Huge tax break for millionaires under Perry's plan, study shows

AP Photo/Jim Cole

Individuals making more than $1 million a year could see an average tax cut of more than $500,000 under Republican presidential candidate Rick Perry's complicated tax proposal, while some taxpayers at the other end of the income spectrum would see a tax hike compared to the current tax rates, according to an analysis released Monday.

Perry's plan would also reduce federal tax revenues by hundreds of billions of dollars, forcing the government to make dramatic spending cuts -- long a goal of many conservatives pushing for a smaller federal footprint.

Perry's plan would give taxpayers the option of paying taxes under the current system or opting into a "flat tax" system with a 20 percent tax rate.

The "flat tax" option would give taxpayers a standard $12,500 exemption for each individual and dependent; keep deductions for mortgage interest, charitable contributions, and state and local taxes paid; and cut taxes on long-term capital gains, qualified dividends and Social Security benefits.

In short, his plan would cap the maximum rate at 20 percent, giving the biggest cut to those at the top of the income scale who pay the current highest federal income tax rate of 35 percent.

The analysis from the Tax Policy Center, a joint venture of the Brookings Institution and the Urban Institute, worked under the assumption that the tax cuts first passed by President George W. Bush in 2001 and extended by President Obama in 2010 would expire as intended in 2012. Materials released and statements made by the Perry campaign suggest the GOP candidate would let the tax cuts expire, according to the group.

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The group also assumed that, given the choice between the current tax law and Perry's 20 percent "flat tax," people would make the best choice for themselves.

Working on that premise, the Tax Policy Center released an analysis comparing today's tax policy to the taxes people would pay in 2015 under Perry's plan. It found that tax rates would go up, on average, for all taxpayers making less than about $50,000 per year. For instance, about 33 percent of taxpayers making between $40,000 and $50,000 would get an average tax break of $962 -- but 63 percent of taxpayers in that income range would see an average tax increase of $900.

However, nearly all Americans making more than $1 million -- 98 percent of them -- would get an average tax break of $512,733. The other 2 percent would see an average tax increase of $33,914.

Compared to today's tax policy, Perry's plan is estimated to reduce federal revenue by roughly $570 billion by 2015.

The Center also released an analysis of Perry's tax plan working with the assumption that the expired Bush/Obama tax cuts are a moot point. Under that premise -- that the higher rates represent the baseline -- no one would have to see a tax hike, since they would either stay at that baseline or choose the "flat tax" if it worked to their advantage.

Even so, the rich still make out better than the rest of society in this scenario -- while everyone making $30,000 or less sees a tax cut of under 1 percent, those making $1 million or more see a tax cut of more than 20 percent. Essentially every person making more than $1 million a year would see an average tax break of $646,752.

On "Fox News Sunday" over the weekend, Perry justified giving the rich a bigger tax cut.

"Historically, those who have money put more money into their business," he said. "They hire more people. That's what we need to be focused on -- how do you give incentives to the job creators in this country so that those $14 million people that don't have jobs out there have a shot of having the dignity to take care of their family?"

Reducing federal revenues by hundreds of billions would require significant spending cuts. On Fox, Perry gave one example of a cut he would make, saying he would save $25 billion by cutting programs in the Department of Education. Perry said he approved of the ideas in a plan introduced by Sen. Tom Coburn, R-Okla., which promises to cut the budget by $9 trillion by scaling back Medicare, closing tax loopholes and making various spending cuts.

[richard2653]

Million dollar earners would have to pay $500,000 LESS taxes. This is huge news since the Liberals would have us think that they now pay NO taxes. Are the Liberals paying attention? Not a chance. And who are those million dollar earners? Probably "S" Corporations where the whiners work. So their jobs are saved and Obammy can claim victory. And everybody is happy.

[aldrich617]

The only way that you can give incentives to the job creators in this country so that the 14 million people that don't have jobs out there have a shot of having the dignity to take care of their family is to give the JOB CREATORS/JOB DESTROYERS a choice of
USE IT OR LOSE IT. Use the generous tax breaks offered to hire people or lose it all to a punitive tax.

[iamproteus]

Wouldn't it be interesting to see an "analysis" showing the effect of these various tax proposals on the tax returns of those proposing them?

[tmn]

Simply Perry taking care of his buddies...

[realidad-2009]

Perry's more of same Texas Bush-Whacking?

Income inequality Grew massively since 2000 under George W Bush.

