Originally published October 25, 2011 at 8:03 PM | Page modified October 26, 2011 at 2:01 PM
Perry's economic plan clashes with Romney's
At a moment when the fragility of the economy ranks at the top of American concerns, sharp differences have begun to emerge in how the leading GOP contenders for president would aim to solve the problem, illuminating not only a diversity in approach but a striking contrast in the governing philosophies of the candidates themselves.
The Washington Post
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At a moment when the fragility of the economy ranks at the top of American concerns, sharp differences have begun to emerge in how the leading GOP contenders for president would aim to solve the problem, illuminating not only a diversity in approach but a striking contrast in the governing philosophies of the candidates themselves.
The latest to put forward a blueprint is Texas Gov. Rick Perry, who gave a full embrace to a number of long-standing and far-reaching conservative goals, as he unveiled it Tuesday in South Carolina.
Its centerpiece is a proposal to give individuals the option of paying a 20 percent "flat tax." Perry would also reduce the corporate tax rate from 35 to 20 percent; eliminate taxes on dividends and capital gains; make deep, unspecified cuts in federal spending; and establish individual retirement accounts (IRAs) outside the Social Security system.
Perry's plan represented a sharp and intentional contrast to the less radical 59-point program put forward last month by former Massachusetts Gov. Mitt Romney, one of the leading contenders for the Republican nomination.
Perry won strong praise from conservative economists and activists, who were pleased that he adopted many of their long-held goals. In doing so, Perry's plan could help to reverse the slide his campaign suffered as the result of his weak performance so far in the presidential debates.
"I am impressed at the level of detail. For someone who was supposed to be thin, there's a lot there," said Douglas Holtz-Eakin, who served as top economic adviser to 2008 GOP nominee John McCain's campaign. The proposal would also be a boon to the wealthiest Americans, which is one reason that previous flat-tax proposals, though appealing in their simplicity, have never gone very far politically.
"The obvious winners are the rich," said Roberton Williams, a senior fellow at the nonpartisan Tax Policy Center. While the Republican candidates differ on the specifics of their plans, the argument against the current occupant of the White House is similar: Obama contends that the rich are not paying their fair share of taxes; the GOP contenders counter that wealthy Americans, along with everyone else, are paying too much. What's bloated, they insist, is government.
Flat-tax proposals, which have been proposed by presidential candidates as far back as Democrat Jerry Brown in 1992 and Republican Steve Forbes in 1996 and 2000, are enjoying a political resurgence.
Former House Speaker Newt Gingrich has a plan somewhat similar to Perry's, in that it would give taxpayers an option of paying a 15 percent flat rate. And former Godfather's Pizza CEO Herman Cain's signature "9-9-9" plan would combine a flat income tax with a new national sales levy and corporate taxes, all at 9 percent.
Though "9-9-9" was a catchy slogan that briefly propelled Cain to the top of the Republican field, a new Washington Post-ABC News poll indicates that it is now out of favor as voters have become more acquainted with its effects, which are heavily weighted toward the benefit of the wealthy.
If the measure of a candidate's boldness is the array of entrenched interests he is willing to battle, none arguably would top former Utah Gov. Jon Huntsman, who would eliminate every tax credit and deduction and set a three-tiered tax system of 8 percent, 14 percent and 23 percent.
Libertarian Ron Paul is the most radical. He would scrap the income tax entirely and argues the government never had the right to impose it in the first place. He claims he could balance the federal books through excise taxes, limited tariffs and drastically shrinking government.
Rep. Michele Bachmann of Minnesota, who often cites her credentials as a former Internal Revenue Service attorney, also says she would "completely abolish the tax code" by replacing it with the flat and simple tax. However, she has not produced a detailed plan for doing so.
Romney would make more incremental changes to the tax code, though he promises to ultimately simplify it and reduce rates. Romney's plan also focuses more heavily than the other candidates' on trade, including a threat to slap China with higher tariffs if it does not boost the value of its currency.
Romney would reduce the maximum corporate tax to 25 percent, 5 percentage points higher than Perry proposes. He would also eliminate taxes on interest, capital gains and dividends, but only for Americans making less than $200,000.
Romney has argued that while a flat tax sounds good in principle, it is not politically realistic. Perry sidestepped some of the political land mines that have doomed earlier flat-tax proposals.
Because it is optional, those most likely to be hurt by the flat tax, primarily lower-income Americans, could exercise the choice to stay within the current tax system. And the most popular middle-class deductions, such as those for state and local taxes, mortgage interest and charitable contributions, would remain intact for those making less than $500,000.
Obama's birthplace
a Perry issue
In two interviews this week, Perry cast doubt about President Obama's birthplace, Honolulu, suggesting he may have been born outside the United States. If true, that would make his presidency illegal. This spring, as would-be candidate Donald Trump rocketed in opinion polls partly by pushing "birther" conspiracies, Obama publicly released his long-form birth certificate to prove that he was born in Hawaii.
In an interview with Parade published Sunday, Perry said he does not know if Obama's birth certificate is authentic. He continued to press that point in an interview with John Harwood of CNBC and The New York Times that aired Tuesday, saying: "It's a good issue to keep alive. ... It's fun to poke (Obama) a little bit and say, 'Hey, let's see your grades and your birth certificate.' "

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