Republican presidential candidate Sen. Rand Paul had one regret from the GOP debate Thursday – the Fox News hosts didn’t ask him about his tax plan. On “Fox News Sunday,” Chris Wallace made up for ignoring the Kentucky Republican by interrogating him on the plan.
Wallace questioned whether Paul’s flat tax on personal income would lower revenue by $3 trillion, citing the Tax Foundation‘s analysis of Paul’s plan.
“It depends on how you look at it, Chris,” laughed Paul. “I look at it as a $3 trillion gain for the taxpayer; and that’s a debate we ought to have.”
“We ought to have a debate [about] whether you want the government to be bigger or smaller, and whether you want the private sector to be bigger or smaller,” Paul said. “I want the private sector to be $3 trillion bigger. That’s how jobs are created. Government doesn’t create jobs. And this is a real debate we ought to have in our party.”
Wallace cut Paul off mid-sentence, saying that 80 percent of the money the government takes in is spent on entitlements and interest servicing the debt.
“Either, critics would say … you’re going to have to make substantial cuts to Medicare and Medicaid, or … you’re going to have to gut that other 20 percent which is everything from defense spending to homeland security to all our social programs,” said Wallace. “It’s easy to say shred the government, but when you got 80 percent that’s entitlements, what do you do?”
“You have to look at everything across the board, and all of government needs to be smaller,” replied Paul, who said that he has put forward three five-year plans that balance the budget over five years.
“I believe in a much smaller government, and that’s what we have to have this debate about,” said Paul. “If you want a Republican that’s going to keep government the same size by having revenue-neutral tax reform and not really cutting taxes, I’m not the guy.”
Paul said the Tax Foundation also said that his tax plan is “the most pro-growth tax plan ever presented” and that he wants to “dramatically lower” taxes like President Ronald Reagan did.
“[W]hen the Democrats say, ‘Oh well this helps the rich,’ I’m going to say, ‘it also helps the poor and the working class’ because my tax plan gets rid of the payroll tax,” said Paul.
He said under his plan Social Security would be paid for by businesses rather than individuals. That would give those who make $40 thousand a year an extra $2 thousand in their paycheck each year, he said.
Paul’s proposal would tax all income at 14.5 percent, which the Tax Foundation found would increase the incomes of those earning over $1 million by 13 percent, while the incomes of those earning between $50,000 and $75,000 would rise by a much more modest 3 percent.
“Doesn’t your plan massively increase income inequality?” asked Wallace.
“The thing is, income inequality is due to some people working harder and selling more things,” Paul replied. “So people voluntarily buy more of your stuff, you’ll have more money.”
“It’s a fallacious notion to say rich people get more money back in a tax cut – if you cut taxes 10 percent, 10 percent of a million is more than 10 percent of a thousand dollars, so obviously people who pay more in taxes will get more back,” said Paul.
“Let’s have that debate – do we want more money in Washington or more money in the economy?” asked Paul.
“This has been my problem with Republicans,” continued Paul. “So many Republicans in Washington aren’t really for tax cuts anymore. I’m for a dramatic tax cut, more dramatic than any tax cut since Ronald Reagan, and I think that would be good for the economy.”
