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So Sen Rand Paul has announced his tax cut plan. And it's a doozy.
He's billing it as a $2 trillion tax cut -- although that's really accurate.
More precisely, Paul is proposing to completely scrap all 70,000 pages of the US Tax Code. In its place, from what I can gather, he wants to replace it with:
* A flat 14.5% tax rate on all income over $50,000 [for a family of four]
* All deductions except mortgage and charitable donations gone
* Retain the EIC for lower-income families
* No more "payroll taxes"
* Businesses have to play by the same rules
Using the 2013 median household income (and rounding it up to a convenient round number), an income of $55,000 using this year's tax brackets and standard deduction would pay $5,437.50 in taxes.
Under Paul's proposal, that same $55,000 household income would pay $725.00 in taxes. That's huge!
A household earning $45,000 would pay, after the standard deduction, $3,937.50 in taxes; under Paul's proposal, they would pay $0.00.
Going the other way, an income of $500,000, with just the standard deduction, would pay $315,700.70 in taxes. Under Paul's proposal, it would pay $65,250.00.
That's also a huge tax cut. But is it really?
Under the current Tax Code, those 70,000+ pages bury hordes of tax credits and deductions and loopholes that someone able to hire a team of accountants and lawyers (read: rich people) can exploit to significantly reduce their tax liabilities. Remember all that hub-bub about Warren Buffett paying a smaller marginal tax rate than his secretary? Or the annual "discoveries" that the largest corporations with the largest incomes pay no taxes?
You and I simply can't play in that ballpark. We can't afford the teams of lawyers and accountants required to take advantage of this over-complicated Tax Code. And cynically, I believe that's the while point of the code: Special interests buy influence in Washington to get special favors and privileges for themselves, while you and I are left shivering in the cold.
Paul's proposal would eliminate that. The entire Tax Code could fit in a pamphlet that any of us could read while eating a cookie and sipping tea! It puts everyone on the same playing field. It ends the absurd practice of charging independent mom-and-pop stores 40% while levying only 35% on large corporations (who then end up not even paying that because of all the loopholes their hired goon- er, lawyers and accountants, can find for them).
Under Paul's proposal, the game is finally fair. We don't need armies of specialists none of us can afford to get the most out of our taxes.
Personally, I'd have liked to see at least one more graduation in that scheme (e.g. 0% on the first $50,000; 14.5% on the next $50,000; 30% on everything above that), but this is a huge step in the right direction at least. And, it finally abolishes corporate welfare.
Gr... I fail at proof-reading!
Second line: "...although that's not really accurate."