Rick Perry's new tax plan. Hot off the press!

pineinthegrass wrote: I ran some numbers and compared Rick Perry's 20% flat tax to the tax paid in our current system.

First consider a family of four. Under Perry's plan they can make up to $50K and owe zero tax. Under the current system (2010 numbers, did not include the temporary Make Work Pay credit), they get a refund (up to $7036) if they make under $45K, so the current system is better for under $45K. There is a "donut hole" from $45K to $65K where you can save under Perry's plan (up to $766). From $65K to $116K you save under the current system. Above $116K Perry's plan cuts taxes.

For a single person you currently get a refund (up to $457) if you make under $11K. With Perry, you pay zero up to $12500. The donut hole where you save with Perry is if you make between $11K and $16K. From $16K to $73K you pay less with the current system. Above $73K, Perry's plan cuts taxes.

Looking at IRS stats, about 88% of tax payers make less than $116K. The $45K-$65K donut hole represents about 15% (rough estimate) of tax payers and the $11K-$16K hole represents about 9%. So by rough estimate I'd say Perry's plan is an increase for about 64% of tax payers. Assuming Perry is telling the truth that everyone would still have a choice of paying under the current system, I assume the 64% will choose that option. And by keeping the current system as an option, Perry is not simplifying taxes but is instead making them a bit more complicated.

For seniors, only about 1/3rd of them currently pay any income tax. So Perry's plan of not taxing Social Security benefits doesn't help 2/3rds of seniors. His plan would help seniors who have some investment income since capital gains and dividends would not be taxed. It's hard to estimate how many would be helped. I'd guess about 10% would save something, but I'll leave it to the experts.

For the wealthy they will save a whole lot if they have lots of investment income. Many thousands of millionaires and billionaires whose main income source is from investments currently pay around 15% and would end up owing zero.

Cain's 9-9-9 plan made an effort to keep tax revenue neutral, and it comes close to doing that from the estimates I've seen. Perry's plan makes no attempt to be revenue neutral and will clearly reduce tax revenues by a substantial amount (my guess is hundreds of billions). He needs to let people know what programs he plans to cut to make up for lost revenues, and by how much IMO. Otherwise he's just growing the deficit even more.

Explain to me how a family of 4 right now making $50,000 get's a refund of $7036 right now?

And also explain how a family of 4 between $65K and $116 K can save more money now. Not even close! What tax rate are they at now? 29-35% for some of them with $1000 write off for kids? And under Perry's it is 20% and you write of $50,000 right off the top So use $100,000 and compare them. They will pay $10,000 under Perry's plan not counting charity write offs and mortgage interest. Which would both be the same so we won't put those in. So under Perry's plan a family making $100,000 pays $10,000 or 10%. Under the current plan let's just use 29%. They only get to write off what? Is there an adult deduction? If not, they write off nothing and pay 29% or $29,000 but get bat child credits of $2000. So they pay 27%. What am I missing? Not even close to compaing the two.

Rick Perry On Increasing Income Inequality: 'I Don't Care About That'

Republican presidential candidate Rick Perry says he wants a huge tax break for the rich, and he doesn't care what it means for income inequality.

Rick Perry announced on Tuesday that if elected president he would slash the corporate tax rate to 20 percent from 35 and give everyone the option of paying a flat income tax rate of 20 percent.

He also would try to encourage U.S. companies who have stored $1.4 trillion overseas to move their profits back to the United States by allowing them to pay 5.25 percent in taxes at first, according to Reuters.

The plan, if enacted, would dramatically reduce the tax burdens of the wealthiest people in the United States, saving millions of dollars for some, while raising taxes for poor and middle-class people who opt into the plan.

"I don't care about that," Perry said of the increased economic inequality that would result from the tax plan in an interview with The New York Times. "If that's what comes, I'll take that criticism."

http://www.huffingtonpost.com/2011/10/2 ... 30991.html

It's nice to have that much "clarity" in an empty-suit politician.

