Editor's Note: This column was co-authored by Ken Klukowski, a columnist for the Washington Examiner.
Governor Rick Perry unveiled his plan for fundamental tax reform with an optional flat tax. This bold proposal for economic growth is a fiscal game-changer, and demonstrably superior to the proposals of rivals Herman Cain and Mitt Romney.
In the 1990s, the National Commission on Economic Growth and Tax Reform (the Kemp Commission) chaired by the late Jack Kemp created the framework for a flat tax. This research was later refined and advanced by Steve Forbes, and the flat tax became central to his presidential campaign.
Since then the flat tax has caught on worldwide, especially in Eastern Europe. Fair and predictable, it has led to extraordinary growth. It removes government from the business of picking winners and losers, bringing everyone together to decide on a common tax rate.
Perry has made the flat tax a major proposal in his presidential campaign. It accomplishes the dual primary purposes of tax policy: raising revenue while optimizing economic growth.
The record of nations and states that adopt a flat tax proves its success in fueling prosperity. It does not punish success through progressive escalation of rates, and is stable and neutral in allowing private entities to freely make choices without government incentives or coercing decisions.
It is based on Ronald Reagan’s supply-side economic philosophy. By spurring economic growth, it increases government revenues. Coupled with cutting spending and a balanced budget constitutional amendment, the flat tax is a vehicle for ending our ruinous debt.
The flat tax also serves the secondary goal of helping the less fortunate. It allows a generous standard deduction and child tax credits to ensure that low-income Americans do not pay and working-income families would only pay modestly. It also rightly focuses on the family as the basic unit of taxation, rather than individuals.
The flat tax is eminently fair. Take Perry’s rate of 20%. The well-off truly pay their “fair share” and pay more than middle-income Americans, because 20% of rich is more than 20% of middle-income.
Perry also deals with the foreseeable questions about deductions for charitable giving and mortgages. While many taxpayers don’t itemize their taxes, millions do, and care about those deductions.
There are other popular deductions and credits, however. Excluding them will cause conflict with powerful interests. Voters will need to be persuaded why a flat tax is preferable.