October 30, 2011 / 4:59 PM / 8 years ago

Perry: can balance U.S. budget with lower revenues

WASHINGTON (Reuters) - Republican presidential candidate Rick Perry said on Sunday his plan for a 20 percent flat tax option would achieve a balanced budget by 2020 even if it brought in lower revenues initially.

Republican presidential candidate Texas Governor Rick Perry files his paperwork to be on the primary ballot in Concord, New Hampshire, October 28, 2011. REUTERS/Brian Snyder

The Texas governor was interviewed on “Fox News Sunday” and reacted sharply when asked if his proposal, which would let people choose between paying a 20 percent flat tax or filing tax returns as they currently do, would “blow a hole” in efforts to reduce federal budget deficits.

“You got to look at the spending cuts as well and you have to look at the dynamics of the growth that goes on here,” Perry said, adding that a simplified tax system would give job-creating entrepreneurs more confidence to invest.

Perry and fellow contender Herman Cain, a former pizza magnate now vying for front spot in the Republican race for the nomination, have each authored innovative tax proposals that both were defending on Sunday.

Perry turned aside a question whether it was possible to get growth under a flat-tax proposal that some economists estimate would, if exacted, bring in nearly $5 trillion less in revenues to government coffers over its first six years.

“There’s nothing wrong with lower revenue,” he said. “I don’t want more revenue in Washington, D.C.’s hands.”

When asked if his proposal would give a bigger break to wealthy taxpayers than to poorer ones and raise questions about fairness, Perry said the wealthy more often are job creators.

“Historically, those who have money put more money into their business,” he said. “They hire more people.”

Perry has had a rocky two months of campaigning and has seen his ratings in popularity polls fall while Cain has moved ahead with his own proposal for radically altering current taxation methods.

Cain’s so-called 9-9-9 plan would scrap the current system and replace it with a 9 percent sales tax and 9 percent rates for personal income taxes and for corporate taxes.

On CBS’s “Face the Nation,” Cain denied that the 9 percent sales tax would actually push up prices of many goods that people buy though he conceded there was “some educating to do” about how it works.

Cain said “invisible embedded taxes,” which he said economists estimate are as much as 30 percent to 40 percent on many goods, would be removed and replaced by the 9 percent sales tax. He suggested his proposal wasn’t fully understood.

“We have some more educating of the public (to do),” Cain said. “And this is why, maybe, some people don’t like it yet.”

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