Congressman Paul is a strong advocate for reforming the tax system and lowering the overall tax burden on the American people. At a tax day speech in 2010, Congressman Paul stated that taxes were equivalent to stealing from the citizens and were a symptom of a runaway government. Congressman Paul often states that he opposes the view that all revenue is owned by the government and that it allows citizens to keep certain amounts. He states that all taxes beyond minimal government spending is stealing and minimum government spending is defined by the constitution. Taxes should therefore be limited to paying for only those actions constitutionally defined.
In 2005 Congressman Paul argued for the ability of citizens of states with sales taxes instead of income taxes to deduct those sales taxes from the federal government income tax. He states that not being able to deduct these taxes puts states on an unequal footing with states with income taxes whose citizens can deduct those taxes.
Throughout that year, Congressman Paul argued against tax reform that did not include lowering of tax rates or elimination of taxes. He stated that doing anything else was equivalent to a political shell game that pits taxpayers against each other in a lobbying scramble to make sure the other guy pays.
In addition to overall lowering of tax rates, one tax that Congressman Paul has specifically sought to end is the death tax. He has stated that the death tax is an especially galling form of double taxation as Americans already pay federal and state income taxes, capital gains taxes, local property taxes, sales taxes, and federal taxes on items like gasoline and telephone use, yet the government still seeks to tax money that people manage to save after paying these taxes. He has stated that the estate tax raises little money and exists based solely on the politics of fearing dynastic families. He quoted a scholar by stating that the estate tax does four things-- discourages savings and investment, undermines job creation and wage growth, stifles investment, and contradicts a central premise of American life, namely, building wealth and “getting ahead.” He has co-sponsored legislation to repeal the death tax.
Congressman Paul has also argued for the removal of the Alternative Minimum Tax (AMT). He notes that the source of the tax - that large portions of the population were escaping paying taxes - is false and that the government should be able to dictate how much of a citizen's earnings they can keep based upon the income the government believes is appropriate.
Congressman Paul supports the Fair Tax in theory, as a sales tax is less susceptible to manipulation and loopholes. However, he notes that installing a sales tax without repealing the 16th amendment (the income tax) would only lead to a scenario where both the sales tax and the income tax are enforced.
As part of his 2012 Presidential campaign, Congressman Paul has stated that once the federal government is properly limited, he would move to end the income tax and abolish the IRS, along with the capital gains tax, and the estate tax.
Sales Tax Deduction
In February of 2005, Congressman Paul released a press statement noting his support for making the deductions for state sales tax permanent.
Paul Joins Effort to Make State Sales Tax Deduction Permanent
February 9, 2005 Washington, DC: Congressman Ron Paul and other members of the Texas congressional delegation have joined Congressman Kevin Brady in working to create a permanent states sales tax deduction. This campaign will correct an injustice that affects millions of Texas taxpayers.
Most American taxpayers are able to deduct their state income taxes from their federal tax bill. Until 1986, citizens of Texas and other states with no income tax were allowed to claim a federal tax deduction for state sales taxes. In 1987, however, that state sales tax deduction was eliminated. As a result, Texas taxpayers have been unfairly penalized.
At the end of 2004, Congress passed a larger tax bill that restored the state sales tax deduction for 2 years. New legislation is needed, however, to ensure the deduction becomes permanent and Texans never pay more federal taxes than residents of other states. Congressman Paul and his House colleagues from Texas will work with Congressman Brady as cosponsors of legislation before the House Ways and Means committee, and the delegation is committed to passing the bill before the 2 year provisional measure expires.
In October of 2007, Congressman Paul issued a press statement noting his support for fairness in the tax system for states that have a sales tax.
Congressman Paul Demands Tax Fairness for His State
Congressman Paul Joins with 72 Other Members to Demand Tax Fairness for His State
October 29, 2007
Washington, DC - Congressman Ron Paul has signed on to a letter directed to the leadership of the House Ways and Means Committee asking them to continue allowing sales taxes to be deductible on Federal Income Tax returns. This deduction is set to expire at the end of this year.
State income taxes are deductible on federal income tax returns, however Texas and six other states do not have a state income tax, relying instead on sales taxes for revenue. This puts residents of these states on unequal footing if the sales tax deduction is allowed to expire.
“While my long term goal is to make the sales tax deduction permanent, even an extension would be a victory for taxpayers in Texas ,” stated the Congressman.
Congressman Ron Paul is fighting for this deduction to be renewed either long-term or permanently for tax fairness in Texas . In addition to signing on to this letter, he has cosponsored HR 60, which calls for the sales tax deduction to be made permanent, and HR 3680 which extends it for another year.
Tax Reform is a Shell Game
In March of 2005, Congressman Paul used his "Texas Talk" to address the discussions concerning tax reform. He notes that the concept of the sales tax is not likely to happen as an income tax would likely come back if the 16th amendment wasn't repealed.
Tax Reform is a Shell Game March 7, 2005
Tax reform is back in the news, brought to the political forefront by a recent meeting of the president’s advisory panel on tax reform. Once again, politicians and former politicians are lamenting the complexity of our tax laws, as though their own spending measures have nothing to do with it. But we’ve heard this song before. In fact, we’ve been promised a simpler, fairer, and better income tax system many times, most recently in 1997 and 1986 when Congress made relatively significant changes to the tax code.
Yet the federal tax system remains an embarrassment, both in terms of the tax burden itself and the outrageous compliance costs engendered by its complexity. One tax reform idea tacitly endorsed by Federal Reserve chairman Alan Greenspan calls for a national retail consumption tax to replace the existing income tax. Absent the outright repeal of the 16th Amendment, however, we cannot be sure that an income tax would not reappear at some point. One can easily imagine popular support for retaining the income tax on the “very rich,” which of course is how the 16th amendment originally was sold to a gullible public in the 1910s.
The president has thrown cold water on the consumption tax proposal, however, by announcing he opposes any reform that eliminates mortgage and charitable deductions. This leaves us with variations on the flat tax concept, which was savaged by the political left when advocated by the likes of House Majority Leader Dick Armey and Steve Forbes in the 1990s.
Lew Rockwell of the Ludwig von Mises Institute offers a very simple test for any tax reform proposal: Does it reduce or eliminate an existing tax? If not, then it amounts to nothing more than a political shell game that pits taxpayers against each other in a lobbying scramble to make sure the other guy pays. True tax reform is as simple as cutting or eliminating taxes. No studies, panels, committees, or hearings are needed. When reform proposals seem complicated, they almost certainly don’t cut taxes. The reform debate is strictly about politics and not serious economics.
Both sides use demagoguery but don’t propose truly significant tax reductions. Both sides use the outrageous expression “cost to government” when talking about the impact of tax legislation on revenues. This implies that government owns everything, and that any tax rate less than 100% costs government some of its rightful bounty. Government spending is the problem! When the federal government takes $2.5 trillion dollars out of the legitimate private economy in a single year, whether through taxes or borrowing, spending clearly is out of control.
Deficit spending creates a de facto tax hike, because deficits can be repaid only by future tax increases. By this measure Congress and the president have raised taxes dramatically over the past few years, despite the tax-cutting rhetoric. The real issue is total spending by government, not tax reform. Who wants a 40% flat tax? Who wants a national sales tax if it adds 35% to the retail price of everything we buy? In other words, why change the tax structure if spending stays the same? Once we accept that Congress needs $2.5 trillion from us-- and more each year-- the only question left is from whom it will be collected. Until the federal government is held to its proper constitutionally limited functions, tax reform will remain a mirage.
Simpler Tax Code
In October of 2005, Congressman Paul used his "Texas Talk" to note that no one opposes a simpler tax system with the exception of those in Washington.
Who Opposes Simpler, Lower Taxes? October 17, 2005
The president’s advisory panel on tax reform held a public meeting last week to discuss possible changes to our tax code, which most Americans view as a disgrace. Unfortunately, the reform panel consists almost entirely of Washington beltway insiders who have absolutely nothing in common with ordinary American taxpayers. The members are former Congressmen and Senators, DC think tank scholars, university professors, and-- unbelievably-- a former commissioner of the IRS! It’s hard to imagine someone more opposed to taxpayer interests than the head of the IRS, the very agency that millions of Americans want abolished.
