(AP Photo/Andrew Harnik)
On Thursday, GOP presidential hopeful Sen. Rand Paul (R-Ky.) unveiled his plan to give the economy a “steroid injection” by rewriting the country’s tax code down to a simple, straightforward flat tax of 14.5 percent on personal income and a 14.5 percent “business activity tax.” By Paul’s reckoning, this would save taxpayers billions and supercharge the economy almost immediately upon implementation. But at least one nonprofit group that advocates tax reform is saying that, just like a real steroid injection, Paul’s scheme to quickly bulk up the economy may have long-term and devastating effects for its health.
Setting aside all other questions about the credibility of a flat tax, nonprofit think tank Citizens for Tax Justice released its analysis of Paul’s proposal, and it’s ugly.
When the dust clears, this would leave the federal government with $1.2 trillion less in tax revenue in fiscal year 2016 if the plan were implemented immediately—a reduction of about one-third in total federal revenues. Over a decade, the plan would cost a stunning $15 trillion.
Ultimately, the fiscal realities of the tax plan might not matter. The flat tax has never caught fire as a presidential election issue. In 2012, Herman Cain had his “9-9-9” plan and Rick Perry suggested a 20 percent flat tax. Most famously, in 1996 there was Steve Forbes, who briefly looked like he could turn his magazine-famous name into a politically relevant one—but didn’t.
