Rick Perry has come out with his own tax plan proposal. He wants to have a 20% flat income tax with deductions. Deductions would include $12,500 for each individual in the family. That would mean that a family of four would pay no income tax on the first $50,000 of earnings.
Perry has also said that you can stick with the current tax plan in place and pay taxes that way if it is more beneficial to you. As a libertarian, I like choice. I would rather the choices be much better, but I suppose that two choices are better than one. Without knowing the details, because you would have a choice of the current tax system and his flat tax proposal, I would vote “yes” on this plan if I were in Congress, although not with a lot of excitement.
Now let’s get to Rick Perry’s plan to drastically cut spending. Oh wait, there is none? Like so many politicians, he wants to balance the budget in about 10 years. Except Perry wants to do it by 2020, which would make it 9 years. I guess that might make him 10% better than the average politician. Or maybe he is lying 10% more than the average politician, if that is possible.
That is the problem here. We can shuffle around the tax code all day long here with a 20% flat tax or some 9-9-9 plan that raises taxes on the middle class. But our situation will not be vastly improved until something is done about spending.
The federal government is spending nearly $4 trillion per year. About 40% of this spending is from borrowed money, whether it is from the Fed, China, Japan, or individual investors.
If we are going to have a healthy economy that has sustainable growth, the government has to drastically cut spending. Aside from Gary Johnson who is polling at 1% or less, Ron Paul is the only Republican presidential candidate who has a plan to cut spending significantly. He is proposing a cut of $1 trillion in the first year.
As long as the government keeps spending nearly $4 trillion a year, it won’t matter much what the tax code looks like. If the government were to cut spending to less than $2.5 trillion to equal tax collections, the economy would benefit quite significantly. That would mean that the government would not have to borrow any further money (not counting debt rollovers). That would mean an additional $1.5 trillion in the free market economy. That would mean a great deal for businesses and individuals trying to save and invest.
It is easy for these candidates to propose tax plans. I could propose a plan to eliminate all taxes and we could just borrow $4 trillion a year. The hard part is to identify real spending cuts. These candidates are trying to play both sides. They don’t want to upset anyone with real proposed spending cuts. I have heard Michele Bachmann say in the past that she would like to get rid of the Department of Education. That is a small start, but it isn’t all that significant with the overall budget. Plus, I’m not really sure if she means it.
Except for Ron Paul, none of the major candidates can get anywhere close to a balanced budget. So they will keep proposing their tax plans that take your money out of a different pocket.
It is not the way the government is taxing me that disturbs me. It is how much they are taking and how much they are spending.