It’s doubtful that former politicians and tax bureaucrats will propose meaningful tax reform. After all, we’ve heard this song before. Remember the big tax reform bills of 1986, 1997, and 2001? We were promised a simpler tax code each time, but it never happened. Some slight progress has been made in terms of very modest rate reductions and a slow phaseout of the estate tax, but even those changes may be reversed by revenue-hungry future congresses. The reform panel should have two simple goals: make taxes lower, and make taxes simpler. Anything else quite frankly is insulting to the American public. But during several hours of discussion last week, the various panelists talked about everything but those two objectives. Instead they embraced the practice of using the tax code as a tool for social engineering, debating what exemptions, credits, and deductions should be tinkered with to steer taxpayers toward or away from certain activities.
The panelists also misused the term “tax subsidy” over and over. A true subsidy is very simple: certain individuals or businesses receive taxpayer money from the government. But the panel members clearly have accepted the thoroughly leftist idea that all income belongs to the state, and therefore the state “subsidizes” you by letting you keep some of the money you earned. This is nonsense. If the government uses tax dollars to build you a house, you have received a subsidy. Taxpayers have given you something. But if you pay less in income taxes because of the mortgage interest deduction, you have not been “subsidized” by anyone. The government has not given you something; it simply has taken less. What kind of tax reform proposals can we expect from people who can’t understand the fundamental difference between a subsidy and a tax cut?
When it comes to actual tax reform legislation in Congress, don’t underestimate the lobbying influence of accountants, tax attorneys, tax preparers, IRS employees, and mortgage companies, just to name a few. Many, many groups and industries benefit from our Byzantine tax system in one way or another. They will not accept major changes to the tax code without a fight. True tax reform is as simple as cutting or eliminating taxes. No studies, panels, committees, or hearings are needed. When reform proposals seem complicated, they almost certainly don’t cut taxes.
Government spending is the problem! When the federal government takes $2.5 trillion dollars out of the legitimate private economy in a single year, whether through taxes or borrowing, spending clearly is out of control. Deficit spending creates a de facto tax hike, because deficits can be repaid only by future tax increases. By this measure Congress and the president have raised taxes dramatically over the past few years, despite the tax-cutting rhetoric. The real issue is total spending by government, not tax reform.
Death Tax Repeal
In October of 2005, Congressman Paul used his "Texas Talk" to address the need to repeal the estate tax.
Will the Estate Tax ever be Repealed? October 24, 2005
Just two years ago, Congress was poised to eliminate the hated estate tax permanently. Today, however, several U.S. Senators are using their own wasteful spending habits to justify retaining the tax. In the eyes of these Senators, budget deficits are never the result of too much spending, but rather too little taxing. They cannot imagine giving up even the tiny fraction of federal revenues raised by the estate tax. Why is a one percent revenue cut unthinkable to these lawmakers, while annual three or five percent spending increases are considered business as usual?
To answer this question, look no further than the transportation bill passed last week in the Senate. It is perhaps the most pork-filled, wasteful appropriations bill passed in years. The bottom line is that spending money is what keeps these Senators in office. They won’t stop pork spending because the American voting public rewards them for it.
The estate tax, more accurately known as the death tax because it is levied when a taxpayer dies, confiscates anywhere from 37% to 55% of a individual’s assets. While these rates are unconscionable, the death tax also represents an especially galling form of double taxation. Americans already pay federal and state income taxes throughout their working lives. They pay income and capital gains taxes on money they save and invest. They pay local property taxes on their homes. They pay various sales taxes whenever they buy something. They even pay steep federal taxes on gasoline and telephone use. Yet after a lifetime of burdensome taxes, the death tax punishes Americans one last time simply because they worked hard, saved, and invested to pass something on to their families.
In 2001 the House debated an outright repeal of the estate tax. Political considerations-- based on the false argument that the estate tax only applies to some imagined class of dynastic families-- prevented the passage of an immediate repeal. Instead, a slow ten-year phaseout bill passed in both the House and Senate chambers. Incredibly, however, the Senate added a provision that would cause the tax rules to revert back to the current system after the ten-year period. In other words, the death tax will return after 2011! So a taxpayer dying in 2010 would pay no estate tax, while his unfortunate neighbor dying the next year would get a whopping bill from the IRS.
Accountants and tax attorneys might support this crazy system, but it creates an estate planning nightmare for American families. Some doctors even warn it could give elderly people a morbid incentive to time their deaths out of concern for their loved ones. The tired argument that the estate tax only affects the rich simply is false. Many of my constituents are farmers, ranchers, and small business owners. They are hardly rich, but some of them have built up valuable businesses they would like to pass on to their children. Yet when they die, their children rarely have the liquid cash needed to pay the death tax bill. Often the business must be sold or divided to raise money for the IRS. Many family farms across this country have been bought by large corporations because of the estate tax.
Ultimately, the argument against the death tax is a moral one. People should not be punished for working hard, saving, and building wealth. Our society should respect the most basic property right, namely the right to dispose of one’s property as one chooses. The American dream is based on making a better life for one’s children, despite the empty rhetoric of the class-warfare politicians in Washington. Building wealth is not sinister, it is admirable. Our tax rules should encourage the decidedly American virtue of saving for the future.
Numerous Permanent Tax Cuts
In December of 2005, Congressman Paul released a press statement noting his support for making numerous tax cuts permanent.
Congress Passes Several Tax Cuts Benefiting Texas
December 7, 2005 Congressman Ron Paul joined an overwhelming majority of his congressional colleagues in voting to pass several tax cuts this week, including measures that directly benefit Texans. Several new tax provisions provide specific relief for those living in counties affected by Hurricane Rita earlier this year. All of the new tax provisions will be available for individuals and businesses filing their 2005 returns. Below are summaries of some of the specific tax cuts passed by Congress this week:
Texans can continue to deduct sales taxes from their income taxes in 2006, assuring parity with taxpayers who deduct state income taxes;
Individuals affected by Rita can withdraw money from their IRA or pension plan without incurring penalties;
Small employers who continued to pay employees in the aftermath of Rita can claim significant tax credits;
Individuals can deduct casualty losses resulting from Rita regardless of adjusted gross income;
Military personnel can use tax-free combat pay as income to receive the earned income tax credit;
Individuals can deduct higher education expenses regardless of whether they itemize;
Teachers can deduct the cost of classroom supplies regardless of whether they itemize;
Higher exemption levels for the dreaded Alternative Minimum Tax (AMT) are extended; and
Lower tax rates for dividend and interest income are extended.
Tax Relief Extension Reconciliation Act
In May of 2006, Congressman Paul released a press statement noting his support for the Tax Relief Extension Reconciliation Act.
Congress Passes Middle-Class Tax Relief Legislation
May 11, 2006
Washington, DC: Congressman Ron Paul yesterday joined more than 240 of his colleagues in the House of Representatives in voting to pass the Tax Relief Extension Reconciliation Act. This legislation was needed to prevent a tax increase on small business owners, seniors, and married couples scheduled for 2006 and 2008. The bill centers on averting tax hikes on capital gains and dividends, exempting ordinary taxpayers from the alternative minimum tax (AMT), and helping small business owners by extending the Section 179 expensing provision.
“Many of the provisions contained in this legislation were necessary to avoid serious tax consequences for millions of American taxpayers,” Paul stated. “Dividend and capital gains tax relief is needed to encourage people to save for their retirements, and the alternative minimum tax is especially harmful. It was never intended to apply to ordinary taxpayers. This legislation takes a small step toward easing the burden on middle class taxpayers.”
Specifically, the Tax Reconciliation bill:
-Extends the lower 15% rate for capital gains and dividend income for an additional two years. Mutual fund holders who designate a portion of their dividends as capital gains distribution also benefit from this provision. -Prevents the AMT from ensnaring more middle class taxpayers. It creates a higher AMT exemption level for 2006 ($62,550 for joint filers; $42,500 for single filers). AMT relief is the largest piece of the bill; 15 million middle class taxpayers otherwise would be subject to AMT in 2006. -Allows many non-refundable tax credits to be claimed against AMT, including the mortgage interest credit, the Hope education credit, and the Lifetime Learning credit. -Extends the vitally important small business expensing deduction (Section 179) at $100,000 through 2009.
Why Won't Congress End the Estate Tax
In June of 2006, Congressman Paul used his "Texas Talk" to ask why congress won't end the estate tax.
