-- Sen. Rand Paul, R-Ky., says he wants to “blow up the tax code and start over” with a 14.5 percent flat tax on individuals and businesses.
Paul, who is running for the Republican nomination for president, announced the plan in a Wall Street Journal op-ed Thursday and said it would amount to a $2 trillion tax cut.
The 14.5 percent tax would be applied on all companies, personal income, including wages, salaries, dividends, capital gains, rents and interest, while eliminating all deductions except for mortgage and charities. The first $50,000 of income for a family of four would not be taxed, according to the outline Paul wrote.
The plan would require huge government spending cuts, and Paul did not specify in his op-ed where they would come from. But in 2013 he released a proposal, which he said would balance the budget in five years, that called for abolishing the Department of Education, the Department of Energy, the Department of Commerce, and the Department of Housing and Urban Development. That proposal would also have replaced food stamps and other welfare programs with state block grants, and increase the age for Social Security beneficiaries, among other things.
Paul wrote that his flat tax plan would “turbocharge the economy.”
A number of Republican presidential candidates have campaigned on flat tax plans over the years, from magazine publisher Steve Forbes in 1996 to former House Speaker Newt Gingrich in 2012. Current candidate Ben Carson has also floated a flat tax plan, suggesting his rate might be 10 percent.
While at times popular with conservatives, flat tax plans are also criticized because the poor would be forced to pay as high a percentage as the rich.
Paul argued that his plan is fair, and in fact declared it “the boldest restoration of fairness to American taxpayers in over a century.”
He wrote in the op-ed that it would eliminate tax loopholes and “most of the loopholes in the tax code were designed by the rich and politically connected.”