The Viking wrote: [Explaing to me how a family of 4 right now making $50,000 get's a refund of $7036?

I said that under current law a family making under $45K gets a refund and that refund can be up to $7036. The sweet spot to get the full $7036 is when you make $21K. $2K is from the child tax credit and the rest is from the earned income credit for having low income. At $45K there is little if any earned income credit. You do owe about $2K tax, but the $2K child credit gets you to zero or less.

To get the maximum $766 savings in the Perry donut hole, you need to make exactly $50K. Between $45K and $50K you start paying tax with the current sysem for the amount above $45K. Once above $50K the Perry advantage starts shrinking because he taxes at 20% while the current plan is still in the 15% bracket. Above $65K the current plan has lower tax up to $116K.

So for a family of four making less than $116K (about 88% of tax payers), the only way you save with Perry's plan is if you make between $45K to $65K. Everyone else under $116K would pay more with Perry's plan.

And there are other areas a family of four could save even more under the current system. I don't see any mention of an IRA or 401K deduction under Perry's plan. Haven't heard any mention of health or education savings accounts either. Those cut your taxes even more but I didn't consider them.

Here. Watch it and decide for yourself what you think.

http://www.therightscoop.com/watch-live ... omic-plan/

The Viking wrote: And also explain how a family of 4 between $65K and $116 K can save more money now. Not even close! What tax rate are they at now? 29-35% for some of them with $1000 write off for kids? And under Perry's it is 20% and you write of $50,000 right off the top So use $100,000 and compare them. They will pay $10,000 under Perry's plan not counting charity write offs and mortgage interest. Which would both be the same so we won't put those in. So under Perry's plan a family making $100,000 pays $10,000 or 10%. Under the current plan let's just use 29%. They only get to write off what? Is there an adult deduction? If not, they write off nothing and pay 29% or $29,000 but get bat child credits of $2000. So they pay 27%. What am I missing? Not even close to compaing the two.

OK, you added more to your post since I last replied.

You are clear on how Perry's plan works, but you don't understand how the current plan works.

For a married couple, the current plan has brackets of 10% for the first $16,750, 15% up to $68K, and 25% up to $137,300. There are also the 28%, 33%, and 35% bracket but they don't apply in this example.

What you are totally missing is the brackets apply after you take your deductions. For example, if you have $45K of deductions, you only pay 10% on the first $16,750 you make above $45K. Even if your adjusted gross income is in the 25% bracket, when you take off your exemptioins and deductions your taxable income might only be taxed at the 10% and 15% rates.

Let's consider a family of four that makes the $116K in my example. Under the current system, they owe $13,169 tax due (I ran it with tax software). So even though they are in the 25% bracket, they only end up paying 11% of their adjusted gross income.

It's kind of similar to Perry's plan. If they make $116K they only owe 20% on $116K - $50K. That comes to $13,200, which is slightly more than the current system. And even though Perry taxes you at a "flat" 20%, they only end up paying 11% in this example as well.

pineinthegrass wrote:

The Viking wrote: [Explaing to me how a family of 4 right now making $50,000 get's a refund of $7036?

I said that under current law a family making under $45K gets a refund and that refund can be up to $7036. The sweet spot to get the full $7036 is when you make $21K. $2K is from the child tax credit and the rest is from the earned income credit for having low income. At $45K there is little if any earned income credit. You do owe about $2K tax, but the $2K child credit gets you to zero or less.

To get the maximum $766 savings in the Perry donut hole, you need to make exactly $50K. Between $45K and $50K you start paying tax with the current sysem for the amount above $45K. Once above $50K the Perry advantage starts shrinking because he taxes at 20% while the current plan is still in the 15% bracket. Above $65K the current plan has lower tax up to $116K.

So for a family of four making less than $116K (about 88% of tax payers), the only way you save with Perry's plan is if you make between $45K to $65K. Everyone else under $116K would pay more with Perry's plan.