Why Won't Congress Abolish the Estate Tax? June 12, 2006
The U.S. Senate had a golden opportunity to repeal the federal estate tax last week, but fell a few votes short. I fear that vote might represent the high-water mark in the movement to get rid of this destructive tax once and for all. Fortunately, estate taxes no longer devour 60% of some individuals’ wealth when they die. Congress passed legislation in 2001 that reduced estate tax rates and increased the amount of assets exempt from the tax. Yet Congress has been unable to abolish the estate tax altogether, and due to a political compromise the old rates will be back in effect come 2011 unless Congress acts first.
The estate tax raises very little money. In fact, even at its height the estate tax accounted for only a little more than 1% of federal revenues. A congressional Joint Economic committee report estimates that Americans spend as much avoiding estate taxes—paying attorneys and accountants—as they do paying estate taxes. A study by a Stanford professor concluded that “True revenues associated with estate taxation may well have been near zero, or even negative.”
It’s no longer a matter of tax policy or economics—the arguments in favor of the estate tax have all been demolished. Instead, the estate tax survives purely because of politics. The real motivation behind the estate tax is a deep-seated hostility to property rights, and a misguided fear of family dynasties. But people don’t keep money in mattresses anymore. Money inherited from an estate is either spent, saved, or invested—all of which are better for the economy than sending it to Washington, where bureaucratic overhead consumes at least 50 cents of every dollar.
If you truly own your property, you have the right to dispose of it any way you wish. You can sell it, give it away, or direct who will receive it when you die. This control is the essence of property rights. If you can’t control what happens to your property, you don’t really own it. That’s why the estate tax is so destructive. Since people don’t want the government controlling their property when they die, they twist themselves into pretzels finding ways to avoid turning assets over to the IRS. Some create elaborate trusts to minimize their taxes, supporting the economically wasteful estate-planning industry. Others simply lose their entrepreneurial spark, stop working, and spend their money-- succumbing to a “die broke” attitude.
Again, the issue is control. People who have worked hard to build wealth simply cannot stand to see government take a big chunk of their assets when they die, so they do anything they can--even economically harmful things—to prevent it. This is what supporters of the estate tax cannot seem to understand. For smaller, family-owned farms and ranches, the estate tax is especially threatening. Such operations may be worth several million dollars when the value of land, livestock, buildings, and equipment are considered. Yet when the owner dies, his heirs often do not have liquid cash to pay a hefty tax bill. As a result, all or part of the family business may be sold to pay the IRS. This has accelerated the trend toward corporate ownership of American farms and ranches.
As William Beach at the Heritage Foundation summarizes, the estate tax does four things-- all of which are bad for the economy and frankly un-American: First, it discourages savings and investment. Second, it undermines job creation and wage growth. Third, it stifles investment. Forth, it contradicts a central premise of American life, namely, building wealth and “getting ahead.” For all of these reasons, it’s time to get rid of the estate tax once and for all.
Taxes and Spending are the Real Problem
In October of 2006, Congressman Paul used his "Texas Talk" to discuss the problems associated with spending and taxes.
Taxes, Spending, and Debt are the Real Issues October 16, 2006
In Washington we hear a lot of talk about tax cuts, but the rhetoric does not always match the reality. For most Americans, taxes remain too complex and too high. After the tumult of the upcoming midterm election, it is imperative that Congress gets back to basics and addresses our terrible tax system. Lower taxes benefit all Americans by increasing economic growth and encouraging wealth creation. I’m in favor of cutting everybody’s taxes – rich, poor, and otherwise.
Whether a tax cut reduces a single mother’s payroll taxes by forty dollars a month, or allows a business owner to save thousands in capital gains and hire more employees, the net effect is beneficial. Both either spend, save, or invest the extra dollars, which helps all of us more than if those dollars were sent to the black hole known as the federal Treasury.
Many conservatives have touted the Fair Tax proposal as an issue in the upcoming election. A pure consumption tax like the Fair Tax would be better than the current system only if we truly did away with the income tax by repealing the 16th amendment. Otherwise, we could end up with both the income tax and a national sales tax. A consumption tax also provides more transparency and less complexity. But the real issue is total spending by government, not tax reform. In other words, why change the tax structure if spending stays the same? Once we accept that the federal government needs $2.7 trillion from us-- and more each year-- the only question left is from whom it will be collected. Until the federal government is held to its proper constitutionally limited functions, tax reform will remain a mirage.
I apply a very simple test to any proposal to overhaul the tax code: Does it reduce or eliminate an existing tax? If not, then it amounts to nothing more than a political shell game that pits taxpayers against each other in a lobbying scramble to make sure the other guy pays. True tax reform is as simple as cutting or eliminating taxes. No studies, panels, committees, or hearings are needed. When reform proposals seem complicated, they almost certainly don’t cut taxes. Congress should simply focus on cutting existing taxes and reducing spending, instead of complicated overhauls of the system.
The question to ask yourself is this: What would I do with the money withheld from my paycheck each month? The answer is simple: you would spend, save, or invest the money, all of which do more for the economy and society than sending it to Washington. Thanks to the deception of income tax withholding, however, some people actually look forward to tax time and a much-anticipated refund. Imagine how quickly Americans would demand lower taxes and spending if they had to write the federal government a check each month!
Tax relief is important, but members of Congress need to back up tax cuts with spending cuts- and they need to vote NO on every wasteful appropriations bill until we start over with the federal budget. True fiscal conservatism combines both low taxes and low spending. Cutting spending would not be hard if Congress simply showed the political will to tackle the problem. I’m not talking about cutting the rate at which government spending grows, but cutting the actual amount of money spent by the federal government in a single year. If federal spending grows at 5% rather than 7% one year, that’s hardly a great achievement on the part of Congress. The current federal budget of around $2.7 trillion could be cut to $2.5 trillion quite easily. The vast majority of Americans would not even notice. But we must begin chipping away at the federal budget if we hope to address the underlying problem of government debt.
Right Start Child Care and Education Act
In September of 2007, Congressman Paul issued a press statement noting his support for the Right Start Child Care and Education Act.
Congressman Ron Paul Cosponsors "The Right Start Child Care and Education Act"
September 12, 2007
Washington , DC - Congressman Ron Paul has signed on as a cosponsor of legislation that would ease the tax burden on America ’s parents, struggling with child care expenses.
The Right Start Child Care and Education Act of 2007 is a comprehensive reform that increases the existing child care tax credit to $5,000 (from $2,400) for the first child and $10,000 for the second. It also increases the current business tax credit for providing child care services at work from $150,000 a year to $225,000. And it creates the “Right Start Child Care Professional” tax credit to encourage college graduates to choose child care as a profession.
Between the income tax, sales tax, property tax, gas tax, capital gains tax, the cost of regulatory compliance and various licenses and fees, an average of 52% of national income goes to government in one form or another. According to Americans for Prosperity, Texans work more than half the year just to pay for government.
The Dependent and Child Care Tax Credit has been increased only once in the last 25 years. Yet, inflation and child care costs are on the rise and have become the next largest expense after mortgage or rent for most families with young children.
“With a mountain of taxes to pay, having one parent stay at home is no longer a viable option for many Americans. The least the government can do for parents making these difficult decisions is to ease the tax burden on them and make it more economical for places of employment to provide on-site child care. Repealing all income taxes is my ultimate goal, but this bill, which allows American parents to keep more of their own money, is a step in the right direction.” Stated Congressman Paul.
Taxpayer Choice Act of 2007
In October of 2007, Congressman Paul released a press statement noting his support for the Taxpayer Choice Act of 2007.
Congressman Paul Cosponsors the "Taxpayer Choice Act of 2007"
October 16, 2007
Washington, DC - Congressman Ron Paul has signed on to co-sponsor legislation that will repeal the Alternative Minimum Tax on individuals and replace it with an alternative, simplified tax that individuals may choose.
The Taxpayer Choice Act of 2007 H.R. 3818 would completely repeal the Alternative Minimum Tax, which was originally enacted to impose taxes on a small number (originally only 155) of the wealthiest Americans. Because the tax is not indexed to inflation, more and more Americans are falling under the AMT trap. Temporary increases in the exemption amount have been extended until the end of 2010. If the AMT is not repealed, 50 million taxpayers will be affected within a decade, up from 3.5 million in 2006.
