U.S. Sen. Rand Paul (KY), a candidate for the 2016 Republican presidential primary, is proposing to “blow up the tax code and start over,” recording a campaign advertisement in which he uses chainsaws, wood chippers, and fire to “kill” the 70,000-page United States Tax Code.
Paul’s proposal, which features a 14.5 percent flat tax, would also eliminate federal estate and gift taxes, telecommunications taxes, and payroll taxes.
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Ross Kaminsky, a senior fellow for The Heartland Institute, which publishes Budget & Tax News, says Paul’s plan would have positive short- and long-term effects for taxpayers and the economy.
“The visible short-term effect of Sen. Paul’s plan would be to lower the amount of tax paid by the vast majority of businesses, entrepreneurs, and individuals,” Kaminsky said. “The long-term effect is what must be foreseen, and it’s what is really important about the plan.
“It’s not just existing businesses that would be impacted,” Kaminsky said. “Simplifying and lowering taxes will cause the creation of new businesses that are being restrained right now by the daunting cost of paying and complying with this tax code.”
Robert Genetski, the founder of the global economic and financial consulting service ClassicalPrinciples.com, says Paul’s proposal is a “bold plan” with huge positive potential.
“It’s a bold plan that has the potential of not just getting us back to where we were historically in terms of real growth and wages, but actually allowing for a catch-up for the opportunities that we missed over the past decade or so,” Genetski said.
Flat taxes allow people to allocate limited resources more efficiently, Genetski says.
“With the very, very high marginal tax rates that we have—relative to what we had some years ago—resources get reallocated away from their most productive uses,” Genetski said. “For example, I spend a great deal of money having a tax accountant go over my very extensive tax forms each year, because I cannot simply comprehend them.”
Elizabeth BeShears ([email protected]) writes from Trussville, Alabama.