Ron Paul on Tax Reform Republican Representative (TX-14); previously Libertarian for President

Sub-sections under Tax Reform:
• Voting+Sponsorships
• Other issues under Tax Reform

Ideal tax rate is 0%; especially the "inflation tax"

PERRY: Seven percent flat tax.

SANTORUM: Two rates, 10 and 28 percent.

ROMNEY: I would like 25 percent.

GINGRICH: I would like to see it be a flat tax at 15 percent and I would like to see us reduce government to meet the revenue, not raise revenue to meet the government.

PAUL: Well, we should have the lowest tax that we've ever had, and up until 1913 it was 0%. What's so bad about that? I think the question is generally misleading, because anytime you spend money, it's a tax. You might tax, you might borrow, you might inflate. The vicious tax, that's attacking the American people, the retired people today, is the inflation tax, the devaluation of the currency, the standard of living is going down, and you need to address that. And that's why I want to make the inflation tax zero, as well.

Q: So your answer is zero?

PAUL: Zero.

Tax code is the symptom; spending is the problem

A: Eventually they go into the private sector. Then don't all leave immediately when the plan goes into effect. But what my plan does is it addresses taxes in a little different way. We are talking about the tax code. But that's the consequence, that's the symptom. The disease is spending. Every time you spend, spending is a tax. We tax the people, we borrow, and then we print the money and the prices go up, and that is a tax. So you have to address the subject of spending. That is the tax. That is the reason I go after the spending. I propose in the first year cut $1 trillion out of the budget in 5 departments. Now the other thing is that you must do if you want to get the economy going and going again is you have to get rid of price-fixing. And the most significant price-fixing that goes on, that gave us the bubble and destroyed the economy, is the price-fixing of the Federal Reserve.

You don't "pay for" tax cuts; they give people's money back

PAUL: Not quite. I'm a taxpayer there. My taxes have gone up. Our taxes have doubled since he's been in office. Our spending has gone up double. Our debt has gone up nearly triple. So, no. And 170,000 of the jobs were government jobs. [Perry claimed job growth due to tax cuts] but how do you pay for a tax cut? I think that's the wrong principle, because when you give people their money back, it's their money. You don't have to pay for it. That means that the government owns all of our money if you look that way. So we have to cut the spending, and a good way to start, there's a little embassy we built over in Baghdad that cost us a billion dollars. It's bigger than the Vatican. That's what's bankrupting this country, and that's the easy place to cut. That's where we should be cutting.

Disastrous tax code contributes to underground economy

Our disastrous tax code has contributed substantially to the need for the underground economy. This need will surely grow as the economy further deteriorates. In economic terms, all this activity is beneficial in the underground, despite politicians' cries that the government is being cheated out of hundreds of billions of dollars in tax revenue. If the market quits functioning, the underground economy will expand exponentially. In some other countries the underground market is responsible for keeping the economy afloat.

AdWatch: Taxpayer’s best friend: never supported an increase

Narrator: Who among [the Republican candidates for president] has never supported a tax increase? Never supported an unbalanced budget? Never supported wasteful government spending?

Narrator: Congressman Ron Paul: The taxpayer’s best friend.

Narrator: We need to keep him fighting for our country. [Attributed on-screen to Ronald Reagan, pictured standing with Rep. Paul]

Repeal 16th Amendment and get rid of the income tax

Spending money doesn’t stimulate economy; reduced taxes do

A: Well, a government program is too vague. What kind of a government program? If it’s appropriating money and trying to stimulate that way and spend more money, no, that would be the wrong thing to do. But a government program of a reduced tax burden, yes, that would be. I believe we’re in a recession. Over-stimulation in an economy by artificially low interest rates by the Federal Reserve is the source of the recession.

Get rid of IRS; get rid of income tax; get rid of spending

A: That’s a good idea. I like that idea.

Q: What would happen to all those lost revenues? How would we fund our government?

A: We have to cut spending. You can’t get rid of the income tax if you don’t get rid of some spending. But, you know, if you got rid of the income tax today you’d have about as much revenue as we had 10 years ago, and the size of government wasn’t all that bad 10 years ago. There’re sources of revenues other than the income tax. You have tariff, excise taxes, user fees, highway fees. So, so there’s still a lot of money. But the real problem is spending. But, you know, we lived a long time in this country without an income tax. Up until 1913 we didn’t have it.

Q: But if you eliminate the income tax, do you know how much lost revenue that would be?

A: A lot.

Q: Over a trillion dollars.

A: That’s good.