In addition, H.R. 3818 introduces a highly simplified tax alternative with tax brackets at 10% and 25%, a generous standard exemption and no special deductions. Taxpayers who are frustrated and bewildered by our current complicated tax code can opt-in to this simplified version, which is designed to be revenue neutral, but very transparent and much easier to administer. It is indexed to inflation.
“This new tax structure could greatly reduce the cost of compliance, and make the financial pretzels we twist ourselves into to reduce our tax burden a thing of the past. It would certainly be better than what we have now, so I hope my colleagues in Congress will join me in supporting this bill,” stated Congressman Paul.
The Estate Tax
In October of 2007, Congressman Paul used his "Texas Talk" to address the estate tax and the need to end it.
Taxing Ourselves to Death
This past week, Congress had an opportunity to permanently repeal the death tax by amending the Tax Collection Responsibility Act of 2007 to include language that ends the estate tax forever. This would have been a good provision in an overall bad bill. 212 Democrats were enough to keep this spectre looming on the horizon if the Bush tax cuts are not renewed in 2011. The bill passed without this silver lining and now we face big increases in taxes and penalties in the next five years.
The underlying attitude behind this bill, and the estate tax, is what I find so distressing about tax policy in this country today - that being a growing disregard for property rights, which are so important to the American dream. The basic tenets of the American dream are that through hard work and ingenuity, you can earn a better life for yourself, and you can give your children a better start than you had. Surveying American history this vision has played out through steady economic progress and growth from one generation to the next.
Our prosperity now is our reward for hard work and achievement in the past. Today we are the strongest economy in the world, and have much to be proud of, but Congress doesn’t seem to understand that we did not tax our way here. Conversely, a nation certainly can tax its way out of prosperity, and that’s one danger I see with this bill, and with policies like the death tax. The death tax punishes one of the greatest and ultimate satisfactions of achieving the American dream – the knowledge that your life’s work is an investment in your family’s future. Instead of being able to focus on hard work, however, death tax provisions keep countless estate planners working countless hours helping Americans negotiate through complicated tax laws just to keep the fruits of their life’s work out of the squandering hands of government.
Other anti-property rights provisions in the Tax Collection Responsibility Act make desperate last attempts to extract the most amount of revenue possible from expatriots on their way out the door. A telling signal that a country is taxing itself to death is capital flight and expatriation. When successful Americans no longer feel their property is secure from government thieves, and they have too much to lose by staying, they vote with their feet and go elsewhere. This country is poorer for the loss of that citizen’s investment here, but it is their right to keep and enjoy what they have built up. How dare Congress or the IRS try to deny them that? And what message does that send to the next generation of young entrepreneurs? It is troubling to me that this country is chasing away wealth, while entitlements recklessly grow. The power to tax is the power to destroy, and we are making strides towards destroying prosperity but expanding the welfare state. This is a dangerous and untenable trend. 186 Republicans and 10 Democrats voted with me last week to kill the Death Tax. It is my hope that we will get another chance in the future to end this punitive and un-American tax for good.
The AMT
In November of 2007, Congressman Paul used his "Texas Talk" address to discuss the need to end the Alternative Minimum Tax.
Tax Reform Promises Treats, Delivers Tricks
Representative Charles Rangel’s recently announced plan to address the impending Alternative Minimum Tax’s application to middle-class Americans demonstrates limited economic understanding. The Alternative Minimum Tax (AMT) began in the late 1960's because 155 wealthy taxpayers had become savvy enough with loopholes that they managed to avoid income taxes altogether. Very few Americans avoided taxes completely this way, nonetheless, policy was enacted that now threatens 25 million Americans.
Rangel's plan boasts loudly about repealing the AMT, but under the Democrats’ pay-as-you-go rules, actual tax cuts are not allowed. Congress must replace any tax revenue reduction with an increase somewhere else, and of course, there are no rules preventing tax hikes. Thus, a new 4% surtax on incomes over $150,000 for singles and $200,000 for couples is proposed to "pay for" the estimated lost revenue. This simultaneously raises $36 billion MORE than simply leaving the AMT alone, and creates a huge new marriage penalty tax. It won't be long before $150,000 is an average income, and middle class taxpayers will again face the situation we see coming today from inflation and the AMT. Overall, the Rangel tax plan is estimated to increase taxes by $3.5 trillion over the next 10 years. With the leadership in Congress calling for this massive tax hike, spending levels promising to absorb all that and then some (thanks to our ambitiously misguided foreign policy), as well as the Federal Reserve's again cheapening the dollar,
American taxpayers are wondering where their purchasing power went. We are working harder than ever before, as our standard of living falls. The founding fathers never saw taxation as a method to direct social behavior or enforce equality. Equality to them was equality under the law, not equality of outcome, or income. It was not the founding fathers' job to manage the economy, or make American businesses competitive. That was up to the free market and American businesses. The founders sought to provide only protection of property and civil liberties such that job creation could happen naturally and peacefully in a stable, prosperous environment. They never sought to take from the rich to give to the poor, or rob Peter to pay Paul. But today, the top 5% of earners in this country pay over half of all income taxes collected, but only bring in a third of the income. One third of Americans pay nothing or receive subsidies from government.
Tax policy should not be based on the premise that government owns you and allows you to keep some arbitrary amount of your labor. Thus, the AMT should be repealed. The estate tax should be repealed. Capital gains taxes should be repealed. The income tax should be repealed. We don’t need to overhaul or adjust tax policy, we need to scrap the whole thing and start over. But this message is not getting through to the leadership of Congress. Congress has ensnared itself in rules so that the only changes in tax policy allowed are increases, while the administration is obsessed with spending, especially spending us into oblivion by spreading this dead-end war when we should be coming home. If Washington can only do wrong, then let’s hope for gridlock, until a more sensible Congress is in office. Sometimes a do-nothing Congress is a lot better than the alternative.
The Family Farm, Small Business, and Home Tax Relief Act
In November of 2007, Congressman Paul released a press statement noting his introduction of the Family Farm, Small Business, and Home Tax Relief Act.
Congressman Paul Cosponsors "The Family Farm, Small Business and Home..."
November 5, 2007
For immediate release
Washington, DC - Congressman Ron Paul, has signed on to co-sponsor legislation that will give immediate estate tax relief so Americans will not lose the family farm, home, or small business when they experience a death in the family.
Currently, the estate tax is in year 6 of a slow 9 year phase out culminating in 2010 when the estate tax will be completely repealed. If no action is taken, in 2011 the estate tax will reset to pre-tax cut levels, which will mean estates worth more than $1 million (or close to that amount) will again be taxed at a rate of 55%.
Major provisions of The Family Farm, Small Business, and Home Tax Relief Act:
Increase the estate tax exemption amount from $2 million (2007 levels) to $3.5 (indexed for inflation) million and holds the tax rate at 45%, thus implementing immediately the forthcoming 2009 estate tax levels.
Exempt a small business or family farm up to $8 million (indexed for inflation) from calculation of estate tax value.
Exempt one principle residence up to $2 million (indexed for inflation) from calculation of estate tax value.
Repeals the generation skipping tax (GST) immediately. The GST is scheduled for repeal in 2010.
“It is patently un-American to tax workers all their lives on the fruits of their labor, and then still take sizeable chunks of what’s left at the end that rightfully belongs to their families. It is an insult to what this country stands for. When a family has just lost someone, it is not right that the government puts them out of their home, farm or business as well,” stated Congressman Paul.
Capital Gains Real Estate Exemption
In November of 2007, Congressman Paul issued a press statement noting his introduction of legislation to allow a capital gains exemption for real estate.
Congressman Paul Cosponsors a Tax Relief Bill Congressman Ron Paul Cosponsors a Tax Relief Bill
November 19, 2007
For immediate release
Washington, DC - Congressman Ron Paul has signed on as co-sponsor to a long overdue piece of legislation that would increase the capital gains exemption amount for real estate transactions. Paul said, “The investment in a home is often the largest investment average Americans will ever make. They rely on appreciation and equity in that home for financial security throughout their lives. It is morally wrong and economically unwise to take massive amounts of that investment out of the economy in capital gains taxes."
