GRAY COURT, S.C. — Texas Gov. and Republican presidential candidate Rick Perry has released an economic plan full of long-held conservative goals, including personal accounts for Social Security, an optional flat tax, major spending cuts and a series of tax cuts.
The plan would dramatically reduce taxes, particularly on wealthy Americans and corporations. It would reduce the corporate tax rate from 35 percent to 20 percent, eliminate taxes on dividends and many capital gains and essentially cap individual tax rates at 20 percent.
Perry argues these tax cuts will spur economic growth by creating a more favorable environment for wealthy individuals and corporations to start or expand their businesses. But without significant spending reductions, the tax cuts could drastically increase the federal budget deficit.
“Taxes will be cut across all income groups in America, and the net benefit will be more money in Americans’ pockets with greater investment in the private economy,” Perry said to an audience of more than 200 in the factory at ISO Poly Films Inc. in this South Carolina town.
The “Cut, Balance and Grow” plan puts Perry firmly to the political right of former Massachusetts Gov. Mitt Romney in terms of economic policy.
As he releases the tax plan, Perry seems determined to re-energize his campaign. In an interview with John Harwood, a reporter with CNBC and The New York Times, the Texas governor cast Romney — the GOP front-runner — as a “fat cat.” He said he likes mentioning conservative falsehoods about President Barack Obama’s birth because “it’s fun to poke him a little bit.”
Perry is clearly looking to woo Tea Party conservatives who have been reluctant to back Romney. In almost every way, he presents policies more conservative than Romney’s.
Romney has called for capping federal government spending at 20 percent of GDP, for example; Perry proposes capping at 18 percent. (This year spending is at 24 percent of GDP.) Romney has proposed raising the retirement age to reform Social Security; Perry adopts an idea even more beloved by conservatives and hated by liberals: allowing young people to put their money into private savings accounts outside the traditional retirement system.
Romney would cut corporate taxes to 25 percent; Perry, 20. Although Romney has said one of his goals is a “flatter” American tax code, under Perry’s plan, Americans could either choose to pay taxes under the current system or pay a 20 percent national flat tax.
