Thread: Ron Paul on taxes

Ron Paul on taxes
28 Dec 2007
A number of readers want me to really dive into Ron Paul's economic policies and explain why I don't like them. Okay, here goes. First up: one of the main areas in which I am supposed to agree with Dr. Paul. That is to say, taxes.

Most of Dr. Paul's supporters like the fact that he wants to cut taxes. I like the fact that he wants to cut taxes. But how he plans to cut taxes is not so good. In fact, it's pretty bad.

His website is full of talk about eliminating the income tax, which is not going to happen. His more realistic plans consist mostly of about eighty zillion tax credits, either to replace existing government spending, or to make a warm gesture towards interest groups Dr. Paul thinks are swell, like senior citizens and people serving in the active duty military.

Item one: there is no good reason to replace spending with tax credits. Economically, they are indistinguishable from spending, except that they add all sorts of ugly behavioral inefficiencies.

Item two: they are regressive. Dr. Paul has several plans to replace spending programs with tax credits, which would represent a massive fiscal redistribution away from people who can't do much with a $15,000 tax credit because they do not have $15,000 worth of taxable income.

Item three: tax credits are economically inefficient, for reasons that I once laid out at great length here.

Item four: tax credits are economically distortionary; they either pay people to do things that they were going to do anyway, or they encourage people to do things that won't pay for themselves.

Item five: tax credits are much beloved of politicians because they sound magically different from spending, which allows them to distribute goodies to their supporters. If nothing else, this should make any libertarian shudder at the thought of tax credits.

And how will he pay for this tax cuttery? Megan's First Fiscal Law: spending is taxation. Economically, it doesn't seem to make much difference whether you finance that spending with taxation or debt; both exert some economic drag, though the mechanisms are different. If you want to cut taxes, you have to cut spending.

Actually, Dr Paul says he agrees with this. So how come his website and collected "issues" writing reveal no major cuts to any programs except his scheme to eliminate the department of education? I mean, I'm all for getting rid of the School Nannies. But observe, please, this graph which I am shamelessly ripping off of Marginal Revolution:

Note, please the category "everything else" which comprises under 17% of the budget. The Department of Education disappears into there, along with transportation, farm subsidies, and everything that is not entitlement spending, defense, and interest on the national debt.

Perhaps he is planning to slash military spending? But then who is going to perform all this border enforcement? And I don't actually see where he's planning to make the military smaller; he's just planning to keep them home. Iraq is expensive, but it's not expensive enough to pay for the kind of tax cuttery he's proposing. You'd have to cut the defense budget by a third to produce a 5% reduction in the overall budget.

Entitlements are by far the largest part of our budget; if you're serious about cutting spending, you need to get serious about attacking entitlements. But Dr. Paul makes no mention of slashing Social Security, Medicare, or Medicaid, and for good reason: the senior lobby would slaughter him. In fact, he's not only going to leave Social Security benefits intact, but also, he's planning to eliminate taxation of Social Security benefits. His plan for dealing with the entitlement problem seems to consist of saying that we should keep the federal government from spending the "trust funds". Okay, Dr.; into what financial assets should the government invest this trust funds, and what taxes will you raise, or spending will you cut, in order to plug the several-hundred-billion-dollar hole this will open in the general fund?

Nor are seniors the only ones he plans to cut taxes on. His ideas include no taxes for active duty military, tax credits for health care, tax credits for paying property taxes . . . apparently, the only people Dr. Paul thinks should pay taxes are, well, me, a young urban worker who doesn't own a home.

He promises to veto new spending. But new discretionary spending is simply not the major driver of our budget. The major driver of our budget is entitlements, which will grow unchecked even if he, and Congress, adjourn to play golf for the next eight years. This is not economically serious, fiscally responsible policy; in fact, it's just another variant on what everyone else is doing, which is ignoring the entitlement programs that are about to turn into the sucking chest wound of the US budget.

Finally, he sells his fiscal policy with completely unnecessary, not to mention factually deceptive, immigrant-and-trade bashing. His brief on the Import-Export Bank, an FDR-era boondoggle of trivial significance to anything, including the US taxpayer, is positioned as a complaint that we are massively subsidizing China. In fact, the subsidy is tiny, and it's not aimed at foreigners. We lend poor credit risks in other countries money to buy US goods; it's an export subsidy, and a particularly stupid one that should be eliminated--without gratuitous fearmongering about China.

Similarly, he attacks the Social Security Administration's plan for a "totalization" agreement with Mexico, claiming that it will result in the American taxpayer, suddenly and for no apparent reason, sending a ton of money to Mexicans who work here for a little while and then go back to Mexico in order to loll around in the sun collecting their Social Security checks.

This sounds ludicrous because it's a gross distortion. Totalization agreements are standard practice between countries with social security systems; they prevent people who are working abroad, but planning to retire in their own country, from having to make contributions to two systems. We have totalization agreements with any number of countries, and the actuaries at the SSA expect that the agreement with Mexico will have little impact either way on the trust funds. Indeed, the agreement with Mexico will cost us much less than our agreement with that nation of mooching scabs, the Canadians.