HR 4132 is necessary because housing prices are up 104% since the $250,000 per single/$500,000 per couple exemption was established in 1997, and this would be the first adjustment. The new exemption amount would be $500,000 in gains for a single tax return filer, $1,000,000 for joint filers.
“With rising inflation and the sub-prime mortgage fallout softening the real estate market throughout the country, it’s time for Congress to adjust tax policy and give American homeowners some good news,” stated Congressman Paul.
The True Cost of Taxing and Spending
In November of 2007, Congressman Paul used his "Texas Talk" to discuss what he called the true cost of taxing and spending.
The True Cost of Taxing and Spending
Congressman Charlie Rangel recently unveiled a tax plan that Republicans estimate would raise taxes by $3.5 trillion over 10 years. Democrats questioned the math. Now, the Democrats on the Joint Economic Committee have released a report on the total costs of the military operations in Iraq and Afghanistan , including "hidden costs" such as interest on the money we're borrowing, and long term healthcare for vets.
The bill comes to $3.5 trillion. Republicans are, of course, questioning the math on this item. One thing taxpayers know is taxing and spending is expensive, and government cost estimates tend to be on the conservative side relative to the actual bills. However extracted and spent $3.5 trillion is an unimaginable extra burden on our economy. If $3.5 trillion is the true cost of these military adventures, $11,500 is the amount every man, woman and child in this country pays. So, a family of four would pay $46,000 just for this war.
This is an especially painful number to me, as the median household income of my constituency in Texas is just $43,000 a year. In other words, war has cost more than an entire year’s worth of income from each middle class Texas family. What about the impact of these costs on education, the very thing that so often helps to increase earnings? $46,000 would cover 90% of the tuition costs to attend a four year public university in Texas for both children in that family of four. Obviously, it would far outpace the cost of a community college degree, so vital to so many in the workforce. But, instead of sending kids to college, too often we’re sending them to Iraq , where the best news in a long time is they aren't killing our men and women as fast as they were last month.
The Heritage Foundation estimates a $3.5 trillion tax increase would be responsible for 2,200 lost jobs in my district alone, over 70,000 lost jobs across Texas . That's 70,000 Texans in unemployment lines, without health insurance for their families. Some Democrats may not want to spend $3.5 trillion on Iraq , but they do want to raise it in new taxes. And, by digging our economy into a deeper hole, they would create a lot more demand for the social programs they propose. Tax and spend policies create needs they can never satisfy. A government check does not make up for a lost job. Americans do not want more of this. Americans believe in hard work and self-sufficiency, not standing in line for government hand-outs.
We are supposed to be living in a land of opportunity, but opportunities fade fast if more tax and spend policies are enacted. The more Congress meddles in the economy, the bigger the problems get. Congress should not increase taxes by $3.5 trillion and the administration needs to end the occupation of Iraq with its costs of $3.5 trillion to taxpayers. Let the hardworking American taxpayers keep their money. Families need that $46,000 far more than government does.
Property Tax Deducation for All Act
In December of 2007, Congressman Paul released a press statement noting his support for legislation to allow a deduction for the property tax.
Congressman Paul Introduces the Property Tax Deduction for All Act
December 11, 2007
For immediate release
Washington , DC - Congressman Ron Paul is yet again chipping away at the back-breaking tax burden on middle-class Americans with his recently proposed legislation. The Property Tax Deduction for All Act would make taxes on property an “above the line” deduction, meaning that taxpayers could deduct their property taxes without having to itemize all their deductions.
This would make the deduction available to millions of homeowners who take the standard deduction.
“Americans who have lived within their means and perhaps don’t pay enough in mortgage interest to make it advantageous to itemize their deductions are missing out on this relief. We should be rewarding their wisdom, not punishing them with a higher tax burden. I urge my colleagues in the House to support this bill and allow taxpayers to treat property taxes as an above the line deduction,” stated Congressman Paul.
Lower Taxes for Stimulus
In April of 2009, Congressman Paul used his "Texas Talk" address to discuss the possibility of lowering taxes to help spur the economy.
Fewer Taxes for Real Economic Stimulus
Taxes are the issue this week as Americans struggle to make the April 15th deadline to file their returns. It is a good time to contemplate the effects of big government and what it does to our country. The income tax is one of the most egregious encroachments on our liberties today. It is a form of involuntary servitude, which was supposed to have been outlawed by the 13th Amendment.
Tax Freedom Day is defined as the day when the nation as a whole has theoretically earned enough income to fund its annual federal tax burden. For all of the days of the year before this day, you are a slave to government. For 2009, Tax Freedom Day will come on April 13th. Almost a century ago in 1910, before the mistakes of 1913-namely the inception of the Federal Reserve and our current income tax, Tax Freedom Day was January 19th, signifying a mere 5% tax burden. Somehow, our country functioned just fine.
If calculated to include government spending and the deficit, rather than just collections, Tax Freedom Day would actually fall on May 29. The annual deficit adds to the growing debt of future generations and adds insult to injury to those that struggle to make this economy work. It is a slap in the face that this is not enough to prevent this crushing governmental burden from falling on the next generation.
For months now, Washington has been desperately throwing taxpayers’ money at various programs to stimulate us out of the recession, to no avail. Seeing hard-earned money confiscated from the people and spent in such wasteful ways, such as the recent bailouts, is almost too much to bear. Getting rid of the income tax altogether, while very beneficial, may be a while in coming. In the meantime, I am fighting for every tax cut or tax credit possible.
I can think of no better economic stimulus than letting people keep their money and spend it how they see fit. For this reason, I am an original cosponsor on a bill that would give Americans a two month employment and income tax holiday, while taking unused TARP money back from the Secretary of the Treasury and putting it in the Social Security trust fund instead.
In addition, I have recently introduced the Child Health Care Affordability Act. If passed this legislation would provide parents with a tax credit of up to $500 for health care expenses of dependent children. I have also re-introduced the Tax Free Tips Act, which would make tips exempt from federal income and payroll taxes. I am also an original cosponsor of a bill that would make permanent the deduction of state and local sales taxes. My bill HR 162 exempts Social Security benefits from income tax.
These are just a few of the many tax related bills I am fighting for in Congress, but without a corresponding cut in the size of government, which I am also fighting for, we are simply adding to the future tax burden of our children.
Tax Day Speech
On April 15, 2010 Congressman Paul spoke at the Freedom Works Foundation about his desire to end the Fed and the IRS.
Homeowner Tax Credit Extension and Expansion Act
In May of 2010, Congressman Paul released a press statement noting his support for the Homeowner Tax Credit Extension and Expansion Act.
Paul Introduces Homeowner Tax Credit Extension and Expansion Act For Immediate Release May 25, 2010
Washington, D.C. - Congressman Ron Paul (TX-14) today introduced legislation to permanently extend the first-time homebuyer tax credit and to make the credit available to people whose homes have been destroyed by a natural disaster, such as a hurricane.
The legislation also makes a number of changes to existing tax credits in order to enhance their usefulness to victims of natural disasters. Specifically, this bill makes casualty loss deductions available to taxpayers who do not itemize, and makes it available to them for five years after the disaster. This legislation also helps people who have lost their jobs because of a natural disaster by making unemployment payments provided under the Disaster Relief and Emergency Assistance Act tax free.
Renewing the first-time home buyer’s credit will help Americans purchase a first home with their own money, instead of having to rely on government-funded or backed programs.
The other sections of this legislation were inspired by conversations Congressman Paul and his staff had with constituents who had to purchase new homes because Hurricane Ike destroyed their prior homes. The first-time homebuyer’s tax credit could be of tremendous value to these people, yet the law denies them the credit because they are replacing destroyed homes.
“It is hard to think of a more beneficial or compassionate expansion of the first-time homebuyer tax credit than to make the credit available to those whose homes have been destroyed or damaged by natural disasters,” stated Congressman Paul. “In addition, the changes to the casualty loss provision will help more taxpayers affected by natural disasters. Providing tax relief to first-time homebuyers and to those affected by natural disasters should be one of Congress’ top priorities.”
The Income Tax
Weekly Address on Taxes
Questions during the Debate
Distorting the Tax Policy Debate
In December of 2010, Congressman Paul used his "Texas Talk" to discuss what he called distortion of the tax policy debate.
