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Perry's tax plan looks great



The best thing about the Republican debates has been that they have proved to be a breeding ground for good ideas. Cain's 9-9-9 plan has been received very enthusiastically, catapulting him from a nobody to a serious contender, and today Rick Perry has improved on the idea with his 20% voluntary flat tax. I should note, however, that Perry has borrowed very smartly from Steve Moore's visionary Alternative Maximum Tax, which he proposed way back in 1997.

Steve Moore, whom I first met at a Cato conference in the early 1990s, and who went on to lead the hugely influential Club for Growth, had a brilliant idea: make the switch to a flat tax voluntary. Let people pay a flat tax rate (Steve originally proposed a 25% flat tax) that was somewhat more than what the average effective income tax rate was at the time, in exchange for being able to fill out their tax forms on a postcard, while also forgoing all the expense of hiring accountants and lawyers to maximize the value of deductions. Steve's plan had the great virtue—as does Perry's plan—of greatly simplifying the tax code, broadening the tax base, and thus maximizing the pro-growth incentives of a lower marginal tax rate. Plus, it made the transition to a completely different tax code relatively painless: let people decide which tax system they wanted to follow, just as Jose PiƱera had the vision to make Chile's privatized social security reform voluntary. The best system will in the end win out, as has Chile's privatized social security reform.

I'm not picking candidates at this point, but I am pointing out that we now have some very, very interesting solutions being proposed to our nation's fundamentals problems, and this is extremely positive. You haven't heard the end of this—only the beginning, and it just promises to get better. Let the best man win!

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