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November 2, 2011

Review of the Rick Perry Flat Tax Plan

Last week, Rick Perry unveiled a new flat tax plan, designed to simplify the tax system, and save both the government and Americans some money. Common Sense Capitalism has determined that the top three income brackets would pay less taxes under the Perry plan. The third of those brackets, those who make around $35K to $85K would pay 1% more in income taxes, BUT would not face the 8% tax on Social Security and Medicare, saving a net of around 7%.

I believe this plan would also add accountability to the Social Security system by bringing it directly into the federal government system and balance sheet. Currently, the overall budget is only affecting by the net flows (gains or losses) by the Social Security program.

Additionally, Perry would keep the state/local property tax deductions, mortgage interest deductions, and increase the standard deduction to $12,500. There is no word yet as to whether or not the student loan interest deduction will still be available. CSC believes that the government can maintain many deductions, but still file on a postcard by giving the taxpayer a choice of only ONE or TWO of the remaining tax deductions to put on their postcard.

Simplification of tax filing is a must. The complication of the tax code and tax filing has made Americans susceptible to lies about the program for decades.

Keep in mind that you are taxed at a customized level currently depending on your income. In order to determine your tax level, check out the IRS tax withholding calculator (one of the few times I will ever direct someone to the IRS website).

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