Economist and University of Maryland Business Professor Peter Morici criticized Presidential hopeful Rick Perry’s “Cut, Balance and Grow” plan Tuesday, saying the Texas Governor’s new tax proposal will do little improve the economy.
“The whole purpose of a flat tax is to encourage individuals and corporations to invest more in sound business opportunities, instead of prospecting for tax breaks by buying homes bigger than they need or spending on government hobby horse projects like solar panels,” Morici said in a statement. “However, the Perry plan by giving tax payers the option of filing under the old system will encourage the wealthy and near-wealthy to continue prospecting for loopholes and credits.”
Perry’s plan gives Americans the choice of a flat tax rate of 20 percent or the current income tax rate. In a Wall Street Journal piece Perry argued, “the simple 20 percent flat tax will allow Americans to file their taxes on a postcard, saving up to $483 billion in compliance costs.”
However, Morici noted, 42 percent of Americans pay no income taxes and many who should be are able to take advantage of loopholes to pay significantly less.