Texas Governor Rick Perry introduced a plan for a flat tax of 20 percent in an effort to revive his candidacy for the Republican Presidential nomination.

Rick Perry

Dubbed the “cut, balance and grow” plan, it also includes cuts in federal spending, a ban on earmarks, and a Balanced Budget Amendment to the Constitution.

The plan would replace the current Tax Code with an optional 20 percent flat tax for individuals and corporations. “Each individual taxpayer will have a choice,” Perry said in a speech Tuesday in Greenville, S.C. “You can continue to pay taxes, as well as accountants and lawyers under the current system, or, you can file your taxes on a postcard, with deductions only for interest on a mortgage, charitable giving, and state and local tax payments.”

The plan would eliminate taxes on Social Security benefits, estates, capital gains and dividends.

“We will increase the standard exemption for individuals and dependents to $12,500, meaning families in the middle on the lower end of the economic scale will have the opportunity to get ahead,” said Perry. “Taxes will be cut across all income groups in America. The net benefit will be more money in Americans’ pockets, with greater investment in the private economy instead of the federal government.”

Perry offered the plan after losing ground in recent weeks to rival candidate Herman Cain, whose “9-9-9” plan for a 9 percent flat tax on individuals, businesses and sales has helped the former Godfather’s Pizza CEO make gains in the polls.

On the corporate tax side, Perry also promised “bold” tax reform. “My plan closes corporate loopholes, ends the special breaks for special interests, and stops the gravy train of lobbyists and tax lawyers at the Washington trough,” he said. “In exchange for a corporate tax free of carve-outs and exclusions, I offer a much lower rate of 20 percent that represents the average corporate rate among the developed nations, and that will make our corporations more competitive on a global scale.”

Perry pledged to “shut down the cottage industry of corporate tax evasion” by creating a tax that is “broad, fair and low.” He also proposed transitioning to a territorial tax system on corporate income earned overseas and to offer a one-time reduced tax rate of 5.25 percent for a limited time on repatriated foreign earnings.

“The goal of my cut, balance and grow plan is to unleash job creation to address the current economic crisis, while generating a stable source of revenue to address our record deficit and put our fiscal house in order,” he said.