Saturday, July 11, 2015

Rand Paul’s Fake Flat Tax

JULY 10, 2015

Every four years, Republican candidates for the White House denounce the federal tax system — often advocating replacing it with a supposedly more equitable single tax rate — and this year is no exception. Senator Rand Paul has already come up with a flat-tax reform plan, and it shows clearly, once again, that this is a fundamentally flawed idea.

Mr. Paul has pledged to “blow up the tax code” by replacing all federal taxes with a flat 14.5 percent tax on personal and corporate income — except, that is, when his plan exempts income from taxation altogether by retaining popular write-offs. Mr. Paul proposes to continue deductions for mortgage interest and charitable donations, which would gut the supposed simplicity of a flat tax.

The Paul plan, like the flat-tax plans from previous campaigns, would fail to raise enough revenue to finance a modern government. Estimates by the conservative Tax Foundation found that it would reduce revenue to the Treasury by $1 trillion to $3 trillion over a decade. Citizens for Tax Justice, a more liberal advocacy group, estimates a 10-year loss of $15 trillion. Arguments about the proper role of government aside, a population and an economy that are growing in size and complexity cannot thrive with a shrinking government.

(More here.)


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