And there are other areas a family of four could save even more under the current system. I don't see any mention of an IRA or 401K deduction under Perry's plan. Haven't heard any mention of health or education savings accounts either. Those cut your taxes even more but I didn't consider them.

Wait a married family is in the 25% bracket between $69,000 and $139,000 so I can change my numbers a bit. Someone making $100,000 pays about 23% now not counting the MI and Charities which don't change, and under Perry's plan they pay about 10%. Huge savings. About $13,000 per year!


Let's go with $65,000 like you said. Minus $50,000 for a family of 4 like we are comparing and they pay 20% on $15K. Which is $3000. That is just 4.6%. Under current how much would a family of 4 pay making $65K? No deductions that are different right? So use the 15% and you owe $9750. Subtract the $2000 shild credits and you still owe $7750. Almost 12%. More than 150% more. $4750 more. Perry's wins hands down again. That is almost $400 per month for that family to spend on food and bills. HUGE difference!

OK, I have a question. Why was it that is was OK to pass the deficit downt he road when we were bailing out banks, and the auto manufacterers, and Wall Street, TARP 1 and 2 and the failed stimulus that Dems say should have been even bigger, and housing and everything else but now when Perry has a plan that bails out taxpayers and can create jobs, Dems all of the sudden care about how it will add to our deficit?

The Viking wrote: Here. Watch it and decide for yourself what you think.

http://www.therightscoop.com/watch-live ... omic-plan/

Here is his written plan:

http://www.rickperry.org/cut-balance-and-grow-pdf/

And here is a sample of his tax form:

http://www.rickperry.org/content/uploads/2011/10/sample-tax-return.pdf

Yes, it's short, although they over simplified it. And here is our current 1040EZ simplified form. It's a bit longer and more involved, but still pretty short.

http://www.irs.gov/pub/irs-pdf/f1040ez.pdf

Actually, that temporary Making Work Pay credit made it a lot longer than it usually is. We don't have that credit in 2011 (instead we get the 2% payroll cut which doesn't go on the tax form).

pineinthegrass wrote:

The Viking wrote: Here. Watch it and decide for yourself what you think.

http://www.therightscoop.com/watch-live ... omic-plan/

Here is his written plan:

http://www.rickperry.org/cut-balance-and-grow-pdf/

And here is a sample of his tax form:

http://www.rickperry.org/content/uploads/2011/10/sample-tax-return.pdf

Yes, it's short, although they over simplified it. And here is our current 1040EZ simplified form. It's a bit longer and more involved, but still pretty short.

http://www.irs.gov/pub/irs-pdf/f1040ez.pdf

Actually, that temporary Making Work Pay credit made it a lot longer than it usually is. We don't have that credit in 2011 (instead we get the 2% payroll cut which doesn't go on the tax form).

So were my above scenarios correct? $65K and $100K save a lot with Perry's plan right?

The Viking wrote: Wait a married family is in the 25% bracket between $69,000 and $139,000 so I can change my numbers a bit. Someone making $100,000 pays about 23% now not counting the MI and Charities which don't change, and under Perry's plan they pay about 10%. Huge savings. About $13,000 per year!


Let's go with $65,000 like you said. Minus $50,000 for a family of 4 like we are comparing and they pay 20% on $15K. Which is $3000. That is just 4.6%. Under current how much would a family of 4 pay making $65K? No deductions that are different right? So use the 15% and you owe $9750. Subtract the $2000 shild credits and you still owe $7750. Almost 12%. More than 150% more. $4750 more. Perry's wins hands down again. That is almost $400 per month for that family to spend on food and bills. HUGE difference!

Again, you don't know how to calculate taxes using the current system. Under the current system a family of four also owes about $3K in taxes. I've run it with my tax software.

If you don't believe me, go get your own tax software and run it yourself. And don't forget to make sure the two kids qualify for the child tax credit. Then you'll see that at $65K both Perry's plan and the current system have a tax due of about $3K.

You keep throwing out your wrong numbers and I keep correcting them, but it does no good. Run some software.