In short, I do not look at this list of proposals and see a bold iconoclast who finally dares to transcend politics, fearlessly doing what needs to be done and speaking truth to power. I see a politician telling his supporters what they want to hear, which is that they deserve to pay lower taxes, but not to have any program that is important to them slashed. I see him scoring cheap campaign points off of American hostility to foreigners, particularly poor foreigners who compete with them economically. And I see him, like everyone else, dodging the major fiscal challenge of our time: the problem of paying for the health care and pensions of the retiring baby boomers.

http://meganmcardle.theatlantic.com




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Entitlements are by far the largest part of our budget; if you're serious about cutting spending, you need to get serious about attacking entitlements. But Dr. Paul makes no mention of slashing Social Security, Medicare

Social Security and Medicare are HARDLY entitlements you dumb bafoon! American workers pay into this fund (way more than we pay in income taxes), and expect to be paid back when it's our turn. That is not an entitlement, that is a savings plan.

Welfare, Medicaid, food stamps, etc...THOSE are entitlements.

Now americangirl,

You really didn't expect ACCURACY, did you?

Originally Posted by PinestrawGuys

Now americangirl,

You really didn't expect ACCURACY, did you?

Silly me....what was I thinking?

No plans by Paul to go after employers. I guess that employers get to do what they want----including hiring illegals.

Originally Posted by americangirl

Entitlements are by far the largest part of our budget; if you're serious about cutting spending, you need to get serious about attacking entitlements. But Dr. Paul makes no mention of slashing Social Security, Medicare

Social Security and Medicare are HARDLY entitlements you dumb bafoon! American workers pay into this fund (way more than we pay in income taxes), and expect to be paid back when it's our turn. That is not an entitlement, that is a savings plan.

Welfare, Medicaid, food stamps, etc...THOSE are entitlements.

Actually when they speak of entitlements they are indeed refering to
social security and medicaid

These are parts of the budget that are "untouchable" And they eat up a huge part of the budget

I only skimmed the article----so I am not really sure what Paul said about social security and medicare.

However, my opinion on both------they should NOT be touched/slashed in any way in regard to US citizens.

However, illegals should NOT be able to get these benefits----and the Totalization Agreement does give the illegals the opportunity to collect on these benefits.

"However, my opinion on both------they should NOT be touched/slashed in any way in regard to US citizens."


Thats why they are intitlements ,

Nobody in their right mind would purpose cutting these and
even if they privatize SS they would still remain entitlements for
a large amount of years

intitlements are things in the budget that cannot be touched

SS , military and govt pensions ,

about a million things in there that can't be touched

Is Ron Paul proposing the Fair Tax like Huckabee???

At first I supported this idea. However, I heard Huckabee being interviewed on Hedgecock about the Fair Tax.

Did you know that this means a 23% consumption tax on EVERYTING that you buy???-----Buy a new car, add 23%.----Buy a house, add 23%.-----Buy groceries, clothes, etc. and add, 23%.-----This will DESTROY the middle class!!!----He is not talking about raising the sales tax slightly instead of an income tax, he is talking about 23%

Originally Posted by Bren4824

No plans by Paul to go after employers. I guess that employers get to do what they want----including hiring illegals.

In case you haven't figured out Ron Paul he is a Jeffersonian (States Rights over Federal G.) so he will not have a federal tax plan for such. This does not mean he will not he may use tariffs from foriegn goods or other methods to fund going after employers.
http://www.betterimmigration.com/can...aulPres08.html

2005: Voted for H.R. 4437 to increase interior enforcement
Rep. Paul voted in favor of final passage of H.R. 4437 which would increase interior enforcement by requiring employers to use the Basic Pilot program to verify that new hires have the legal right to work in the United States. As well, it would bring state and local law enforcement agencies more into the enforcement fold and provide funding through both grants and reimbursement for their assistance in federal enforcement efforts. H.R. 4437 was passed by the House by a vote of 239 to 182.

2006: Voted in favor of H.R. 6095 to increase interior enforcement
Rep. Paul voted in favor of H.R. 6095 to clarify state and local law enforcement’s inherent authority to enforce Federal immigration laws and overturn a decades-old court injunction that impedes the Federal government’s ability to remove aliens from El Salvador on an expedited basis. H.R. 6095 passed by a vote of 277-140.

If he voted to allow State and local authorities to enforce Federal immigration laws then their is no doubt he will be for the same at the federal level. IMO the issue with Paul is who is going to pay for it. Increasing Federal taxes(?) Paul will not however if he is able to use tariffs on foriegn goods or some of the other methods he has mentioned in recent interviews he will.

OFFICIAL STANCE on protecting Americans' jobs and wages from foreign workers:
No welfare for illegal aliens. Americans have welcomed immigrants who seek opportunity, work hard, and play by the rules. But taxpayers should not pay for illegal immigrants who use hospitals, clinics, schools, roads, and social services. RonPaul2008.com

"He has also called for an end to welfare benefits, 'mandatory medical care' and public education for illegal immigrants." July 16, 2007; Des Moines Register (Iowa)

2005: Voted in favor of amendment to prohibit foreign-worker importation provisions in Free Trade Agreements
Rep. Paul voted in favor of the Tancredo Amendment to H.R. 2862 to prevent the U.S. Trade Representative from including immigration provisions in Free Trade Agreements. The Tancredo Amendment failed by a vote of 106 to 322.

He has stated in a recent interview he is against the Fair Tax.