Last week, presidential candidate Rep. Ron Paul (R-TX) unveiled a tax and budget plan. Titled “Plan to Restore America,” reduces projected federal spending from $16.4 trillion over the 2013-16 period to $11.6 trillion, a reduction of approximately $1 trillion per year. How a President Paul would achieve those savings has been the subject of news coverage since he unveiled it, but his plan also includes a taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. component.
The tax plan:
- Extend the 2001 and 2003 “Bush” tax cuts for all earners
- Continue to index the Alternative Minimum Tax to inflationInflation is when the general price of goods and services increases across the economy, reducing the purchasing power of a currency and the value of certain assets. The same paycheck covers less goods, services, and bills. It is sometimes referred to as a “hidden tax,” as it leaves taxpayers less well-off due to higher costs and “bracket creep,” while increasing the government’s spending power.
- Eliminate taxes on capital gains and dividends
- Eliminate the estate and gift taxA gift tax is a tax on the transfer of property by a living individual, without payment or a valuable exchange in return. The donor, not the recipient of the gift, is typically liable for the tax.
- Reduce the corporate income taxA corporate income tax (CIT) is levied by federal and state governments on business profits. Many companies are not subject to the CIT because they are taxed as pass-through businesses, with income reportable under the individual income tax. to a top rate of 15 percent
- Allow tax-free repatriationTax repatriation is the process by which multinational companies bring overseas earnings back to the home country. Prior to the 2017 Tax Cuts and Jobs Act (TCJA), the U.S. tax code created major disincentives for U.S. companies to repatriate their earnings. Changes from the TCJA eliminate these disincentives. of overseas capital
All told, Paul estimates that instead of the federal government collecting an estimated $14.3 trillion over the 2013-16 period, it would under his plan collect $11.1 trillion. Paul balances the budget by 2015.
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