Rand Paul Promises to ‘Blow Up the Tax Code.’ Would the EITC and CTC Survive?
June 23, 2015Print
By Kate Skochdopole
Presidential hopeful Sen. Rand Paul (R-Ky.) recently announced his tax reform plan, a $2 trillion tax cut that seeks to, in his own words, “blow up” the current system. The plan would eliminate all individual and corporate income tax and implement a flat tax rate of 14.5 percent for all earners.
Unlike most flat tax proposals, Paul’s plan would retain vital tax credits for working families like the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC). However, the plan does little to expand the credits or any other benefits for lower-income workers. The bulk of Paul’s proposed tax cut would instead benefit the wealthiest Americans. Howard Gleckman of Tax Vox estimates that top earners would pay as much as 60 percent less in taxes under Paul’s plan and even less if they use existing deductions such as those for charitable giving and mortgage interest. The Tax Foundation estimates that taxes among low- and middle-income earners might drop by 11 percent while those at the top could see theirs fall by at least 27 percent.
Rand Paul says his plan would make the economy “roar.” But further expanding the EITC and CTC is a proven way to put money back into the economy, boost labor force participation rates and help those who have jobs stay employed. At the same time it would help lower-income workers support themselves and their families.