Asked if his flat tax plan would further separate the haves from the have-nots, GOP presidential hopeful Sen. Rand Paul (Ky.) said Sunday that income inequality is the result of some Americans working harder than others, rather than economic policies. “The thing is, income inequality is due to some people working harder and selling more things,” Paul told host Chris Wallace on “Fox News Sunday.” “If people voluntarily buy more of your stuff, you’ll have more money.”
Paul has proposed what he calls a “flat and fair tax,” which would put a flat 14.5 percent tax on all types of income. An analysis by the Tax Foundation found that under the plan, households earning more than $1 million per year would see their after-tax incomes rise by 13 percent. Households’ earnings between $50,000 and $75,000 per year, meanwhile, would see their after-tax income rise only by 3 percent.
“Doesn’t your plan massively increase income inequality?” Wallace asked. “It’s a fallacious notion to say, ‘Oh, rich people get more money back in a tax cut,’” Paul responded. “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.” “We all end up working for people who are more successful than us,” Paul went on, “and that’s a good thing, that more money will be back in the economy.”
Flat tax proposals, which are popular with the tea party crowd, have a way of popping up during Republican presidential primary sessions. In addition to Paul, Sen. Ted Cruz (Tex.) has proposed moving to a flat tax rate and abolishing the IRS. Back in 2012, the flat tax banner was carried by former Texas Gov. Rick Perry and Herman Cain, who drew national attention with his “9-9-9” flat tax plan.