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Rand Paul hedges on tax code revamp

By BRUCE SCHREINER
October 14, 2010

Rand Paul: Oh, never mind (AP)

Republican U.S. Senate candidate Rand Paul sidestepped questions Wednesday about revamping the federal tax code, a day after the tea party favorite took a stand to replace the income tax with a national sales tax.

Paul, a limited-government advocate, said he supports a “simpler tax code” but wouldn’t offer specifics about his written comments to an anti-tax group supporting repeal of the 16th Amendment that created the federal income tax.

“I haven’t really been saying anything like that,” Paul told reporters following a speech in Henderson as part of his Kentucky bus tour. “I think it’s probably better to go … with what I’m saying on the campaign trail.”

Paul, who is running against Democrat Jack Conway in a closely watched race, didn’t mention the tax issue in his speech to about 100 supporters in this western Kentucky city. Instead, Paul kept to some of his main themes: criticizing President Barack Obama’s health care and environmental policies that he characterizes as anti-business.

An anti-tax group on Tuesday released to The Associated Press a written statement from Paul saying he would support changing the federal tax code to get rid of the Internal Revenue Service, and he would vote to repeal the 16th Amendment. Paul’s statement called the federal tax code “a disaster” and said he supports making taxes “flatter and simpler.”

“I would vote for the FairTax to get rid of the Sixteenth Amendment, the IRS and a lot of the control the federal government exerts over us,” Paul wrote in a statement verified by his campaign.

The FairTax proposal has been championed by the Texas-based group Americans for Fair Taxation and a newly formed affiliate, FairTax America Support Team. Paul’s former campaign manager, David Adams, is a member of the affiliate’s governing board.

Conway’s campaign has said the FairTax proposal calls for a tax of nearly a quarter on every dollar.

“Working people are having a tough enough time making ends meet,” Conway campaign spokeswoman Allison Haley said. “They can’t afford Rand’s plan to put a 23 percent sales tax on everything they buy — from groceries to gas to medicine.”

When asked by a reporter about his written comments about taxes, Paul turned his focus on government spending.

“Right now the primary problem we have in our country is a spending problem,” he said. “I am for a simpler tax code, and there are various ways you can get to it, but I think the first thing we have to address is … spending.”

He declined to answer further questions on the topic.

Conway spoke on Wednesday to about 50 people on the front lawn of the Old State Capitol in Frankfort and accused Paul of considering a litany of long-standing government initiatives unconstitutional, including Social Security and Medicare.

Conway also accused Paul of opposing laws to protect minorities and the disabled, as well as those setting standards for consumer protection, workplace safety and a federal minimum wage.

“Rand Paul on Monday night challenged me to step up and be a man,” Conway said. “I’m going to step up and protect the Constitution of the United States.”

Paul countered that Conway supported Obama’s unconstitutional federal takeover of the health care system.

“Jack needs to read the Constitution,” Paul said. “He needs to understand that … there is no enumerated power for the current health care (law) to force people to buy insurance. He has a completely backwards understanding of this.”

Conway, the state’s attorney general, refused to join in a lawsuit by a number of other states challenging the law on constitutional grounds. Conway supports the health care overhaul but says it could be improved. Paul says he wants to repeal the landmark law and have Congress start over.

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Online:

Conway campaign: http://www.jackconway.org/

Paul campaign: http://www.randpaul2010.com/

Copyright © 2010 The Associated Press

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4 Responses to Rand Paul hedges on tax code revamp

  1. Almandine

    October 14, 2010 at 11:48 am

    “Conway’s campaign has said the FairTax proposal calls for a tax of nearly a quarter on every dollar.” … which is true.

    However, the 23-cent sales tax on all new goods proposed by the FairTax advocates would replace the Income tax, FICA and Medicare taxes (for both employees and employers), which now eat up much more than 23% of personal incomes, on average. In addition, the Fair Tax would give each taxpayer a monthly probate (not rebate) for necessities, equal to the monthly cost of living at the official poverty level. Thus, there would be no tax on mere subsistence, only on goods above and beyond that.

    I personally find it difficult to believe that a 23% sales tax would be enough, but the Fair Tax has been studied (extensively) more than any other alternative to our current tax system and that is the published amount. It is also purported as being one of the biggest potential boons to economic prosperity that we could ever put in place… short of eliminating all taxes. That alone should make it attractive.

    Rand Paul should not fear admitting that he would vote to end the current income-based tax system in favor of the Fair Tax system, except that someone like Conway would demagogue such an idea as unworkable… “How we gonna feed the govt?”

    Why do such alternatives never get a public airing by our politicians?

