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Home Publications Blogs Beat the Press Rand Paul Wants to Reduce the Income Tax Rate for the Rich to 5 Percent

Rand Paul Wants to Reduce the Income Tax Rate for the Rich to 5 Percent

Wednesday, 08 January 2014 10:59

That headline would have been as accurate as much of what appears in a NYT article on Republican proposals that they claim are designed to address poverty. The piece asserts "Republicans are offering a series of proposals to help more Americans rise out of poverty."

Of course the NYT has no idea if the goal of these proposals is really to "help more Americans rise out of poverty." There is good reason to believe that this is not the case since almost all of them have been tried before with little success. Furthermore, the most obvious beneficiaries of many of these proposals would be rich people who are able to game them successfully.

Usually reporters do not take politicians claims at face value. This is why they report on their statements and their actions, not their intentions. If progressive Democrats came up with a proposal for "defense reform," which they asserted would make the country better able to confront foreign threats, it is unlikely that any major media outlet would simply describe the defense reform proposal as a plan to improve the country's security.

Most of these proposals have obvious ways to game them. For example, Senator Rand's proposal would provide for a 5 percent flat tax for any individual or business who lived in his designated "economic freedom zones." It would be a relatively simple matter for Bill Gates or any other rich person to buy an apartment which they would claim as their residence in order to reduce their tax bill by 75-85 percent. Similarly, it would be easy for Apple to set up an office which would register most of its patents, so that it would be the location for most of its profits.

Of course the 6-figure and 7-figure tax accountants hired by the rich and large corporations would find many more sophisticated ways to game the Rand proposal. However, since it opens such obvious loopholes for the rich to drastically lower their tax bill it is as reasonable to believe that this Rand's motive rather than recycling a failed approach in the hope that this time it will actually reduce poverty. 

Comments (10)Add Comment
written by Robert Sadin, January 08, 2014 10:43
Uncharacteristically naive...
News outlets take government statements at face value all the time.

They rarely if ever contradict right wing presentations.

And let's not forget the "terrorists" who are killed with drones on a constant basis.

No, it is very rare that a newspaper challenges a political statement. The most they might do is quote a second viewpoint (generally from the the other party) without
any attempt to sort out the truth.

Beat the Press is great...but I wish you did not feel compelled to be solely reactive...
critiquing the Times and Post. It would be good to point out what stories are being completely ignored by the large news outlets...military activity around the globe, TPP negotiations...etc
written by Last Mover, January 08, 2014 11:05

How can Dean Baker question the sincerity of Rand Paul to raise the poor out of poverty with a 5% tax on the rich?

Rand Paul has already save thousands from poverty by protecting them from drone attacks by Obama as enemy combatants.

Not only that, Rand Paul has also save thousands from poverty by demanding that the Fed be transparent and subject to audits for what it does with the trillions in its coffers.

What more proof does Dean Baker require? It's nothing less than a witch hunt I tell you. What, you think it's about a politician so delusional he believes what he is saying?
emancipation is nigh
written by Kat, January 08, 2014 11:11
"Economic freedom zones"? Why? because enterprise zones are not sufficiently libertarian?
Conservatives-- tweaking programs that have failed in order to make them worse.
written by BillB, January 08, 2014 11:39
Dean says "It would be a relatively simple matter for Bill Gates or any other rich person to buy an apartment which they would claim as their residence in other to reduce their tax bill by 75-85 percent."

Microsoft is already doing this for their corporate sales taxes. Microsoft has over 50,000 employees in the state of Washington that design the software that they sell. However, when it comes to actually selling the licenses for that software they do it from a post office box in Reno, Nevada. This allows them to avoid paying a small (less than 0.5%) software royalty tax in Washington state that saves it hundreds of millions of dollars.

Gates then goes around the country complaining about the poor preparation of students from public secondary schools at the same time Washington State is forced to lay off school teachers due to lowered tax revenues.

Gates also complains about the shortage of qualified engineers and lobbies for increases in H1-B visas so that he can import cheaper engineers from India and China. The University of Washington, which trains software engineers, is forced to raise the cost of tuition and reduce the number of enrollments because of reduced tax revenues.

You can read about Microsoft's domestic tax dodge here:
written by djb, January 08, 2014 12:17

this is the republican strategy since paul ryan

dems and repubs were arguing of things close to possible until paul ryan comes in with is outrageous fraudulent plan thhat basically whould eliminate the entire government except military social security and medicare

instead of this being called outrageous, the gutless democrats allowed this to pull the compromise positive much farther to the right

so rand paul is doing the same thing

even though the golden years of the middle class was when the top tax rate was 70 to 90 percent for what you made over a million

rand paul goes the opposite way calling for a 5 percent top tax rate

the left should respond with a proposal to make the taxes more progressive and ask for a 95 percent top tax rate

then talk compromise with rand paul

written by Matt, January 08, 2014 1:48
Mike Lee: "we have not done a good job messaging conservatism, messaging the fact that we are conservatives not in spite of our concern for the poor, but because of it"

The only "concern" regarding the poor I've ever seen from the likes of Lee and his teahadi colleagues is a concern that the poor might be getting a crumb more than the law allows or doing things like voting.
written by djt, January 08, 2014 4:32
Uh, djb, I hope you noticed by now that the Democratic Party does not represent the interests of working people. They are largely Republican lite. They won't cross their benefactors or the sources of their post congress sinecures. THEY THEMSELVES don't want to pay the higher taxes - they are quite pleased that Republicans deliver lower taxes to them. The dead body that is the Democratic Party needs to combined with the Republican Party so a new party can appear.
I'm surprised Rand Paul has not followed tax rates through the zero value
written by John Wright, January 08, 2014 9:06
I'm surprised Rand Paul hasn't followed his suggestions even further.

To borrow a possibly Tom Friedman copyrighted/trademarked phrase, the USA could experiment with "super-connected supply side" incentives for the job creators of America.

Rand Paul is suggesting 5% tax rates to create jobs, but why be limited by the arbitrary zero % value, why not pass through zero % and go to negative tax rates?

In this program, the government would recognize the extreme societal value of high income earners by not only freeing them from any taxes, but further honor them by awarding them "progressive" government grants.

In this progressive grant reward policy, the more effective one was in creating personal wealth, the progressively larger would be the government grant.

Perhaps if someone made $100 million in a year, the government might grant a negative tax rate of 20% and hand them $20 million, and if someone made $1 billion, they might have a negative tax rate of 30% and get a government grant of $300 million.

Then watch the economy bloom as we head toward a negative unemployment rate in which more people could be employed than are available to work.

People could work one job and then collect additional income from a second job, that is held for them, on retainer, if they ever need additional employment.

In this way we achieve a super-connected supply side economics negative employment rate.

And probably the Democrats will make a strong "principaled" (not principled) stand and meet Rand Paul part way with smaller negative tax rates.

Let's watch as Tom Friedman picks up on this program.
Republicans want Unemployment extension with an offset
written by jumpinjezebel, January 08, 2014 9:22
I suggest a cost saving idea that would fit the bill and then some. Insist that the offset be that Medicare pay the same prices for drugs as the VA. How about something to shove up their extremist A$$es.
to djt
written by djb, January 09, 2014 5:56

Yours is not a new,idea.... been around for decades

There is a difference and the democrats because of who is their base can be driven more to the side that benefits the people......

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.