Loren Steffy

A business blog

Video: why Perry’s tax plan falls flat


Last night, I was one KRIV Fox 26 discussing Gov. Rick Perry’s economic plan, which he hopes will recharge his struggling presidential campaign.  A big part of his plan is a 20 percent optional flat tax, and as I discussed in Sunday’s column, the flat tax simply doesn’t live up to its promise. Another big problem: Perry’s plan could come up almost $5 trillion short on revenue by 2020. In the Fox 26 segment, we also discuss Perry’s proposal to allow young people to opt out of Social Security in favor of individual retirement plans.

What a Flat Tax Means for Your Money: MyFoxHOUSTON.com

Loren Steffy

2 Responses

  1. Meiczyslaw says:

    Can’t watch the video at work, but I presume you’re referring to the CBO baseline forecast. According to James Pethokoukis, under dynamic scoring “the U.S. economy would be $3.5 trillion bigger in 2020 than under the CBO baseline forecast. And this gap would widen since CBO has some pretty sluggish growth forecasting moving forward.”

    So, yeah, this is a Reagan-style growth move. The trick to Perry’s plan is whether he can cut that $1.7 trillion (what dynamic scoring says we’ll be short) out of the Federal budget. Given that he’s also asking for a move away from baseline budgeting, this plan ain’t that goofy. (Baseline budgeting is what creates the illusion of cuts when all we’re doing is not increasing spending as quickly.)

    You just have to commit to cutting the size of the Federal government in real terms. (It might also matter whether you trust the CBO or Perry’s independent firm more. Given that I know the games that the CBO plays, I’d tend toward the independent firm, but that’s just a gut reaction.)

  2. Matt Bramanti says:

    “…which gets to all the deductions and credits and all that kind of thing, and the reason we have all those is because actually defining income in America is a very complicated process”

    That’s the most perfect reversal of cause and effect I’ve encountered year-to-date.