There is zero reason why any Republican presidential contender should oppose the idea Rand Paul introduced in the Wall Street Journal yesterday…
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.
The immediate question everyone asks is: Won’t this 14.5% tax plan blow a massive hole in the budget deficit? As a senator, I have proposed balanced budgets and I pledge to balance the budget as president.
Here’s why this plan would balance the budget: We asked the experts at the nonpartisan Tax Foundation to estimate what this plan would mean for jobs, and whether we are raising enough money to fund the government. The analysis is positive news: The plan is an economic steroid injection. Because the Fair and Flat Tax rewards work, saving, investment and small business creation, the Tax Foundation estimates that in 10 years it will increase gross domestic product by about 10%, and create at least 1.4 million new jobs.
There might be slight alterations to Paul’s plan that ought to be made before it becomes law. You could make that 14.5 percent 17.5 percent and the plan would still be far better than what we have now, for example – when you’re offering an exemption for the folks who make $50,000 or less for a family of four, etc., the effective rate will still be very low. And I’d like to see the first, say, $5,000 of income carry the full tax without the exemption (anything above $5,000 could catch exemptions), because I want everybody in the country to be on the hook for a tax burden so they’ll actually vote like taxpayers.
But those are details that could be tweaked during the legislative process. The plan itself is as good as it needs to be. It fundamentally destroys the tax code, and it paves the way for abolishing the IRS and allowing the states to collect taxes. With a simple one-rate tax plan you can easily outsource tax collection to the 50 state Departments of Revenue and not suffer for it. And by allowing a real-world expensing of equipment, you’re going to incentivize businesses to retool, modernize and increase productivity.
There is nobody running for president on the GOP side who disagrees with this plan, or at least nobody who disagrees with it who can win. This is the plan the GOP electorate wants, and has wanted for a long time.
So all of them should back Paul’s plan, and commit to implementing it as president. Mitch McConnell and John Boehner should insure that the plan passes in both the House and the Senate – or at least the House, and force the Democrats to filibuster it in the Senate. Make the tax reform the single most important issue in the 2016 elections, and call out the special interests who oppose it for the self-dealers they are.
Sure, this will put some monied interests at odds with the GOP. Let them back Hillary Clinton if they want.Run against them, and repudiate the Wall Street Insider gang as the folks who have destroyed the economy and the American Dream with their byzantine and oppressive rules.
A plan like this, properly explained in harmonious fashion by the entire party, will attract the middle class. It will find purchase both with the Tea Party crowd and even some of the Occupy nuts who rant and rave about corporations who pay no taxes. And the economic growth inherent in it could revolutionize America and bring back entrepreneurship and the work ethic.
There is no point in quibbling over details, and there is absolutely no point in any Republicans running on keeping the same tax code with or without minor tweaks. Throw it out, and unite behind throwing it out.