Gov. Rick Perry Unveils His Plan to Implement a 20% Flat Tax

I’ll have more on Gov. Perry’s new economic plan, which calls for a 20% flat tax rate and a generous $12.5K per/person deduction, after I get a chance to read the entire thing over the next couple of days.

But I’ve talked to a few people who have already read the entire thing…some smart people whose opinions I respect…and they think this is a game changer (and probably the impetus for Cain changing his 9-9-9 plan to 9-0-9 plan).

Gov. Perry (from the Wall Street Journal):

The folks in Washington might not like to hear it, but the plain truth is the U.S. government spends too much. Taxes are too high, too complex, and too riddled with special interest loopholes. And our expensive entitlement system is unsustainable in the long run.

[snip]

The plan starts with giving Americans a choice between a new, flat tax rate of 20% or their current income tax rate. The new flat tax preserves mortgage interest, charitable and state and local tax exemptions for families earning less than $500,000 annually, and it increases the standard deduction to $12,500 for individuals and dependents.

This simple 20% flat tax will allow Americans to file their taxes on a postcard, saving up to $483 billion in compliance costs. By eliminating the dozens of carve-outs that make the current code so incomprehensible, we will renew incentives for entrepreneurial risk-taking and investment that creates jobs, inspires Americans to work hard and forms the foundation of a strong economy. My plan also abolishes the death tax once and for all, providing needed certainty to American family farms and small businesses.

My plan restores American competitiveness in the global marketplace and provides strong incentives for U.S.-based employers to build new factories and create thousands of jobs here at home.

First, we will lower the corporate tax rate to 20%—dropping it from the second highest in the developed world to a rate on par with our global competitors. Second, we will encourage the swift repatriation of some of the $1.4 trillion estimated to be parked overseas by temporarily lowering the rate to 5.25%. And third, we will transition to a “territorial tax system”—as seen in Hong Kong and France, for example—that only taxes in-country income.

Steve Forbes endorsed Perry’s plan to replace the current tax code, praising it for its “radical simplicity.”

I especially like this part of Gov. Perry’s plan:

Cut, Balance and Grow also gives younger workers the option to own their Social Security contributions through personal retirement accounts that Washington politicians can never raid. Because young workers will own their contributions, they will be free to seek a market rate of return if they choose, and to leave their retirement savings to their dependents when they die.

This could be the game changer that Perry needs to sweep himself to a GOP primary victory (and a wipe out of Obama in 2012).

What are your initial thoughts?