    • griff

      October 14, 2010 at 12:59 pm

      Because we really don’t want change, now do we? The mere rhetorical illusion will suffice. Again and again. See:Obama.

    • Guardhouse Lawyer

      October 14, 2010 at 2:25 pm

      While I too am in general favor of a national sales tax to replace the income tax, there are some things which need comment or airing.

      First off, there is no such thing as a fair tax. Never has been, never will be. Unless, of course, it’s where I don’t pay any taxes and you pay my share, but that’s not happening.

      I went to fairtax.org to see what this stuff about probate was, and finally figured out that it was not probate but prebate. There was this document:

      http://www.fairtax.org/site/DocServer/TaxAdministrationandCollectionCosts.pdf?docID=621

      cited on the website which I scanned rather hurriedly, I will admit, because I wanted to see the bare bones of how the prebate would work. Buried down around page 27 I found the following, which details some of the administrative costs of paying the prebate:

      The final item to be estimated is the cost the federal government would have in processing the checks for the prebate. For this estimation, we used the costs of processing and posting W-2 forms in paper and electronic format, as well as the share of the forms in each format reported by the Office of Management and Budget for 2004.42 The costs were $0.002 per electronic form and $0.297 per paper form, and the shares were 60 percent for electronic forms and 40 percent for paper forms.43 This implies a weighted average cost of $0.12 per form. We multiplied thisaverage by the number of households receiving the prebate in 2005, 113.04 million, and by 12 months, since the government would issue one check a month per household, to obtain the cost estimate on line 7 of $0.16 billion. At this point, we are ready to calculate the net federal savings caused by the FairTax, which we do on line 8 by adding lines 2, 4, 6, and 7. The results are savings of $9.38 billion, which means that the FairTax causes savings of $0.40 per $100 of revenue at the federal level.

      I have no reason to question the figures SO FAR AS THEY GO. I suppose I could print 1.35 billion checks a year for that price. But could I deliver them? Nope. IF you were to print that many checks and send them out at 44 cents apiece you would have a further expenditure of about $600 million, which dwarfs the “savings of $9.38 billion”, doncha know.

      This sounds as though I am quibbling, but in my experience, when people have presented things like this without full disclosure or with errors that are apparent on even cursory examination, there are usually other things they have not disclosed. And cynic that I am, I have never found such an error which detracts from the message, it is always in favor of the proponent. Coincidenc,e I know.

      Yes, I know that a lot of people will opt for electronic fund transfer, but how many people are there who literally cannot afford a bank account? Or who will find themselves forced out of banking by increased costs. I just got a notice the other day that my checking account will incur a $15 a month “statement fee” if my daily balance goes below $5,000. That’s $180 a year! That’s f***ing outrageous since almost every transaction I make is electronic and I go into the bank once in a blue moon!

      There are other points:

      First off, the gap between the rich and the poor is going to get wider, because the rich may be spending more but they are not living paycheck to paycheck. Savings aren’t taxed, so those at the top end are going to have even more money. And they can spend that money to consolidate their control of business and industry.

      Unless, of course, you are going to impose a 23 percent sales tax on the sellers of stocks and bonds. Ponder the political feasibility of that for more than a second and you are wasting your time.

      What about rentals? Are you going to impose a 23 percent tax on rental of cars (think leasing here), televisions, home appliances? If not, what you are going to see is a massive market opened up by manufacturers to lease their products rather than selling them. “Whoa, government,” says the manufacturer, “I am not collecting 23 percent on that. I didn’t sell it, I only built it.” If there is a way around the tax, people are going to find it, whether it is legal or not.

      What about real estate? Are you going to impose a sales tax on real property transfers? Good luck with that one.

      Then there is the extremely vital area of access to political types. We all know that money buys access and some sort of favor. Is the poor schmo living paycheck to paycheck going to have disposable income to make contributions like this? A little more than he or she has now, certainly, since there will be more pretax income. But at the other end of the scale you will find the millionaires and billionaires with even more pretax earnings to buy access with. Are you going to impose a tax on donations to political parties and candidates? I don’t believe that would happen even if Hell did freeze over.

      I do recognize that there could be very significant savings by doing away with the IRS code and all the IRS people, and by doing away with corporate income taxes, but before we institute such a revolutionary change people have to see all sides of the complex issues, and these are just a few I came up with off the top of my head.

      • Almandine

        October 14, 2010 at 3:24 pm

        Yeah, prebate (proactive funding) is a better term… got lost in the moment.

        Plenty of questions, for sure, but also plenty of opportunity for improvement.

        Taxing consumption instead of – not in addition to – industriousness is a clear step forward.