Perry offers taxpayers the two options-either stick with the current tax system or opt into the new system in which they pay a flat income tax of 20 percent. Which incentivizes compact people who would pay less under the current system to stick with it, and people will pay less in a flat tax plan-most Americans at the end of the scale of the revenue-to choose a new plan.
That would add up to a big drop in income, says Ted Gayer, Co-Director of the courses of Economics and Senior Fellow at the Brookings Institution.
Perry has yet to pull out all the specifics of the plan, which makes it difficult to estimate the full impact. But “it will clearly be a decrease in revenue, I think it’s pretty big,” said Gayer. Many conservative Republicans want to reduce the role of Government in society partly by starvation of funds.
(On the left, Jill Schlesinger of CBS MoneyWatch and Jack Otter discusses Perry’s plan.)
In addition to allowing Americans to keep up with current tax code retains a number of pieces, Perry under the flat-tax plan, including deductions for home mortgage interest and donations to charity. That cut against one of the main benefits of a flat tax plan. Flat tax supporters say it worked because it simultaneously makes a larger taxpayer and make a lot more types of taxable income by eliminating the deduction, a concept referred to as “expanding the base.” Extending reduced under Perry’s plan because many of the cuts currently stored on the premises.