# Thread: Overview of Rand's Tax Plan

1. ## Overview of Rand's Tax Plan

http://taxfoundation.org/blog/econom...ax-reform-plan

Personal Income Tax and Payroll Tax:

Sen. Paul would make a number of changes to the tax code for individuals. He would replace the current seven tax bracket structure with a flat rate of 14.5percent and apply that tax rate to all income – wages and salaries,capital gains, dividends, interest, and rents.

The plan would include a \$15,000 standard deduction (per filer) and a \$5,000 per person personal exemption. This means that a family of four would pay no income tax on their first \$50,000 of income (\$55,000 for a family of five, etc.).

Retirement accounts remain as they currently are and in our modeling we assumed that the exclusion for employer-provided health care remains.

The plan retains home mortgage and charitable deductions, the earned income tax credits,and the child tax credit and eliminates all other tax credits and deductions.

The plan would eliminate the payroll tax...
Compare how much you pay now with how much you'll pay under Rand's plan. To figure out your income tax liability under the current system (assuming you don't know it off the top of your head), use this calculator.Separately, take your total wages and multiply by 7.65% (payroll taxes). Add these two numbers together. To figure out your liability under Rand's system, take your total income, subtract the proper deductions/exemptions (see article above for details), and multiply the remainder by 14.5%.

Tell us how much you'll save!

For a general idea of how this will affect people at different income levels:

Single Filer, 1 Exemption, No Dependents, \$15,000 wages
Current System = \$485 (income tax) +\$1147 (payroll tax) = \$1632
Rand's System = \$0
Savings = \$1632(100% cut)

Single Filer, 1 Exemption, No Dependents, \$20,000wages
Current System = \$1024 (income tax) + \$1530 (payroll tax) =\$2554
Rand's System = \$0
Savings = \$2554 (100% cut)

Single Filer, 1 Exemption, No Dependents, \$25,000 wages
Current System =\$1774 (income tax) + \$1912 (payroll tax) = \$3686
Rand's System =\$725
Savings = \$2961 (80% cut)

Single Filer, 1 Exemption, No Dependents, \$30,000 wages
Current System = \$2524 (income tax) +\$2295 (payroll tax) = \$4819
Rand's System = \$1450
Savings =\$3369 (70% cut)

Single Filer, 1 Exemption, No Dependents, \$35,000 wages
Current System = \$3274 (income tax) + \$2677 (payroll tax) = \$5951
Rand's System = \$2175
Savings = \$3776 (63%cut)

Single Filer, 1 Exemption, No Dependents, \$40,000wages
Current System = \$4024 (income tax) + \$3060 (payroll tax) =\$7084
Rand's System = \$2900
Savings = \$4184 (59% cut)

Single Filer, 1 Exemption, No Dependents, \$45,000 wages
Current System =\$4774 (income tax) + \$3442 (payroll tax) = \$8216
Rand's System =\$3625
Savings = \$4591 (56% cut)

Single Filer, 1 Exemption,No Dependents, \$50,000 wages
Current System = \$5819 (income tax) +\$3825 (payroll tax) = \$9644
Rand's System = \$4350
Savings = \$5294 (55% cut)

Single Filer, 1 Exemption, No Dependents,\$60,000 wages
Current System = \$8319 (income tax) + \$4590 (payroll tax) = \$12909
Rand's System = \$5800
Savings = \$7109 (55%cut)

Single Filer, 1 Exemption, No Dependents, \$70,000wages
Current System = \$10819 (income tax) + \$5355 (payroll tax) =\$16174
Rand's System = \$7250
Savings = \$8924 (55% cut)

Single Filer, 1 Exemption, No Dependents, \$80,000 wages
Current System =\$13319 (income tax) + \$6120 (payroll tax) = \$19439
Rand's System =\$8700
Savings = \$10739 (55% cut)

Single Filer, 1 Exemption,No Dependents, \$90,000 wages
Current System = \$15819 (income tax)+ \$6885 (payroll tax) = \$22704
Rand's System = \$10150
Savings =\$12554 (55% cut)

Single Filer, 1 Exemption, No Dependents,\$100,000 wages
Current System = \$18334 (income tax) + \$7650(payroll tax) = \$25984
Rand's System = \$11600
Savings = \$14384(55% cut)

As reflected in the figures above,Rand's plan eliminates the employee portion of payroll tax, but it also eliminates the employer portion.

The plan also eliminates:

1. estate tax
3. excise tax
4. customs duties

Finally, the existing corporate income tax will be replaced with a 14.5% flat-rate corporate income tax with fewer deductions.

In total, the plan reduces federal taxes by about \$300 billion per year.

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3. ## An independent contractor (not an employee) in the current system

Has to pay the payroll tax and also has to pay the portion that an employer would usually pay. For an independent contractor there is a 7.5% penalty for not being an employee because of this, on top of not getting any sick days or vacation or 401k or health benefits or any other employee benefits including a bit more job security. It seems Rand's plan would benefit independent contractors also.

4. I think the only real argument most people have with his plan is:

(A) It reduces revenues by a marginally significant amount.
(B) It doesn't have the exemptions that they think are important.

In the first case, that is a reasonable criticism for a moderate or liberal to have. Explaining how this will be such a boon to the economy and helps even low wage workers and families so much is a great way to counteract this. In addition, the plan prioritizing social security and Medicare actually makes it more progressive.

In the second case, they need to realize that this is precisely the problem with the current system.

I love this tax plan.

5. This is a very important thread and needs to be bumped. Everyone needs to know the basics of Rand's plan.

6. Its a huge increase for all those corporations paying zero or making money by lobbying the government. These lobbyist aren't going to to just stand by while Rand takes a Chain saw to their bottom line. Although this is giving me a great idea for a new ad.

7. Originally Posted by nikcers
Its a huge increase for all those corporations paying zero or making money by lobbying the government. These lobbyist aren't going to to just stand by while Rand takes a Chain saw to their bottom line. Although this is giving me a great idea for a new ad.
Corporations pay zero income taxes when they have zero net income.

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