Waiting for Perry’s Flat Tax

by Ramesh Ponnuru

The top questions I’ll have when I get a chance to look at Perry’s plan:

What’s the rate going to be? Does it seek to raise as much money as the current tax code? Can it raise that money only on the assumption that it kick-starts strong economic growth? Does it abolish the deductions for mortgage interest and charitable contributions? Is it optional? (Some previous flat-tax proposals have given filers the option of choosing a flat tax or the current code, so that everyone is held harmless.) How much income will it exempt? (Steve Forbes’s 1996 proposal would apply taxes only on income above $36,000 for a family of four.) How many people would be added to or removed from the income tax rolls as a result? Does it raise taxes on middle-class families?

The answers to these questions depend on one another. If Perry aims for revenue neutrality, then the fewer the deductions and the smaller the exemptions the lower he can make his rate.

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