Optional Flat Personal Income Tax

• Optional system for those who want to switch over: if you like your tax code, you can keep it.  This will be a popular option for low income filers, especially.
• 20 percent flat rate on all personal income.  Details yet to be specified here.
• 0 percent rate on long-term capital gains and qualified dividends
• Standard deduction of $12,500 per person (e.g., $50,000 for a family of four)
• Itemized deduction alternative for families making less than $500,000: mortgage interest, state and local taxes, charitable contributions only

Business Tax Reform

• 20 percent flat rate on all business profits for all business forms: corporations, S-corporations, partnerships, LLCs, and sole proprietorships
• Full business expensing of all new business purchases
• Research and development tax credit retained
• One-year repatriation holiday of 5.25%, followed by territoriality
• Eliminates all business deductions and credits not part of a consumption base

Obamacare

• There are 20 new or higher taxes in the Obamacare law.  These include: the individual and employer mandate excise taxes, the 3.8 percent surtax on investment income, the “Cadillac plan” tax, the “medicine cabinet tax,” the “tanning tax,” a hike in the Medicare payroll tax, and HSA tax hikes.
• Perry’s plan repeals all 20 new or higher taxes in Obamacare.

Social Security Taxation

• Younger workers could voluntarily establish personal retirement accounts to pre-fund their own Social Security benefits
• Social Security benefits would be free of taxation under the flat tax       

Other Tax Features        

• No new taxes: no national sales tax, no value-added tax (VAT)
• Kills the death tax permanently
• Requires a tax hike supermajority in a balanced budget amendment
• Calls for dynamic scoring of tax legislation

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Posted by Ryan Ellis on Tuesday, October 25, 2011 12:06 PM EDT

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