Distorting the Tax Policy Debate
George Orwell warned us about the use of “meaningless words” in politics, words that are endlessly repeated by sloganeering politicians until they have no meaning at all. Meaningless words certainly were on display during last week’s congressional debate over the latest tax bill.
Over and over again we heard trite, empty phrases like “tax cuts for the wealthiest 2%,” “tax giveaways,” “tax earmarks,” and “borrowing money to give to millionaires.” Time and time again the same falsehoods were presented as fact, and reported as such by a credulous media.
But all of these clichés about taxes are based on the presumption that government has a right to all of your income, and so government “gives” you something when it allows you to keep a portion of that income. To this mindset, tax cuts represent a “cost” to government. After all, they argue, money that really ought to go to the most noble of purposes-- wealth redistribution via taxation--is being kept by greedy people and corporations who just don’t want to pay their fair share.
Far too many Americans truly believe that tax cuts represent a government giveaway, indistinguishable from an outright subsidy or entitlement payment. To combat this mindset, we need to be clear with our language.
A subsidy, properly understood, occurs when government takes tax dollars and gives them to favored individuals, companies, or industries. A tax cut, by contrast, simply means government takes less from an individual, company, or industry. When government takes less from you, it has not given you anything; it merely has harmed you less. This is the critical distinction that has been lost in the endless, tired debate about tax policy.
Of course the bill passed last week did contain some actual spending, mostly in the form of an extension of unemployment benefits for another 13 months. The total spending in the bill amounted to about $60 billion. But the tax savings in the bill, meaning the amount of money that will remain in the hands of taxpayers rather than being sent to Washington, is approximately $850 billion. So while a clean tax bill certainly would have been preferable, the tax relief it contains is significant. It means $850 billion will be spent, saved, or invested by American citizens rather than being sent into the black hole known as the federal treasury.
The media, however, dutifully reported that opposition to the bill came from concerned members of Congress who felt the $850 billion “cost” of the bill was too high, and would add too much to the deficit. As always, they could not distinguish between government giving and government taking away. The American people already pay plenty in federal taxes; the deficit is the result of a spending problem, not a revenue problem.
Had the bill not passed, millions of Americans would have seen their paychecks shrink in January due to increased tax withholding. That is the plain and simple truth, and that is why I voted for the bill.
The Western Debate
In October of 2011, Congressman Paul participated in the Western Debate in Las Vegas. He was asked about Herman Cain's 9-9-9 plan and calls it dangerous to give the federal government another tax stream. He also states that he would like to see the income tax done away with completely.
Congressman Paul, you called his plan dangerous today.
PAUL: Oh, it is, because it raises revenues, and the worst part about it, it's regressive. A lot of people aren't paying any taxes, and I like that. I don't think that we should even things up by raising taxes.
So it is a regressive tax. So it's very, very dangerous. And it will raise more revenues.
But the gentlemen asked the question -- he didn't even ask what we're talking about. He asked the question, what are you going to replace the income tax with? And I say nothing. That's what we should replace it with.
(APPLAUSE)
PAUL: But I do want to make a point that spending is a tax. As soon as the governments spend money, eventually it's a tax. Sometimes we put a direct tax on the people. Sometimes we borrow the money. And sometimes we print the money.
And then when prices go up, like today, the wholesale price index went up 7 percent rate, and if you look at the free market, prices are going up 9 and 10 percent. So that is the tax.
So, spending is the tax. That is the reason I offered the program, to cut $1 trillion out of the first year budget that I offer.
Campaign Website Statements
Ron Paul supports the elimination of the income tax and the Internal Revenue Service (IRS). He asserts that Congress had no power to impose a direct income tax and has introduced legislation to repeal of the 16th Amendment to the Constitution, which was ratified on February 3, 1913.
An income tax is the most degrading and totalitarian of all possible taxes. Its implementation wrongly suggests that the government owns the lives and labor of the citizens it is supposed to represent. Tellingly, “a heavy progressive or graduated income tax” is Plank #2 of the Communist Manifesto, which was written by Karl Marx and Friedrich Engels and first published in 1848.
To provide funding for the federal government, Ron Paul supports excise taxes, non-protectionist tariffs, massive cuts in spending.
On November 20, 2008 Ron Paul said in a New York Times / Freakonomics interview:
“I want to abolish the income tax, but I don’t want to replace it with anything. About 45 percent of all federal revenue comes from the personal income tax. That means that about 55 percent — over half of all revenue — comes from other sources, like excise taxes, fees, and corporate taxes.
We could eliminate the income tax, replace it with nothing, and still fund the same level of big government we had in the late 1990s. We don’t need to “replace” the income tax at all. I see a consumption tax as being a little better than the personal income tax, and I would vote for the Fair-Tax if it came up in the House of Representatives, but it is not my goal. We can do better.”
On May 7, 2001, Ron Paul wrote the following column:
The Case Against the Income Tax
Could America exist without an income tax? The idea seems radical, yet in truth America did just fine without a federal income tax for the first 126 years of its history. Prior to 1913, the government operated with revenues raised through tariffs, excise taxes, and property taxes, without ever touching a worker’s paycheck. In the late 1800s, when Congress first attempted to impose an income tax, the notion of taxing a citizen’s hard work was considered radical! Public outcry ensued; more importantly, the Supreme Court ruled the income tax unconstitutional. Only with passage of the 16th Amendment did Congress gain the ability to tax the productive endeavors of its citizens.
Yet don’t we need an income tax to fund the important functions of the federal government? You may be surprised to know that the income tax accounts for only approximately one-third of federal revenue. Only 10 years ago, the federal budget was roughly one-third less than it is today. Surely we could find ways to cut spending back to 1990 levels, especially when the Treasury has single year tax surpluses for the past several years. So perhaps the idea of an America without an income tax is not so radical after all.
The harmful effects of the income tax are obvious. First and foremost, it has enabled government to expand far beyond its proper constitutional limits, regulating virtually every aspect of our lives. It has given government a claim on our lives and work, destroying our privacy in the process. It takes billions of dollars out of the legitimate private economy, with most Americans giving more than a third of everything they make to the federal government. This economic drain destroys jobs and penalizes productive behavior. The ridiculous complexity of the tax laws makes compliance a nightmare for both individuals and businesses. All things considered, our Founders would be dismayed by the income tax mess and the tragic loss of liberty which results.
America without an income tax would be far more prosperous and far more free, but we must be prepared to fight to regain the liberty we have lost incrementally over the past century. I recently introduced “The Liberty Amendment,” legislation which would repeal the 16th Amendment and effectively abolish the income tax. I truly believe that real tax reform, reform that so many frustrated Americans desperately want, requires bold legislation that challenges the Washington mind set. Congress talks about reform, but the current tax debate really involves nothing of substance. Both parties are content to continue tinkering with the edges of the tax code to please various special interests. The Liberty Amendment is an attempt to eliminate the system altogether, forcing Congress to find a simple and fair way to collect limited federal revenues. Most of all, the Liberty Amendment is an initiative aimed at reducing the size and scope of the federal government.
Is it impossible to end the income tax? I don’t believe so. In fact, I believe a serious groundswell movement of disaffected taxpayers is growing in this country. Millions of Americans are fed up with the current tax system, and they will bring pressure on Congress. Some sidestep Congress completely, bringing legal challenges questioning the validity of the tax code and the 16th Amendment itself. Ultimately, the Liberty Amendment could serve as a flashpoint for these millions of voices.
Ron Paul introduced the Liberty Amendment in 1998, 1999, 2003, 2005, 2007 and 2009. It is currently know as H. J. RES. 48 and has 2 cosponsors, Roscoe G. Bartlett (MD-6) and Don Young (AK). Here is the text of the proposed amendment:
Liberty Amendment
Section 1. The Government of the United States shall not engage in any business, professional, commercial, financial, or industrial enterprise except as specified in the Constitution.
Section 2. The constitution or laws of any State, or the laws of the United States, shall not be subject to the terms of any foreign or domestic agreement which would abrogate this amendment.
Section 3. The activities of the United States Government which violate the intent and purposes of this amendment shall, within a period of three years from the date of the ratification of this amendment, be liquidated and the properties and facilities affected shall be sold.
Section 4. Three years after the ratification of this amendment the sixteenth article of amendments to the Constitution of the United States shall stand repealed and thereafter Congress shall not levy taxes on personal incomes, estates, and gifts.’.