The most sinister of all taxes is the inflation tax

I have never voted for a tax increase; and never will

A: I have never voted for a tax increase; never will. But the tax issue is only one-half of it. You can easily pledge not to raise taxes, but you have to cut spending.

GovWatch: Zero income tax reverts to 1990 budget, not 2000

Paul told Leno that the abolition of the income tax would leave the federal government with roughly the revenues it was able to gather in 2000, before the overseas adventures of the Bush years.

This seemed too good to be true, and it was. Without the revenues from individual income tax, the federal budget would shrink to the size it was in the early 1990s, not the year 2000. The discretionary share of the federal budget would dwindle to zero. All remaining federal revenues would be earmarked for mandatory entitlement spending such as social security--which Paul has said he would not touch--and interest on debt.

The Paul campaign responds, “Policy wonks can go back and forth arguing over budget specifics. Dr. Paul’s point is that we can eliminate the income tax & fund a level of government from the recent past. Whether that year is 1995, 1997 or 2000 is irrelevant.”

Immediately work to phase out the IRS

Immediately. You can only do that if you change our ideas about what the role of government ought to be. If you think that government has to take care of us, from cradle to grave, & if you think our government should police the world and spend hundreds of billions of dollars on a foreign policy that we cannot manage, you can’t get rid of the IRS. But if you want to lower taxes and stop causing all the inflation, you have to change policy.

Get rid of the inflation tax with sound money

A: I would get rid of the inflation tax. It’s a tax that nobody talks about. We live way beyond our means. We print money for it. The value of the money goes down, and poor people pay higher prices. That is a tax. That’s a transfer of wealth from the poor and the middle class to Wall Street. Wall Street’s doing quite well, but the inflation tax is eating away at the middle class of this country. We need to get rid of the inflation tax with sound money.

Campaign slogan in 2004: The Taxpayers’ Best Friend

1986 tax simplification made tax code more incomprehensible

Madison would be apoplectic if he had been forced to witness the writing of the 2,000-page 1986 Tax “Simplification” Act, which no one fully understands. A decade will be required to decipher the thousands of pages of yet-to-be-written regulations. The chaos is not accidental: the taxing authorities can role any way they wish with those they choose to imprison as long as the tax code is incomprehensible. When our government officials call it “simplification,” we can be confident that it is exactly the opposite.

Inflation is a form of taxation on poor & middle class

Money of real value, gold or silver, was clearly intended by the Founding Fathers.

If for no other reason, inflation should be rejected on the basis of morality. Inflation is taxation by deceit. Government deceives the people as to the tax burden, and who is bearing it. The working and middle classes are gradually impoverished, while the poor are ground further down.

Wealth is transferred to the rich, from the hardworking and thrifty to the conniving & foxy. Monetary and economic decisions are increasingly taken from individuals and transferred to politicians, bureaucrats, and central bankers. To enforce the transfer, government officials accumulate power through legislation and regulation.

Doesn’t want flat tax or consumption tax

A: Well, I know. That’s why I don’t want it.

Q: So you have nothing?

A: I want to cut spending. I want to use the Constitution as our guide, and you wouldn’t need the income tax.

Voted NO on extending AMT exemptions to avoid hitting middle-income.

1. increase and extend through 2008 the alternative minimum tax (AMT) exemption amounts;
2. extend through 2008 the offset of personal tax credits against AMT tax liabilities;
3. treat net income and loss from an investment services partnership interest as ordinary income and loss;
4. deny major integrated oil companies a tax deduction for income attributable to domestic production of oil or gas.

The AMT sets a minimum tax rate of 26% or 28% on some taxpayers so that they cannot use certain types of deductions to lower their tax. By contrast, the rate for a corporation is 20%. Affected taxpayers are those who have what are known as "tax preference items". These include long-term capital gains, accelerated depreciation, & percentage depletion.

Because the AMT is not indexed to inflation, an increasing number of upper-middle-income taxpayers have been finding themselves subject to this tax. In 2006, an IRS report highlighted the AMT as the single most serious problem with the tax code.

For 2007, the AMT Exemption was not fully phased until [income reaches] $415,000 for joint returns. Within the $150,000 to $415,000 range, AMT liability typically increases as income increases above $150,000.

OnTheIssues.org Explanation: This vote extends the AMT exemption, and hence avoids the AMT affecting more upper-middle-income people. This vote has no permanent effect on the AMT, although voting YES implies that one would support the same permanent AMT change.

Voted YES on retaining reduced taxes on capital gains & dividends.

