Perry: Courting the Donor Class

October 26, 2011

Rick Perry announced his 20% flat tax proposal today which is clearly designed to benefit the upper middle class and the wealthy – the political donor class. These are the individuals who have enough disposable income to donate substantial amounts to political campaigns.

No Help for Working or Middle Class Families

To understand who would benefit from Perry’s plan, we need to examine effective tax rates (i.e., the percentage people really pay) under our current tax structure. Tax brackets are often confusing and lead people to believe they are paying a higher percentage in taxes than they actually do. Each layer of income is taxed differently which means that people in a given bracket do not pay the rate specified for the bracket (i.e., 15%, 25%, 28%, etc.). The following outlines effective tax rates for those who are married filing jointly:

Income Range Effective Tax Rate
under $17,000 10% or less (depending on earned income credit)
$17,000 – $69,000 10 – 13.8%
$69,000 – $139,350 13.8 – 19.4%

Those who are married filing jointly do not begin to pay a 20% tax rate until their taxable income is approximately $150,000 yearly. Families earning less than this will see absolutely no benefit from the Perry plan.

Who Would Benefit from the Perry Plan?

Monty BurnsQuite simply, the donor class would benefit. The more you make above $150,000, the more tax giveaways Rick Perry thinks you deserve.

Taxable Income Tax Giveaways Under Perry Plan
$200,000 $4,069
$300,000 $16,454
$400,000 $29,872
$500,000 $44,872
$1,000,000 $119,872
$5,000,000 $719,872

A Valentine for the Wealthy

Perry’s tax plan is a sweetheart deal for the donor class but provides absolutely no benefit for working and middle class Americans. In fact, it penalizes everyday Americans who will not be able to use Perry’s new short postcard tax form if they would like to pay the lower rates they do today.

The message behind this plan is that those with working or middle class income levels don’t deserve any relief. Everyday folks can continue to pay the same rate (as long as they go through the more lengthy process to do it) while Rick Perry throws money at the donor class.

Desperate Stunt

This plan is completely ridiculous and would never generate enough revenue to cover our expenses. It is a political stunt meant to placate wealthy Republican donors in an effort to keep donations rolling into the Perry campaign treasury.

Perry is in desperation mode and needs all the money he can get to start running attack ads in the hope that this will revive his dying campaign effort. I’m just not sure his sweetheart proposal will be enough to overcome his terrible debate performances. In all likelihood, it’s too little, too late.

  • Alan

    You have a real grasp of “actual” versus “marginal” tax rates.  I wish more voters did.