On April 30, 2009 Ron Paul introduced the Liberty Amendment with the following speech:
Ron Paul: Madam Speaker, I am pleased to introduce the Liberty Amendment, which repeals the 16th Amendment, thus paving the way for real change in the way government collects and spends the people’s hard-earned money. The Liberty Amendment also explicitly forbids the Federal government from performing any action not explicitly authorized by the United States Constitution.
The 16th Amendment gives the Federal government a direct claim on the lives of American citizens by enabling Congress to levy a direct income tax on individuals. Until the passage of the 16th amendment, the Supreme Court had consistently held that Congress had no power to impose an income tax.
Income taxes are responsible for the transformation of the Federal government from one of limited powers into a vast leviathan whose tentacles reach into almost every aspect of American life. Thanks to the income tax, today the Federal government routinely invades our privacy, and penalizes our every endeavor.
The Founding Fathers realized that “the power to tax is the power to destroy,” which is why they did not give the Federal government the power to impose an income tax. Needless to say, the Founders would be horrified to know that Americans today give more than a third of their income to the Federal government.
Income taxes not only diminish liberty, they retard economic growth by discouraging work and production. Our current tax system also forces Americans to waste valuable time and money on compliance with an ever-more complex tax code. The increased interest in flat-tax and national sales tax proposals, as well as the increasing number of small businesses that question the Internal Revenue Service’s (IRS) “withholding” system provides further proof that America is tired of the labyrinthine tax code. Americans are also increasingly fed up with an IRS that continues to ride roughshod over their civil liberties, despite recent “pro-taxpayer” reforms.
Madam Speaker, America survived and prospered for 140 years without an income tax, and with a Federal government that generally adhered to strictly constitutional functions, operating with modest excise revenues. The income tax opened the door to the era (and errors) of Big Government. I hope my colleagues will help close that door by cosponsoring the Liberty Amendment.
2012 Presidential Campaign Website Statements
KEEP MORE OF YOUR MONEY
The power to tax is the power to destroy, which is why Ron Paul will never support higher taxes.
Our national debt is currently over $14 trillion, with the government spending nearly $2 trillion more per year than it collects. The American people should not have to pay for Washington’s reckless and out-of-control appetite for debt.
High taxes stifle innovation, prevent saving, destroy production, crush the middle class and the poor, and discourage investment. Every American is entitled to the fruits of his labor, especially during these tough economic times.
Lowering taxes will leave you more money to take care of yourself and your family, and it will allow businesses greater opportunities to hire new workers, increase current salaries, and expand their companies.
As President, Ron Paul will support a Liberty Amendment to the Constitution to abolish the income and death taxes. And he will be proud to be the one who finally turns off the lights at the IRS for good.
Capital gains taxes, which punish you for success (and interfere with your efforts to hedge against inflation by purchasing gold and silver coins), should also be immediately repealed.
Struggling college students and those working to support their families would be greatly benefited and receive an immediate pay raise by eliminating taxes on tips.
As a congressman, Ron Paul has consistently endorsed legislation to let Americans claim more tax credits and deductions, including on educational costs, alternative energy vehicles, and health care. He also believes it is immoral to tax senior citizens twice by requiring them to include Social Security benefits in their gross income at tax time. A first step to eliminating that requirement would be to repeal the 1993 increase in taxes on Social Security benefits. Then we must abolish that tax entirely.
While a Flat Tax or a Fair Tax would each be a better alternative to the income tax system, Congressman Paul believes we would have to guarantee the 16th Amendment is repealed to avoid having both the income tax and one of these systems as an additional tax.
But there is a better way. Restraining federal spending by enforcing the Constitution’s strict limits on the federal government’s power would help result in a 0% income tax rate for Americans.
The answer to spending and debt is to return to a constitutionally limited government that protects liberty – not one that keeps robbing Peter to pay Paul.
Michigan Economic Debate
On November 10, 2011 Congressman Paul participated in the Michigan Economic Debate. He spoke there about international debt, US debt, and the housing industry. He also states that spending is a tax.
CRAMER: Congressman Paul... (APPLAUSE) (inaudible) to say, and I really get that. But I'm on the frontlines of the stock market. We were down 400 points today. We're not going to be done going down if this keeps going on, if Italy keeps -- the rates keep going up. Surely you must recognize that this is a moment-to-moment situation for people who have 401(k)s and IRAs on the line and you wouldn't just let it fail, just go away and take our banking system with it?
PAUL: No, you have to let it -- you have to let it liquidate. We've had -- we took 40 years to build up this worldwide debt. We're in a debt crisis never seen before in our history. The sovereign debt of this world is equal to the GDP, as ours is in this country. If you prop it up, you'll do exactly what we did in the depression, prolong the agony. If you do -- if you prop it up, you do what Japan has done for 20 years. So, yes, you want to liquidate the debt. The debt is unsustainable. And this bubble was predictable, because 40 years ago we had no restraints whatsoever on the monetary authorities, and we piled debt on debt, we pyramided debt, we had no restraints on the spending. And if you keep bailing people out and prop it up, you just prolong the agony, as we're doing in the housing bubble.
PAUL: Right now, Fannie Mae and Freddie Mac are demanding more money because we don't allow the market to determine what these mortgages are worth. If you don't liquidate this and clear the market, believe me, you're going to perpetuate this for a decade or two more, and that is very, very dangerous.
CRAMER: Governor...
(APPLAUSE)
(inaudible) Italy's too big to fail. It's great. I'd love it if we were independent. It would be terrific to say, "It's your fault. It's your fault. It's your problem." But if this goes, the world banking system could shut down. Doesn't that involve our banks, too?
BARTIROMO: Congressman Ron Paul... (APPLAUSE)
BARTIROMO: ... you have said you want to close down agencies. Tell us about your tax plan as well as closing agencies -- federal agencies. Where do those jobs go?
PAUL: Well, 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 five departments. (CHEERING AND APPLAUSE) PAUL: 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, destroyed the economy, and is preventing this from coming out, is the price-fixing of the Federal Reserve, manipulating interest rates way below market rates.
You have to have the market determine interest rates if you want a healthy, viable economy.
BARTIROMO: So you think the economy would be stronger if interest rates were higher right now?
PAUL: You would have more incentive. You would take care of the elderly. They get cheated. They get nothing for their CDs. Why cheat them and give the banks loans at zero percent? And then they loan it back to the government at 3 percent. They are ripping us off at the expense of those on fixed incomes and retirees.
BARTIROMO: Even though higher interest rates would make it much more expensive to borrow, mortgages.
PAUL: But you want is the market to determine this. Whoever thought that one person, the Federal Reserve Board chairman, knows what the money supply should be? Just in the past six months, M1 has gone up at the rate of 30 percent. That spells inflation. That spells lower standard of living and higher prices and watch out. They are coming.
Voting Record
Alternative Minimum Tax Relief Act of 2008
The Alternative Minimum Tax was created to tax wealthy individuals who were exploiting loopholes to avoid paying taxes. It was not indexed to inflation and now affects many more families than it was intended. Congress regularly applies "fixes" to the law in the form of yearly adjustments. Sometimes they attempt to repeal it completely. In 2008, the house voted on the Alternative Minimum Tax Relief Act of 2008. The bill was had the objectives of increasing and extending through 2008 the alternative minimum tax (AMT) exemption amounts, and extending through 2008 the offset of certain nonrefundable personal tax credits against regular and AMT tax liability. This change would have brought in less revenue and that was to be offset by lowering the tax deductions for oil companies. The bill was supported by most Democrats and opposed by most Republicans. While it passed the house, it never came up for a vote in the Senate. Ron Paul voted against the Alternative Minimum Tax Relief Act of 2008.
Ron Paul voted against the Alternative Minimum Tax Relief Act of 2008.
