Kentucky senator Rand Paul has introduced a tax reform proposal that promises to “blow up the tax code” and replace it with a flat tax on individual and business income. Here’s Paul introducing his proposal in the Wall Street Journal:
So on Thursday I am announcing an over $2 trillion tax cut that would repeal the entire IRS tax code—more than 70,000 pages—and replace it with a low, broad-based tax of 14.5% on individuals and businesses. I would eliminate nearly every special-interest loophole. The plan also eliminates the payroll tax on workers and several federal taxes outright, including gift and estate taxes, telephone taxes, and all duties and tariffs. I call this “The Fair and Flat Tax.”
In addition to the flat rate on all income, Paul’s plan would remove all deductions from the code except those for mortgage interest and charitable donations. “The first $50,000 of income for a family of four would not be taxed,” he writes. “For low-income working families, the plan would retain the earned-income tax credit.”
Paul says he developed the plan with the helps of Stephen Moore of the Heritage Foundation, flat-tax advocate Steve Forbes, and economist Art Laffer. He also says the Tax Foundation estimated the plan would add 1.4 million jobs and 10 percent to GDP over ten years.
Paul is not the first or only Republican presidential candidate to release a tax plan, and there’s a surprising amount of diversity in the plans of those running for the GOP nomination:
But at the center of the debate is the proposal put forth by first-term senator and White House hopeful Marco Rubio of Florida. Coauthored by fellow senator Mike Lee of Utah, it’s the first serious tax plan by any presidential candidate this cycle. It’s also the first to break the strict “lower the rates” Republican mold. Briefly, Rubio and Lee propose two individual income-based tax brackets of 15 percent and 35 percent; a corporate tax rate of 25 percent; stripping the code of all deductions except those for charitable contributions and mortgage interest; and—perhaps the most controversial feature on the right—a significant increase to the child tax credit. Rubio and Lee called it “pro-growth, pro-family” tax reform.
