Billionaire Steve Forbes. a former presidential candidate, is backing… (Saeed Khan / AFP/Getty Images )
The original flat taxer, Steve Forbes, has endorsed Rick Perry’s presidential bid the day before the Texas governor plans to unveil his own flat-tax plan during a speech in South Carolina.
“It’s going to be very exciting,” the former presidential candidate told Fox News. “A very low rate, generous exemptions for adults and for children, make it worthwhile to invest in America again, drastically simplying the tax code, lowering the corporate tax rate.”
Forbes called it a “win-win all around” and praised its “radical simplicity.”
That simplicity, of course, is what fueled Herman Cain’s rise from near-anonymity to first-tier candidate. Cain’s "9-9-9" tax plan captured the imagination of many conservatives tired of the complex tax code. But his plan quickly fell under attack. Rivals such as Rep. Michele Bachmann of Minnesota claimed it would give Congress another revenue stream to exploit. And Perry, among others, slammed Cain’s proposed 9% federal sales tax.
Forbes, the editor in chief of Forbes magazine, ran for president as a Republican in 1996 and 2000, largely campaigning on the notion of a flat tax. He finished second in the Iowa caucuses in 2000 behind George W. Bush. (In 2008, he backed first Rudolph Giuliani and then John McCain.)
Perry is trying to revitalize a campaign that has lost momentum since the governor turned in a series of poor debate performances, and he hopes to win support from Republicans who prefer Cain or another candidate to Mitt Romney.
While the details of Perry’s plan will come Tuesday, it’s expected to be similar to the plan that Forbes advocated in the 1990s, which would have imposed a 17% across-the-board tax on wages. The question is whether Perry’s plan would eliminate taxes on investment income, interest, and capital gains — as Forbes' would have — and what deductions in the current code Perry’s plan would leave in place.
Those elements will probably dictate whether the plan will be viewed as a progressive tax, in which taxpayers who earn a higher income are taxed at a greater rate, or regressive, where lower-income tax payers bear a disproportionate burden. Critics claim that most flat-tax plans end up raising taxes on the lower end of the spectrum while cutting taxes for the wealthy.
Liberal advocates argue that income taxes should be progressive because sales taxes and gasoline taxes (which are essentially flat taxes) are regressive in nature.
Perry's plan, like Forbes' (and Cain’s), would also probably generate less revenue for the government than the current tax scheme — something that would no doubt please small-government advocates but could leave many federal services unfunded.
Perry's campaign Monday also added several new key advisors, including Joe Allbaugh, who served as George W. Bush's campaign manager during his 2000 campaign; GOP consultant Curt Anderson; Stanton Anderson, former chief executive of the U.S. Chamber of Commerce; and pollster Tony Fabrizio. Fabrizio served as pollster to Bob Dole's 1996 presidential campaign and last year was part of the team behind Rick Scott's surprise victory in the Florida governor's race.