A flat tax has been an elusive dream of conservative Republicans for decades, occasionally springing up on the fringes of presidential campaigns, most recently in Steve Forbes’s White House runs in 1996 and 2000.
Perry may be the most viable presidential candidate to advocate the idea. His proposal comes on the heels of a warm early reception for Herman Cain’s “9-9-9” plan, a flat-tax proposal that has made Cain a favorite among some conservative voters.
In a speech to the Western Republican Leadership Conference in Las Vegas on Wednesday, Perry previewed the broad outlines of a tax plan that he said he will present in six days. Among its features, he promised, will be spending cuts, entitlement reform and a flat tax.
“I want to make the tax code so simple that even Timothy Geithner can file his taxes on time,” Perry said, a reference to the embarrassment that complicated the Treasury secretary’s confirmation in 2009.
A flat tax is just what it sounds like: one tax rate for all Americans. Right now, income taxes are progressive — the rate increases with each income bracket. Flat-tax advocates tout its simplicity — no complicated forms, few itemized deductions, credits or other loopholes. There would be no estate tax, no capital gains tax, no dividends tax.
Will Perry’s new tax proposal propel him back into the top tier of the race with rivals Herman Cain and Mitt Romney? As Chris Cillizza and Aaron Blake explained:
Rick Perry’s planned embrace of a flat tax proposal to address the nation’s ongoing economic woes amounts to a major political gamble on which the fate of his presidential bid could rest.
While Perry won’t offer specifics on the plan until next week, a survey of senior Republican party operatives suggests that the Texas governor might well have stumbled onto a bit of political gold.
“The flat tax is fairly simple and easier to explain, which may help Perry who to date has failed to make a coherent case for why he’s better on the economy than his rivals with private sector experience like [Mitt] Romney and [Herman] Cain,” said Sarah Huckabee, a Republican operative who headed former Minnesota governor Tim Pawlenty’s Iowa presidential bid earlier this year.
It’s the simplicity of the flat tax that makes it so politically appealing. Nearly all Americans — but especially Republicans — are fed up with the oftentimes baffling complexity of the current tax code and yearn for something better.
The idea of wiping out the entire tax code then in favor of a single tax bracket appeals to most peoples’ common sense. And, politically, it’s far easier to explain a flat tax in a 30-second television ad than trying to explain a more elaborate plan. (Worth noting: Romney has a 59-point economic plan.)
“It’s killer politics in New Hampshire,” said one veteran Republican operative not affiliated with any of the presidential candidates. New Hampshire, which will hold the first primary vote of the 2012 race, has long been home to flinty fiscal conservatives who are decidedly resistant to taxes.(The state has no income or property tax.)
But, simply embracing a flat tax won’t be enough for Perry, according to several GOP strategists.
First, he has to prove that he is simply not “me too-ing” Cain, who has made huge political strides in recent weeks with a heavy reliance on his “9-9-9” tax reform plan.
“The follower position usually loses out to the leader position,” said one senior party strategist granted anonymity to speak candidly. “The key is whether Perry can articulate the merits of the plan in a way that makes him sound like a true believer, rather than making it sound like a ‘catch-up to Cain’ political stunt.”
Sal Russo, a California-based Republican consultant, added that Perry “has to sell it, along with his energy plan and other ideas, as a prescription to create jobs and restore American prosperity.”
Looming over the discussion of the political efficacy of the flat tax is wealthy businessman Steve Forbes, who ran for president in 1996 and 2000 with the flat tax at the center of his policy platform. (Forbes is advising Perry on his proposal, according to a well-placed source.)
On neither occasion did he win the Republican nomination, but his advisers in that race insist that the flat tax proposal was a major boon to his campaign.
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