• Decreasing the number of people that will be required to pay the Alternative Minimum Tax (AMT)
• Allowing for deductions of state and local general sales taxes through 2007 instead of 2006
• Lengthening tax credits for research expenses
• Increasing the age limit for eligibility for food stamp recipients from 25 to 35 years
• Continuing reduced tax rates of 15% and 5% on capital gains and dividends through 2010
• Extending through 2007 the expense allowances for environmental remediation costs (the cost of cleanup of sites where petroleum products have been released or disposed)

Voted YES on providing tax relief and simplification.

• Extension of Family Tax Provisions
• Repeals the scheduled reduction (15 to 10 percent) for taxable years beginning before January 1, 2005, of the refundability of the child tax credit.
• Extends through 2005 the increased exemption from the alternative minimum tax for individual taxpayers.
• Extends through 2005 the following expiring tax provisions:
  1. the tax credit for increasing research activities;
  2. the work opportunity tax credit;
  3. the welfare-to-work tax credit;
  4. the authority for issuance of qualified zone academy bonds;
  5. the charitable deduction for donations by corporations of computer technology and equipment used for educational purposes;
  6. the tax deduction for certain expenses of elementary and secondary school teachers;
  7. the expensing of environmental remediation costs;
  8. the designation of a District of Columbia enterprise zone

Voted YES on making permanent an increase in the child tax credit.

Voted YES on permanently eliminating the marriage penalty.

Voted YES on making the Bush tax cuts permanent.

Voted YES on $99 B economic stimulus: capital gains & income tax cuts.

The bill would allow more individuals to receive immediate $300 refunds, and lower the capital gains tax rate from 20% to 18%.

Voted YES on Tax cut package of $958 B over 10 years.

Voted YES on eliminating the Estate Tax ("death tax").

Voted YES on eliminating the "marriage penalty".

Voted YES on $46 billion in tax cuts for small business.

Overhaul income tax; end capital gains & inheritance tax.

As adopted by the General Membership of the Republican Liberty Caucus at its Biannual Meeting held December 8, 2000.
• WHEREAS libertarian Republicans believe in limited government, individual freedom and personal responsibility;
• WHEREAS we believe that government has no money nor power not derived from the consent of the people;
• WHEREAS we believe that people have the right to keep the fruits of their labor; and
• WHEREAS we believe in upholding the US Constitution as the supreme law of the land;

BE IT RESOLVED that the Republican Liberty Caucus endorses the following [among its] principles:
1. The tax system of the United States should be overhauled.
2. There should be a national debate discussing various alternative means of taxation including but not limited to a single flat income tax, repealing the income tax and replacing it with a national sales tax, and reducing spending to the point where the income tax can be repealed without the need to replace it with a national sales tax or any other form of taxation.
3. The capital gains tax should be *eliminated*.
4. The inheritance tax should be *eliminated*.
5. The new tax system should be implemented *promptly*.

Phaseout the death tax.

Title: To amend the Internal Revenue Code of 1986 to phaseout the estate and gift taxes over a 10-year period.

Summary: Repeals, effective January 1, 2011, current provisions relating to the basis of property acquired from a decedent. Provides with respect to property acquired from a decedent dying on January 1, 2011, or later that:
1. property shall be treated as transferred by gift; and

2. the basis of the person acquiring the property shall be the lesser of the adjusted basis of the decedent or the fair market value of the property at the date of the decedent's death.

3. Requires specified information to be reported concerning non-cash assets over $1.3 million transferred at death and certain gifts exceeding $25,000.

4. Makes the exclusion of gain on the sale of a principal residence available to heirs.

5. Revises current provisions concerning the transfer of farm real to provide that gain on such exchange shall be recognized to the estate only to the extent that the fair market value of such property exceeds such value on the date of death.

6. Provides a similar rule for certain trusts.

7. Amends the special rules for allocation of the generation-skipping tax (GST) exemption to provide that if any individual makes an indirect skip during such individual's lifetime, any unused portion of such individual's GST exemption shall be allocated to the property transferred to the extent necessary to make the inclusion ratio for such property zero; and

8. if the amount of the indirect skip exceeds such unused portion, the entire unused portion shall be allocated to the property transferred.

9. Provides that, if an allocation of the GST exemption to any transfers of property is deemed to have been made at the close of an estate tax inclusion period, the value of the property shall be its value at such time.

Rated 89% by NTU, indicating a "Taxpayer's Friend" on tax votes.

