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

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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.