This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Forbes: Why Perry's Right on Taxes

Stocks in this article: UDN UUP

NEW YORK ( TheStreet ) -- Steve Forbes, chairman and editor-in-chief of Forbes Media, stands by Rick Perry's tax plan despite bad reviews.

Governor Rick Perry is proposing a 20% flat tax with some exemptions for lower income earners (under $500,000), like $12,500 for individuals and dependents as well as deductions for mortgage interest, charity donations and state and local taxes. Perry would also eliminate the tax on social security benefits, capital gains, dividends and estates. Finally, Perry would reduce the corporate tax rate from 35% to 20% as well as lower the tax on overseas capital companies bring back into the U.S.

The Tax Policy Center estimates that Perry's plan would cut Federal revenue by 27% in 2015. The Congressional Budget Office says that the Federal government made $2.3 trillion in 2011 so a 27% cut would leave the government with just $1.6 to spend.

In 2011, the government spent $3.6 trillion, and almost one trillion of that was spent on just social security and net interest payments alone. The CBO estimates that government annual spending on net interest will more than double in the next ten years.

Perry does want to cut spending to 18% of GDP which would require $900 billion in annual spending cuts, but that would still amount to $2.7 trillion in spending leaving a sizable deficit of nearly $1.1 trillion.

Perry's flat tax would undoubtedly help the rich but might do little for lower income earners. Those paying taxes on $10 million, for example, would see the amount they had to pay each year fall by 42% while those making only $50,000 would see only a 20% decrease in their taxes.

Steve Forbes has been an ardent supporter of Perry throughout the campiagn and has even gone as far to say that a vote for Rick Santorum or Ron Paul is really a vote for Mitt Romney. TheStreet sat down with Forbes to see what parts of Rick Perry's tax plan were positive, where his plan fell short, and where to cut spending without damaging the economy.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs