Third Party & Independents Archives

Rand Paul's Proposal for the Beast

There is no true flat tax rate in Rand Paul’s proposal, which was apparently taken off his website but is ready to be relaunched at some point. But there is a sort-of-flat-tax proposal with a sort-of-progressive component mixed in. A true flat tax rate implies a marginal tax rate of zero. That means the rate you pay does not rise as your income rises. Like a sales tax, which is usually denounced by progressives as unfair to low income earners, and praised by old-fashioned conservatives as virtuously diverting money from consumption to production. Which sounds a little Soviet or Chinese in an odd way. Less tablets and flat screens and more flat-rolled steel please. So Rand Paul understandably wanted something a little more fabulous than a sales tax sort of thingy.

Under Rand's proposal, lower and middle income earners would still get personal exemptions and standard deductions effectively lowering their "flat" rate to less than the 17% benchmark. Businesses would pay the same flat rate of 17% and it's not clear what deductions or exemptions they might be allowed to use to lower that rate. Investment income, capital gains, and good old fashioned dividends would not be taxed at all. So there would be incentives to invest more and consume less built in to what we kind of know about Rand's proposed tax proposal. Estate, gift, and Alternative Minimum taxes would all be eliminated. Is it revenue neutral? Of course not! It would offend Rand if it was. The postulated - it's just a statistical guess in other words - revenue neutral rate of 25% clearly does not interest the Kentucky senator. That invokes the starve-the-beast strategy. A strategy that hasn't worked so far. The beast bellies up to the bond markets and feeds itself even more. So far at least. Perhaps what Rand Paul's tax proposal needs to truly slim down the size of government, is Ted Cruz and hard ball tactics in Congress. That means shut downs if necessary, that enable them to hold and then lower the debt ceiling and then, actually begin to pay down the debt even as tax revenues stabilize and then begin to decline.

Of course for that to truly happen, you would need Rand Paul in the Oval Office, and Ted Cruz as Senate Majority leader of a Tea Party-dominated GOP. That's about as likely as a true flat tax administered by a reformed IRS. Impossible, or nearly so, in today's world of subsidies and an enormous and spreading tangle of rules and regulations. Especially those enforced by the IRS.

Posted by AllardK at April 9, 2015 10:48 PM
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