Perry proposes 20 percent flat tax

Republican presidential candidate Rick Perry unveiled a sweeping economic agenda Monday highlighted by a plan to level a voluntary 20 percent "flat tax" on all taxpayers who will accept it in place of what they're paying now.

The plan, outlined in a Wall Street Journal op-ed column a day before the Texas governor was set to unveil it in South Carolina, also calls for capping federal spending at 18 percent of the country's GDP while allowing younger earners to privatize their Social Security accounts. Taxpayers who don't want to pay a 20 percent flat income tax, he said, can keep their current rate.

Perry offers several proposals that appear designed to sweeten the offer - and to counter criticism that the flat tax is regressive, taking a proportionally bigger bite from smaller incomes. His plan would preserve popular deductions for mortgage interest and donations to charity for households earning less than $500,000 a year. It would increase the standard deduction to $12,500.

Calling his agenda "Cut, Balance and Grow" - a clear nod to congressional Republicans, who have proposed a "Cut, Cap and Balance" budget bill - Perry says his proposal is the best way to cure the nation's ailing economy.

"Cut, Balance and Grow strikes a major blow against the Washington-knows-best mindset," Perry said. "It takes money from spendthrift bureaucrats and returns it to families. It puts fewer job-killing regulations on employers and more restrictions on politicians. It gives more freedom to Americans to control their own destiny. And just as importantly, the Cut, Balance and Grow plan paves the way for the job creation, balanced budgets and fiscal responsibility we need to get America working again."