According to Harvard Magazine, 66% of 2001-2007's income growth went to the top 1% of Americans, while the other 99% of the population got a measly 6% increase. How is this possible?

One thing to consider is that in 2001, George W. Bush cut $1.3 trillion in taxes, and 32.6% of the cut went to the top 1%.. Today, 50 percent of all Capital Gains go to top 0.1 percent of Income, 37 percent to next 4.9 percent, and 10 percent to next 15 percent cupon clippers who get their Income from Investments... Not Work!

Another factor is Bush's decision to increase the national debt from $5 trillion to $11 trillion, with nary a comment from Republican in Congress . The combination of increased government spending and lower taxes helped the top 1% considerably. Then Bush and Cheney started two wars.... "Outside of the Federal Budget:..... which continue today 10 years later. No wonder U. S. is BROKE!

The second part of the con was George Bush & Dick Cheney's "Deregulation and Lack of Financial Enforcement" to mask much of the Power Elites', his "Haves and Have Mores", income streams behind tax shelters and other gaming-of-the-system so the advertised rate appears high to the peasantry but the effective rate paid on total income is much much lower.

The tax shelters are so numerous and so effective that it takes thousands of pages of tax codes and armies of toadies to pursue them all: family trusts, oil depletion allowances, tax-free bonds and of course special one-off tax breaks arranged by "captured" elected officials.

Now the Five Republican "front-runners" ... say "They want to eliminate Capital Gains Tax and Tax on all Dividends"?

[rationall7]

So true, eliminate Capital Gains & Dividends is a highly leveraged source of income used by the wealthy and not by the average working class person, it's unfair to propose that we forget about taxing someone who is Stock Day Trader making $1 million because he bought low and sold high to our Mutual Fund Manager.

[stn_sage]

His tax plan strikes me as being 'very strange'!
Is this just an outright attempt to buy the votes of the ultra-wealthy in this country, OR, does he REALLY believe such a plan
is feasible?!
Because if the latter is the case, if, he really believes you can
TAKE even MORE MONEY from people who don't have it, and THAT
is going to solve the economic woes of this country,
then frankly, he's too economically naive to be president!!

[tsigili]

That's the part of the plan that doesn't work. In any case, it is Congress who has to say yea or nay, to any part of any plan. In this case, it won't work, so they would not agree to it.

[impactors]

I hope no one is surprised. .When you see Gov. Perry. What you're really looking at is a George W. Bush clone. But let's face it. No matter who wins next year's Presidential election. One thing will not change. One thing always remains the same. The American voting majority. The only segment in American society that has absolutely no representation on any level of government, will continue to see their lives get worse. As hard as it's getting to believe, It is a given. Why? Because politicians do not do things for working people, they do things to working people. It's policy to take from the peasant class. In order to provide for themselves and the rich. Which after a term or two, includes them. It's always been that way. At least for the last fifty or so years. Besides, we cannot afford to provide bribe money by way of lobbyists, or huge campaign contributions. We cannot afford to open up Swiss bank accounts for the little extra bits of cash, a few hundred grand, that suddenly appears in our, and you have no idea how I hate to use that word, "OUR" when referring to those we elect to rule over us, bank accounts. I don't know about you. But I haven't a spare executive type jet that I can loan out. How about trips to the bahamas. So the politicians can discuss the slum problems in New York City? Nope, I can hardly afford to put gas in my car. And the closest thing in the way of a plane I can afford. Would be a ten dollar Walmart kite. At this time I'd like to thank our rulers for all they have done to me, and you. After all is said and done. Why should we have to bribe our representatives to do for us what we already pay them to do? You know, the hardest part for me to swallow, is the fact that all those self-centered corrupt politicians. The very people who caused the destruction of our Nation. Will never suffer at all. While we the forgotten American people undoubtedly will. They'll retire, flee, like rats from a sinking ship, would be more accurate. To their ranch or compound. Santuaries protected by armed guards that are paid for with taxpayer dollars. Sad, isn't it? Andy Rooney once said. "This country has been going to Hell for so long now. I just can't understand why it hasn't got there yet. Don't worry Andy, Hell is just around the bend. We should be there within the next four or five years, maybe a whole lot sooner.

[jcnbma]

Trickle down economics consists of a yellow fluid running down the faces of the poor working class.

[jcnbma]

This guy is one of the shadiest candidates I've seen come along in a while. This guy is corrupt....you can smell it a mile away.