Every year National Taxpayers Union (NTU) rates U.S. Representatives and Senators on their actual votes—every vote that significantly affects taxes, spending, debt, and regulatory burdens on consumers and taxpayers. NTU assigned weights to the votes, reflecting the importance of each vote’s effect. NTU has no partisan axe to grind. All Members of Congress are treated the same regardless of political affiliation. Our only constituency is the overburdened American taxpayer. Grades are given impartially, based on the Taxpayer Score. The Taxpayer Score measures the strength of support for reducing spending and regulation and opposing higher taxes. In general, a higher score is better because it means a Member of Congress voted to lessen or limit the burden on taxpayers. The Taxpayer Score can range between zero and 100. We do not expect anyone to score a 100, nor has any legislator ever scored a perfect 100 in the multi-year history of the comprehensive NTU scoring system. A high score does not mean that the Member of Congress was opposed to all spending or all programs. High-scoring Members have indicated that they would vote for many programs if the amount of spending were lower. A Member who wants to increase spending on some programs can achieve a high score if he or she votes for offsetting cuts in other programs. A zero score would indicate that the Member of Congress approved every spending proposal and opposed every pro-taxpayer reform.

Rated 0% by the CTJ, indicating opposition to progressive taxation.

OnTheIssues.org interprets the 2005-2006 CTJ scores as follows:

• 0% - 20%: opposes progressive taxation (approx. 235 members)
• 21% - 79%: mixed record on progressive taxation (approx. 39 members)
• 80%-100%: favors progressive taxation (approx. 190 members)

Citizens for Tax Justice, founded in 1979, is not-for-profit public interest research and advocacy organization focusing on federal, state and local tax policies and their impact upon our nation. CTJ's mission is to give ordinary people a greater voice in the development of tax laws. Against the armies of special interest lobbyists for corporations and the wealthy, CTJ fights for:

• Fair taxes for middle and low-income families
• Requiring the wealthy to pay their fair share
• Closing corporate tax loopholes
• Adequately funding important government services
• Reducing the federal debt
• Taxation that minimizes distortion of economic markets

Repeal the Death Tax.

A BILL to repeal the Federal estate and gift taxes:
• Subtitle B of the Internal Revenue Code of 1986 (relating to estate, gift, and generation-skipping taxes) is hereby repealed.
• The repeal shall apply to estates of decedents dying, gifts made, and generation-skipping transfers made after the date of the enactment of this Act.

Taxpayer Protection Pledge: no new taxes.

Politicians often run for office saying they won't raise taxes, but then quickly turn their backs on the taxpayer. The idea of the Pledge is simple enough: Make them put their no-new-taxes rhetoric in writing.

In the Taxpayer Protection Pledge, candidates and incumbents solemnly bind themselves to oppose any and all tax increases. While ATR has the role of promoting and monitoring the Pledge, the Taxpayer Protection Pledge is actually made to a candidate's constituents, who are entitled to know where candidates stand before sending them to the capitol. Since the Pledge is a prerequisite for many voters, it is considered binding as long as an individual holds the office for which he or she signed the Pledge.

Since its rollout with the endorsement of President Reagan in 1986, the pledge has become de rigeur for Republicans seeking office, and is a necessity for Democrats running in Republican districts.

Supports the Taxpayer Protection Pledge.

[The ATR, Americans for Tax Reform, run by conservative lobbyist Grover Norquist, ask legislators to sign the Taxpayer Protection Pledge in each election cycle. Their self-description:]

In the Taxpayer Protection Pledge, candidates and incumbents solemnly bind themselves to oppose any and all tax increases. Since its rollout in 1986, the pledge has become de rigeur for Republicans seeking office, and is a necessity for Democrats running in Republican districts. Today the Taxpayer Protection Pledge is offered to every candidate for state office and to all incumbents. More than 1,100 state officeholders, from state representative to governor, have signed the Pledge.

The Taxpayer Protection Pledge: "I pledge to the taxpayers of my district and to the American people that I will: ONE, oppose any and all efforts to increase the marginal income tax rate for individuals and business; and TWO, oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates."

Opponents' Opinion (from wikipedia.com):In Nov. 2011, Sen. Harry Reid (D-NV) claimed that Congressional Republicans "are being led like puppets by Grover Norquist. They're giving speeches that we should compromise on our deficit, but never do they compromise on Grover Norquist. He is their leader." Since Norquist's pledge binds signatories to opposing deficit reduction agreements that include any element of increased tax revenue, some Republican deficit hawks now retired from office have stated that Norquist has become an obstacle to deficit reduction. Former Republican Senator Alan Simpson, co-chairman of the National Commission on Fiscal Responsibility and Reform, has been particularly critical, describing Norquist's position as "no taxes, under any situation, even if your country goes to hell."