Senator Rand Paul on Taxes: Chip off the Old Block

Sen. Rand Paul, the nominally Republican presidential candidate, has inherited an uncommon trait from his father. He manages to inspire distrust in his credibility even as he conveys a message I want to hear and believe. On Thursday June 18th 2015, he had an op-ed in the Wall Street Journal about his proposed tax reform. Any national tax reform involves fiendishly difficult calculations about complex matters. Sen. Paul wants to junk the whole repulsive, disgusting, oppressive income tax and the IRS in favor of a flat tax. Music to my ears but difficult to believe his assertion that this replacement would be revenue neutral.

I don’t especially want federal revenue neutrality. I want the federal government’s share of GDP to decline. Yet, I understand that Mr Paul wishes to avoid conducting two discussions in one. (Junk the personal income tax; decrease the power of the federal government.) So, he has not done anything wrong there.

My problem is that in the course of a longish piece, he misuses grossly two sets of simple, basic economic terms. In this second paragraph, he refers to “duties and tariffs…” Toward the last third, he states something about “small businesses” and “corporations.” Both statements would be unacceptable in a sophomore basic economics class, even in a introduction to economics in a reasonably good high school.

Here is the first mistake: duties and tariffs are the same object. A “duty” is a tax on imports (or, very rarely, on exports). A tariff is the mechanism used to levy such taxes. It could be 10% of the value of the import or it could be $1 per bottle, for example. (Both methods are common.) That’s it. Referring to “duties and tariffs” proves beyond any doubt that you don’t understand the ordinary and oldest form of taxation. It looks bad in an essay devoted to …taxation.

Contrasting, or building any sort of parallel construction between “small business” and “corporations” is a common mistake but it does not belong under the pen of an elected politician who wants, as his main contribution, to overturn the way we have been financing most government for fifty years. “Small” businesses are in fact small. “Corporations” can be of any size, including two people, such a dentist and his wife. Most American corporations are small. The word corporation refers to a legal arrangement. It has nothing to do with the size of the business.

It’s as if Sen Paul did not know simple stuff when he talks about complex stuff. It’s as if, even more seriously from the standpoint of his credibility, he had no one to proofread his writing for blatant errors. It’s as if he were so convinced of knowing everything that he did not need -ever – anyone looking over his shoulder. If these two mistakes are the product of carelessness, they also imply hubris. That’s worse than simple ignorance because it has no cure in a grown man.

How can I trust someone to unravel the complex relationship between taxes, government revenue, economic growth, and personal liberty when he sounds like one of my indifferent former students?

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5 thoughts on “Senator Rand Paul on Taxes: Chip off the Old Block

  1. I have just two thoughts:

    1) Politicians aren’t meant to be trusted. That’s never been their job. They’re meant to represent factional interests in a body politic that has been built specifically to handle conflict through peaceful rather than violent means. Who in their right mind has ever voted for somebody because he “trusts” them? Trusts them to do what? The right thing? Help old ladies across the street? This brings me to thought number 2: you’re arguing from bad faith (again).

    The Senator did not imply that “duties and tariffs are the same object.” (Your words.) Here is the only passage in his op-ed with the word ‘tariff’ in it:

    The plan also eliminates the payroll tax on workers and several federal taxes outright, including gift and estate taxes, telephone taxes, and all duties and tariffs. I call this “The Fair and Flat Tax.”

    You’re knocking down a straw man, though the Econ 101 refresher is duly appreciated. Your strange criticism of Paul’s “common mistake” is equally malevolent. He are the Senator’s actual words:

    I would also apply this uniform 14.5% business-activity tax on all companies—down from as high as nearly 40% for small businesses and 35% for corporations.

    Paul is citing numbers from what I can only assume is the US tax code, not confusing small businesses with corporations. The fact that the IRS considers small businesses and corporations as different entities is, of course, an interesting subject on the stupidity and malevolence of taxation in general, but you didn’t take that route. You decided to take a swim in the gutter instead.

    All this smoke from the burnt straw in this piece has not caused my (quite sharp) memory to fade. Your dishonest approach to foreign policy is what is at issue here (“I think there was a declaration of war [against Iraq]“). That’s why you’ve put words into the mouth of a Senator whose foreign policy embarrasses you and your religious use of fairy dust and unicorn farts to save the world.

  2. Brandon: I am glad you got to write a piece thanks to my initiative. You seem to be missing my only point however: Do I trust that a politician knows what he is talking about? There is a continuum of my answers to this question. Reagan was high, Rand Paul is at the low end, just like his dad.

    When you chose, decide, on your own initiative to write an oped on what must be you( his) favorite topic for the most important newspaper you can count on, you should have somebody of a normal level of economic culture review it ( a good junior in economics, for example.) Paul does not care. He does magic tricks and the mirror shows. Too bad, I would like to be able to believe his tax reform program.

    It’s strange we are even talking about this.

    I never brought up the subject of moral trust as in: “Will he do what he says he will do?’

    • I’m arguing with your imagination.

      Everything you’ve attributed to Senator Paul is false. He’s never claimed the things you say he’s claimed. You are putting words in his mouth and then knocking down those fake words. Earth to Dr J!

      Speaking of earth: We are talking about the Republican Party, so feel free to vote for the guy who believes it (the earth, that is) was created in seven days…

  3. Rand Paul, Wall Street Journal , June 18th 2015

    ” The plan also eliminates the payroll tax on workers and several federal taxes outright, including gift and estate taxes, telephone taxes, and all duties and taxes.”

    ” I would apply this uniform 14.5% tax on all companies – down from as high as nearly 40% for small businesses and 35 % for corporations.”

    Did I make up these citations, Brandon? Have you gone mad?

    • Dude, how is it possible that I always end up in the awkward position of teaching you basic logic?

      Look here:

      ”The plan also eliminates the payroll tax on workers and several federal taxes outright, including gift and estate taxes, telephone taxes, and all duties and taxes tariffs.”

      Citing this passage, you charge that Paul thinks “duties and tariffs are the same object.” That’s absurd. You’re putting words into his mouth. I am repeating myself.

      Look here:

      ”I would apply this uniform 14.5% tax on all companies – down from as high as nearly 40% for small businesses and 35 % for corporations.”

      Paul is citing numbers from what I can only assume is the US tax code, not confusing small businesses with corporations (where else would he get those rates from?). The fact that the IRS considers small businesses and corporations as different entities is, of course, an interesting subject on the stupidity and malevolence of taxation in general, but you didn’t take that route. You decided to take a swim in the gutter instead. I am repeating myself.

Please keep it civil

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