June 18, 2015

WE ARE ALL NEOCONOMISTS NOW:

The VAT is back (but don't use the V word)  (Alan D. Viard, June 18, 2015, AEIdeas)

In a Wall Street Journal op-ed today, Senator Rand Paul (R-KY) unveiled his plan to "blow up the tax code and start over." His plan makes him the most recent public figure to propose a value added tax (VAT).

Senator Paul's plan would repeal the Social Security and Medicare payroll and self-employment taxes, the corporate income tax, the estate and gift tax, tariffs, and some excise taxes. And, it would dramatically reduce individual income taxes, slashing rates to a flat 14.5% and offering a $50,000 exemption for a family of four while maintaining the earned income tax credit and the child tax credit.

Of course, repealing and reducing those taxes would cause a large revenue loss. The plan would make up a little of the revenue loss by eliminating income tax deductions, other than for charitable contributions and mortgage interest. It would look to unspecified spending cuts to make up part of the revenue loss. But, the plan's biggest revenue offset is a new 14.5% VAT.

Posted by at June 18, 2015 6:37 PM
  

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