Thursday, October 27, 2011

Can Perry's 20% Replace Cain's 9-9-9?

Rick Perry has announced a "cut, balance and grow" tax plan with a 20% flat rate as one of its components (others include a Balanced Budget Amendment and a ban on earmarks). The plan would be optional, taxpayers could choose the present tax law or the 20% tax. Only mortgage interest, charitable contributions and state and local taxes would be deductible under the 20% plan and Perry would raise exemptions to $12,500 each to exclude most low-income and working class Americans from tax liability. Perry would also go to a 20% rate on corporations while significantly cutting into corporate tax incentives.

Predictably attacked by liberals as being "pro-rich," Perry's plan is intriguing in its simplicity EXCEPT for the optional feature. Giving taxpayers a choice between the proposed plan and present tax law is clearly full employment for tax CPAs, but the thought of having to calculate tax both ways for clients bringing in tax documents on April 8 (or October 8 for extensions) probably is enough to cause even the most mild-mannered CPA or EA to have nightmares and run screaming from his or her desk.


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