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
- 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