Phyllis Schlafly rips Perry flat tax from the right
Fri November 4, 2011 12:00 am

[I am indebted to the Quorum Report for providing a link to Ms. Schlafly’s column, portions of which I have excerpted below. The founder of the Eagle Forum writes:]

Does Rick Perry want to undermine traditional marriage? This question leaps out from his new 20 percent flat tax plan, which would eliminate all tax advantages for married couples in which one spouse is the primary breadwinner.

For more than 60 years, the federal income tax has treated the family as an economic unit. A husband and wife have the benefit of pooling their income in a joint tax return which affords larger deductions and lower rates.

Perry would replace the pooling of husband-wife income with a system in which each individual, regardless of marital status, would owe federal taxes on his or her separate income. Perry’s plan offers “generous standard deductions of $12,500 for individuals and their dependents” — which ignores the fact that children are “dependents” of both their parents, even if one earns all or most of the family income.

If an income tax is truly “flat,” filing status wouldn’t matter because a wife is taxed at the same rate as her husband. But Perry’s so-called flat tax isn’t anywhere near flat, so it matters greatly that he offers the same standard allowances to alternative lifestyles as for married couples, allowing, for example, two unrelated adults living with two children to avoid income tax on their first $50,000 of income.

Perry’s spokesman told the Wall Street Journal that “We were very careful to construct this in a way that protects the middle class.” No; giving that size deduction to unmarried parents, defined as “individuals and their dependents,” means rewarding bad behavior and is, by definition, outside the middle class. Regardless of income, you can’t be middle class without respecting middle-class values, the most important of which is marriage.

The anti-family bias of Perry’s tax plan is found to a lesser degree in several other tax reform plans. But Perry has been on probation with pro-family voters since July when he told an elite group of big-money donors in Aspen that he was “fine” with gay marriage in New York because “that’s their business.”

* * * *

Schlafly’s article blows a giant hole in Perry’s flat tax proposal from the viewpoint of social conservatives. But she also makes an interesting economic argument against the Perry tax plan:

Although the Perry plan’s most striking feature is its anti-marriage bias, his proposal for corporate income is equally pernicious. Perry would shift businesses to a “territorial” tax system, which means that corporations would be taxed only on the profits they earn inside the United States.

We should do exactly the opposite. We should reduce or eliminate taxes on businesses that employ Americans producing goods and services inside our own country, while increasing taxes on the profits that corporations earn by outsourcing or manufacturing overseas.

Above all, we should eliminate the foreign tax credit, a self-destructive provision that allows corporations to pay China or Venezuela or Saudi Arabia the money they would otherwise owe the U.S. government. Let’s also cut out the deductions that U.S. corporations take for hiring foreigners to do work that Americans can do.

I have speculated several times over the past few months that something is wrong inside the Perry campaign. This became obvious when Perry came out with his first economic “plan,” which was a hastily thrown together ripoff of the American Petroleum Institute’s wish list. Schlafly’s criticisms lay bare vulnerabilities in the flat tax that Perry’s policy staff did not anticipate. This is what happens when you’re in power for ten years with no opposition and no interest in public policy beyond Voter I.D. and sonogram legislation. You get soft, and you get sloppy, and you don’t spend a lot of time looking for the pitfalls in your proposals. The Perry campaign has not been able to raise the level of its game. They do sloppy work and they get called on it, and those habits have become ingrained–and they’re running out of time to do something about it.

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