Sen. Rand Paul unveiled on Wednesday his plan to "blow up" the tax code and start fresh with a flat federal tax.
"The tax code has grown so corrupt, complicated, intrusive and antigrowth that I've concluded the system isn't fixable," the freshman Kentucky senator and Republican presidential candidate wrote in a Wall Street Journal op-ed piece, going on to described a replacement plan that would reduce the government's tax take by more than $2 trillion over 10 years, or at least 5 percent.
"My tax plan would blow up the tax code and start over," Paul wrote. "I devised a 21st-century tax code that would establish a 14.5 percent 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."
Dubbed "The Fair and Flat Tax," Paul says his plan would get rid of "nearly every special interest loophole" and also nix the payroll tax on workers, as well as several federal taxes including gift taxes, estate taxes, telephone taxes and all duties and tariffs.
The popular mortgage interest and charity deductions would be retained under Paul's plan, as would the earned-income tax credit.
A uniform 14.5 percent business activity tax would also be applied on all companies, down from the current 35 percent tax rate for corporations, and nearly 40 percent of small businesses, according to Reuters.
"The immediate question everyone asks is: Won't this 14.5 percent 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," Paul wrote.
He said his proposal would "turbocharge the economy" by encouraging employers to hire and allowing workers to keep more of their money.
Paul says the plan would also keep the deficit in check by working as 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 [percent], and create at least 1.4 million new jobs," he wrote. "And because the best way to balance the budget and pay down government debt is to put Americans back to work, my plan would actually reduce the national debt by trillions of dollars over time when combined with my package of spending cuts."
And in an attempt to ward of left-leaning critics who may suggest Paul's plan is a tax cut for the wealthy, he writes, "But most of the loopholes in the tax code were designed by the rich and politically connected. Though the rich will pay a lower rate along with everyone else, they won't have special provisions to avoid paying lower than 14.5 [percent]."
Paul then issued a challenge to his presumed Democratic opponent: "It shows that we have something we can offer to the working class," he told the WSJ. "The question we have for Hillary Clinton is: How are you going to help the working class?"
