The 25 best blogs nov: There’s A Lot To Like About Rand Paul’s Tax Plan

Friday, June 19, 2015

There’s A Lot To Like About Rand Paul’s Tax Plan

I’m sorry I haven’t written much about the Republican primary. It’s still early and there are a few candidates left to officially throw their hats in the ring. Plus, I haven’t heard a whole lot from anyone to inspire me to sit here at my laptop late at night to weigh in. Then I saw Rand Paul’s op-ed in the Wall Street Journal outlining his tax plan. There’s a lot to like.

So on Thursday I am announcing an over $ 2 trillion tax cut that would repeal the entire IRS tax code—more than 70,000 pages—and replace it with a low, broad-based tax of 14.5% on individuals and businesses. I would eliminate nearly every special-interest loophole. The plan also eliminates the payroll tax on workers and several federal taxes outright, including gift and estate taxes, telephone taxes, and all duties and tariffs. I call this "The Fair and Flat Tax."

From there he goes on to note how President Obama’s “middle class economics” of redistribution are making income inequality worse and making middle class families worse off. He also said that his plan would increase economic growth and help to bring down the deficit as more jobs.

So here are the basics of the plan, which sounds pretty simple to understand and would make the IRS obsolete.

My tax plan would blow up the tax code and start over. In consultation with some of the top tax experts in the country, including the Heritage Foundation's Stephen Moore,former presidential candidate Steve Forbes and Reagan economist Arthur Laffer, I devised a 21st-century tax code that would establish a 14.5% flat-rate tax applied equally to all personal income, including wages, salaries, dividends, capital gains, rents and interest. All deductions except for a mortgage and charities would be eliminated. The first $ 50,000 of income for a family of four would not be taxed. For low-income working families, the plan would retain the earned-income tax credit.

I would also apply this uniform 14.5% business-activity tax on all companies—down from as high as nearly 40% for small businesses and 35% for corporations. This tax would be levied on revenues minus allowable expenses, such as the purchase of parts, computers and office equipment. All capital purchases would be immediately expensed, ending complicated depreciation schedules.

Read the whole thing.

Just eliminating the payroll tax would make it so much easier for small businesses (and large ones, for that matter) to hire more workers. Plus, it would leave more money in the pockets of working Americans that they could spend in the economy as they see fit. I hope the other candidates take note. Heck, I hope the Republican Party puts this in their platform.

Update: IBD reminds us what Paul’s plan would get rid of:

In the Communist Manifesto, Karl Marx places “a heavy progressive or graduated income tax” second in his 10-item to-do list for establishing a communist society. Bracketing it are, at No. 1, “abolition of property in land and application of all rents of land to public purposes” and, at No. 3, “abolition of all rights of inheritance.”

How can American society, the world’s supposed bastion of capitalism, be so tied to the core Marxist principle of progressive taxation?[…]

The code’s monstrous 70,000-plus pages currently give the Internal Revenue Service massive powers to seize Americans’ bank accounts simply on suspicion, without a judge’s warrant. With that power, the IRS has in recent years harassed and weakened the effectiveness of political organizations, elements of the populist tea party movement in particular. Ending progressive taxation with a single low rate applicable to all would mean little if any need for a national confiscatory police force like the IRS, since noncompliance would be largely unheard of under such a simple system no longer dedicated to serving government greed.

Americans waste over 6 billion hours of their time a year attempting to comply with IRS rules and regulations, at a cost of over $ 160 billion. That’s money and time that could generate millions of new jobs. Wasteful complexity is simply the inescapable byproduct of a progressive tax system that serves one thing: the vice of popular envy. (Read More)