AMT Relief Act of 2007
The AMT Relief Act of 2007 sought to apply a fix to the AMT, and offset those costs by taxing gross income from overseas companies. Most Democrats supported the legislation and most Republicans opposed it and the bill passed the house, but was not brought up for a vote in the Senate. Ron Paul cast a "No Vote"
Tax Increase Prevention Act of 2007
In 2007, congress passed legislation to apply a temporary fix. Most Democrats supported the legislation and all Republicans opposed it on the grounds that it violated PAYGO. Ron Paul cast a "No Vote"
Tax Relief and Health Care Act of 2006
The Tax Relief and Health Care Act of 2006 was passed into law in 2006 and contained a wide array of tax cut extensions for everything from making improvements to your house, to state and local sales tax exemptions, and to make improvements to DC. It also contained a provision for health savings accounts. The bill got wide support and passed the house with about 25% of Democrats opposing it. Ron Paul cast a "No Vote"
Pension Protection Act of 2006
The Pension Protection Act of 2006 addressed regulations governing employer-sponsored pensions and acted to make the portions of the 2001 act which allowed higher contributions to IRAs. with the support of both parties. The bill got wide support from both parties and passed 279-131. Ron Paul voted against the Pension Protection Act of 2006.
Ron Paul voted against the Pension Protection Act of 2006.
Tax Increase Prevention and Reconciliation Act of 2005
The Tax Increase Prevention and Reconciliation Act of 2005 extended previously lowered dividend income and capital gains through 2010, and made an increase to the AMT exemption. It also eliminated income restrictions on high-income taxpayers for converting traditional Individual Retirement Accounts (IRAs) to Roth IRAs. Most Republicans supported the legislation and about 1/3 of teh Democrats supported it. The bill passed in a 234-197 vote with the support of both parties. Ron Paul voted in favor of the Tax Increase Prevention and Reconciliation Act of 2005.
Ron Paul voted in favor of the Tax Increase Prevention and Reconciliation Act of 2005.
Working Families Tax Relief Act of 2004
The Working Families Tax Relief Act of 2004 extended the 10 percent bracket on income tax created in the 2001 legislation, doubled the child tax credit, extended the previous AMT exemption and the Work Opportunity Tax Credit. The legislation was widely supported and passed 339-65. Ron Paul voted in favor of the Working Families Tax Relief Act of 2004.
Ron Paul voted in favor of the Working Families Tax Relief Act of 2004.
American Jobs Creation Act of 2004
The American Jobs Creation Act of 2004 allowed individuals to claim a deduction for state and local sales taxes paid, in lieu of deducting state income taxes. It also increased tax credits for business investment abroad, and temporarily increased the expensing provisions for corporations. The bill passed 251-178 with the support and opposition of both parties. Ron Paul voted in favor of the American Jobs Creation Act of 2004.
Ron Paul voted in favor of the American Jobs Creation Act of 2004.
A bill to end the marriage penalty
In 2004, the house voted on a bill to fix the marriage penalty tax. The bill increased the standard deduction for married taxpayers and increased the deducitons for the 15 percent bracket. The bill got wide support in the vote and passed with only 1/3 of the Democrats opposing it. The bill was not brought up for a vote in the Senate. Ron Paul voted in favor of ending the marriage penalty.
Ron Paul voted in favor of ending the marriage penalty.
Jobs and Growth Tax Relief Reconciliation Act of 2003
In the Jobs and Growth Tax Relief reconciliation Act of 2003 tax rates on realized capital gains received by individual shareholders were reduced from 10 percent (for taxpayers in tax brackets where the ordinary income tax rate was 15 percent or below) and 20 percent (for all other brackets) to 5 percent and 15 percent, respectively, through 2007 and to 0 and 15 percent in 2008. It also adjusted the AMT exemption limit, expanded the child tax credit, and accelerated some of the earlier aspects of the previous laws. The bill was supported by Republicans and opposed by Democrats, and passed in a 222-203 vote. Ron Paul voted in favor of the Jobs and Growth Tax Relief Reconciliation Act of 2003.
Ron Paul voted in favor of the Jobs and Growth Tax Relief Reconciliation Act of 2003.
Job Creation and Worker Assistance Act of 2002
The main provision of the Job Creation and Worker Assistance Act of 2002 was to create a bonus depreciation. This bonus depreciation allowed firms to claim extra deductions for depreciation of a long-term physical capital investment during the early years. This reduces corporate profits and therefore taxes. The act was supported by Republicans and opposed by Democrats 85-9. Ron Paul voted in favor of the Job Creation and Worker Assistance Act of 2002.
Ron Paul voted in favor of the Job Creation and Worker Assistance Act of 2002.
Death Tax Elimination Act of 2001
In 2001, the house voted on legislation to end the "Death Tax", otherwise known as the Estate Tax, which applies a tax to estates large than a given amount. The bill passed the house with the support of almost all Republicans and about 1/4 of the Democrats. Ron Paul voted in favor of the Death Tax Elimination Act of 2001.
Ron Paul voted in favor of the Death Tax Elimination Act of 2001.
Economic Growth and Tax Relief Reconciliation Act of 2001
The first piece of legislation was passed in 2001 as the Economic Growth and Tax Relief Reconciliation Act of 2001 The act was especially sweeping. Its two most prominent changes were a phased-in reduction in income tax rates and a reduction and eventual repeal (at the beginning of 2010) of the estate tax. It also provided a wide range of tax breaks for education, families with children, married couples, and contributions to certain kinds of savings accounts. While all republicans voted in favor of this legislation, most democrats opposed it. Ron Paul voted in favor of the EGTRRA of 2001.
Ron Paul voted in favor of the EGTRRA of 2001.
Marriage Tax Relief Reconciliation Act of 2000
In 2000, the house voted on a bill to fix the marriage penalty tax. The bill increased the standard deduction for married taxpayers and increased the deducitons for the 15 percent bracket. The bill got wide support in the vote and passed with only 1/3 of the Democrats opposing it. The bill was vetoed by the President.
Death Tax Elimination Act of 2000
The house also attempted to pass a repeal of the Death Tax in 2000. This time, the bill was supported by almost all Republicans and by about 1/4 of the Democrats. The bill was vetoed by the President. Ron Paul voted in favor of the Death Tax Elimination Act of 2000.
Ron Paul voted in favor of the Death Tax Elimination Act of 2000.
Makes permanent the reductions in the dividend and capital gain tax enacted by the Jobs and Growth Tax Relief Reconciliation Act of 2003.Amends the Internal Revenue Code to: (1) reduce individual and corporate income tax rates; (2) repeal the alternative minimum tax for individual taxpayers; (3) allow inflation adjustments to the basis of capital assets in determining gain or loss; (4) reduce the capital gains tax rate for corporations; (5) repeal limitations on the expensing allowance for depreciable business assets; (6) make permanent the tax credit for increasing research activities; (7) extend the carryback period for net operating losses to seven years; (8) increase the child tax credit; (9) exclude from gross income in 2009 distributions from an individual retirement plan (IRA) and exempt IRAs from mandatory distribution requirements after 2009; and (10) increase the tax deductions for tuition and related expenses and for the interest on qualified education loans.Makes 1% across-the-board rescissions in non-defense discretionary spending for FY2009.
Amends the Internal Revenue Code to increase in taxable years beginning in 2009, 2010, or 2011: (1) the limit on the tax deduction for trade or business start-up expenditures from $5,000 to $20,000; and (2) the threshold amount for reducing such limit.
To amend the Internal Revenue Code of 1986 to repeal the alternative minimum tax on individuals and replace it with an alternative tax individuals may choose.
Amends the Internal Revenue Code to: (1) reduce the maximum corporate income tax rate to 25%; (2) increase the expensing allowance for depreciable business assets to $250,000 in 2008 and 2009; (3) increase to 50% the current year bonus depreciation allowance for certain property placed in service in 2008 and 2009; and (4) allow additional carrybacks for certain net operating losses and for excess business and foreign tax credit amounts arising in 2008 and 2009.
Amends the Internal Revenue Code to: (1) repeal the dollar and other limitations on the expensing allowance of depreciable business assets; (2) reduce to 25% the maximum corporate income tax rate; (3) provide for an inflation adjustment to the basis of certain capital assets for purposes of determining gain or loss; and (4) reduce from 35 to 15% the alternative capital gains tax rate for corporations.
Amends the Internal Revenue Code to establish, on a permanent basis, a zero percent tax rate for the net capital gains of individuals and corporations for purposes of the regular and alternative minimum tax. Eliminates the terminating date in the Jobs and Growth Tax Relief Reconciliation Act of 2003 (i.e., December 31, 2008) for provisions that reduce the capital gains tax rate for individuals.
