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Rick Perry joined the GOP’s tax reform sweepstakes on Tuesday, proposing an optional flat income tax of 20%, among other fiscal and economic reforms. We’ll get to the details, but the larger story is how the drive for a flatter, simpler, more pro-growth tax code is taking center stage in the Republican Presidential contest.

Mr. Perry joins Newt Gingrich, who has proposed a 15% optional flat tax; Jon Huntsman, whose reform proposal would cut the top individual rate to 23%; and Herman Cain and his now famous 9-9-9 plan. House Republicans included a reform with a 25% top rate in their budget earlier this year. All of this ferment shows that whatever one thinks of the candidates as potential Presidents, most of them are trying to meet the political moment with reforms to address our major economic challenges.

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A flatter tax code is both an economic and political reform. Economically, its lower rates would attract more capital from abroad, encourage more domestic investment, and increase growth and jobs. It would also minimize, if not eliminate, the tax favoritism and loopholes that misallocate labor and capital. Politically, this would reduce the legal corruption of handing out favors that has soured so many Americans on their government.

Mr. Perry has struggled since he announced his campaign, so his proposal can be seen as a chance to rejuvenate his candidacy. He’d offer individuals a choice of tax systems: Keep the current code, with all of its deductions, the alternative minimum tax and a top rate of 35%. Or go with a flat rate of 20%, with far fewer deductions and no AMT. Mr. Perry is assuming that most filers would choose simplicity and a low rate over deductions and complexity.

Based on a National Taxpayers Union study, Mr. Perry believes that this plan will reduce economy-wide compliance costs by as much as $483 billion a year by 2015. The flat tax also eliminates the double taxation on savings and investment, by zeroing out taxes on capital gains and dividends as well as the death tax.

The Texas Governor would address the inevitable political attack that this would be “regressive” by allowing a $12,500 standard deduction per individual. This means that a family of four would pay no federal income tax until it earns $50,000 a year. This is a very generous exemption, and the Perry campaign couldn’t say what share of taxpayers would pay nothing at all. But it would be tens of millions, which reduces the tax base.

The standard deduction would also begin to phase out at $500,000 of income, which guarantees a higher effective tax rate for higher income taxpayers. This won’t be enough to satisfy the liberals at the Tax Policy Center that is portrayed by the media as “nonpartisan,” but Mr. Perry is sure trying.

Less defensible on equity grounds is Mr. Perry’s proposal to include deductions for mortgage interest, charitable contributions and state and local taxes even in his optional flat tax. This is intended to blunt political criticism from powerful lobbies that like their current breaks.

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Kevin Hassett on Rick Perry’s new tax plan.

But as long as the flat tax is optional, it makes far more sense to offer it as a truly clean reform. Homeowners who want to keep their mortgage deduction could choose the current tax code. Mr. Perry is muddying his reform message. And he is making a premature concession that will have other lobbies demanding that they, too, should be a flat-tax exception. With a smaller tax base, pressure to raise rates increases.

Mr. Perry’s corporate tax reform would not be optional, but it would still be beneficial for nearly all American companies. He’d cut the corporate income tax rate to 20% from 35% today, putting it more in line with our global competitors.

He’d also move to a territorial tax system, in which companies would no longer have to pay the U.S. rate if they earn that money abroad. This would make it easier for U.S. companies to bring that income home and create jobs in America. By making the individual and corporate rates the same, at 20%, Mr. Perry would also reduce the risks of tax arbitrage between the two.

One attack on a flat tax is that it won’t raise enough revenue to fund the government—as if the current tax code is doing that well. But Mr. Perry and other Republicans shouldn’t play this static revenue game. The flat tax is desirable precisely because of its spur to faster growth and more job creation, and the dynamic effect those would have on government revenues. The Perry campaign yesterday released a revenue analysis of its plan by John Dunham and Associates that estimated revenues of $2.781 trillion by 2014 and 19.5% of GDP by 2020 (compared to $2.3 trillion and 15.3% in fiscal 2011).

All such estimates are speculative, but the point is that revenue history is on the side of the reformers. After the Reagan reform of 1986 that reduced tax rates to 28% from 50%, tax revenues rose by 36% from 1986 to 1990. As Martin Feldstein wrote on these pages Monday, based on the 1986 experience, even a modest base broadening with lower tax rates would increase tax revenues by 4%, or more than $500 billion over 10 years. Republicans should let Democrats play the role of accountants for the welfare state and instead stress reform and growth.

This does not mean ignoring the spending side of the balance sheet, and Mr. Perry does not. The Texas Governor supports a balanced budget amendment to cap spending at 18% of GDP by 2020, from nearly 24% today. Without getting into too much detail on entitlements, he does dare to propose a higher retirement age for Social Security and Medicare (to be negotiated with Congress), changing the benefit formula so that higher-income seniors get less in payments over time, and personal Social Security retirement accounts.

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All of this is bold enough that it will require an informed and articulate promoter, and the question about Mr. Perry is whether he can make that case better than he has so far been able to defend his Texas record. He’ll be helped by Steve Forbes, the original flat-tax proponent, who is now advising Mr. Perry and knows the attacks to come.

The good news is that Mr. Perry and most of his competitors are thinking big, with proposals that will reverse the U.S. slide to high-debt, slow-growth stagnation. President Obama wants to portray the economic debate as pro-growth government spenders vs. the austerity of budget cutting. But the real debate is over whether government or the private economy is the main engine of prosperity. The flat tax puts Republicans on the side of private growth and government reform, a potent combination. Perhaps Mr. Perry and his comrades can even coax Mitt Romney to join the party.