of nearly $500,000 every year. The richest 0.1 percent of Americans would receive a tax cut of $1.5 million apiece. Meanwhile, a family making $10,000-$20,000 would pay $215 more under Perry’s plan, while a family making $20,000-$30,000 would pay nearly $500 more.
Perry’s plan would, quite literally, cut a Medicare-sized hole in federal revenue (Medicare costs $523 billion in 2010), while asking those at the lowest end of the income scale to pay more in taxes. The plan is almost shocking in the amount of money it would hand out via tax breaks to the rich, which would then necessitate obliterating the social safety net as we know it in order to balance the budget.