Recall that Rick Perry’s so-called “flat tax” plan isn’t flat at all, but rather an alternative tax system that would constitute a massive tax cut for the rich. For people above a certain income, his plan would be worth opting into, and for the rest of earners, it would make sense to stay in the current tax system.
The Tax Policy Center has posted data neatly illustrating this bug (or feature, depending on your point of view). Here it is in handy graph form.
Above about $200,000 a year in income, Perry’s plan would be hard to refuse. Once you exceeded that threshold, your effective tax rate would actually drop modestly, falling below people who make less money than you, and more still the richer you get. It would be like codifying the opposite of the Buffett Rule.
That’s true whether you assume the current Bush tax rates and other tax policies remain in effect permanently for the non-rich, or whether they expire, as scheduled by law.
- Rick Perry’s “File Your Taxes On a Postcard” Scheme (gunnyg.wordpress.com)
- Perry Plan Might Not Cut Taxes Across the Board, Tax Policy Center Finds (blogs.wsj.com)
- Rick Perry’s tax plan: A flat reception | The Economist (policyabcs.wordpress.com)
- Rick Perry: Flat Tax is ‘Tax Cut for Everyone’ (kudlowsmoneypolitics.blogspot.com)
- Rick Perry’s tax and spend conundrum (money.cnn.com)