Ron Paul Asks "Will Tax Reform Increase Or Limit Liberty?"

Tyler Durden's picture

Authored by Ron Paul via The Ron Paul Institute for Peace & Prosperity,

President Trump and the congressional Republican leadership recently unveiled a tax reform “framework.” The framework has a number of provisions that will lower taxes on middle-class Americans. For example, the framework doubles the standard deduction and increases the child care tax credit. It also eliminates the alternative minimum tax (AMT). Created in the 1960s, the AMT was designed to ensure the “wealthy” did not use “loopholes” to “get out of” paying taxes. Today the AMT is mostly a means to increase taxes on the middle class.

The framework eliminates the “death tax,” thus enabling family-owned small businesses and farms to remain family owned. It also helps the economy by lowering the corporate tax rate to 20 percent, reducing taxes on small businesses. The framework also adopts a territorial tax system, which means US companies would only pay tax on profits earned in the United States.

However, the framework is far from a total victory for liberty.

Concerns have been raised that, depending on what income levels are assigned to what tax brackets, the plan could increase taxes on many middle- and lower-income Americans! This is largely due to the framework’s elimination of most tax deductions.

The framework also contains a stealth tax increase imposed via the chained consumer price index (chained CPI). Supporters of chained CPI clam the government is currently overstating inflation. The truth is exactly the opposite: government statistics are manipulated to understate inflation.

Chained CPI enhances the government’s ability to lie about inflation. One way it does so is by claiming that inflation does not lower our standard of living if we can substitute cheaper goods for goods made unaffordable by inflation. So inflation does not harm you if you can’t afford a steak dinner as long as you can still buy a cheeseburger.

Chained CPI allows the government to take maximum advantage of “bracket creep,” where individuals are pushed into higher tax brackets not because they are actually earning more money, but because inflation creates the illusion they are wealthier. In fact, by decreasing their purchasing power, inflation makes most people poorer. The inflation tax thus raises taxes on declining incomes. It is hidden and regressive, making it the most insidious of all taxes.

Most of the framework’s problems stem from Congress’ continued refusal to offset tax cuts with spending cuts. Instead, Congress continues to increase spending, with the only real debate over whether the government should spend more on welfare or warfare.

Pairing tax cuts with increases in federal spending and debt - and the drafters of the framework admit their plan will increase the debt by at least $2.2 trillion - means that the economic benefit from the tax cuts will be outweighed by the economic harm caused by the increase in debt. Increasing the debt also means the Federal Reserve will further devalue the dollar in order to monetize that debt. While the Republican tax and budget plans predict uninterrupted economic growth, the US economy is far more likely to undergo a major economic crisis caused by a rejection of the dollar’s world reserve currency status.

While all supporters of individual liberty and sound economics should support tax cuts, the Republicans’ failure to cut spending means that their tax plan will do little to increase liberty or prosperity. Instead of increasing debt, eliminating deductions, and relying on the inflation tax to “pay for tax cuts,” Congress should cut two dollars in spending on the military-industrial complex and other forms of corporate welfare for every dollar in tax cuts. Cutting both taxes and spending is the only way to protect prosperity and liberty.

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zorba THE GREEK's picture

Trump's tax reform benefited the rich. So who cares.

Rapunzal's picture

There will be no law anymore that will benefit the middle class. They will finish off the Middle class. Once the majority of Americans is so poor that they cannot move their assets into safer ones, the Middle class will be only slaves. Dependent on their masters. I think it's like a big concentration camp where people will slowly starve to death.

auricle's picture

Cutting taxes to increase defecits and debt. That's the name of the game from here to the end 'exponential debt'.

Oldwood's picture

Guess who pays most of the taxes.

Lets Buy The Dip's picture

what does not beneift the rich, their stocks are all time highs. 

These guys are killer stock market analysts, their chart suggest the market is overbought. => http://www.bit.ly/2hHfN90

maybe its time for crashy, crash time. Dunno. Nothing can bring this market down, even the end of the world. LOL

MoreFreedom's picture

Cutting corporate taxes benefits most everyone: the corporations' employees, owners, people looking for jobs in the US and their customers.  

Paul is right.  The last thing the establishment wants (and that includes the RINOs controlling the GOP in Congress) is to cut spending. That's why they always talk about tax reform, but never specific spending cuts.  After all, they never do cut spending, even for things lke Planned Parenthood or the Export Import Bank.

Still, starving the beast is more likely to lead to spending cuts, than not.    Better would be to vote out RINOs in the GOP primaries. I'd rather a Democrat hold an office than a RINO, because then the Democrats get the blame and the RINOs learn that pushing RINOs doesn't work.

Identify as Ferengi's picture

Thanks, Dr. P. Chained CPI is news to me. Ugly, ain't it.

political_proxy's picture

"Chained CPI enhances the government’s ability to lie about inflation."

As though the gov needed any tools or reasons to lie.

rejected's picture

Years ago with a more adept and educated self reliant society government had to bullshit.  Even then it was difficult.

Today,,, LOL,,, Well, to be kind, let's just say that society of years ago is gone.

serotonindumptruck's picture

What better way to instill Stockholm Syndrome amongst the masses than to tell them that they won't have to pay more taxes to the extortionist who threatens them with State sanctioned violence.

I luv you, Mr. Taxman!

political_proxy's picture

Doesn't Stockholm Syndrome require the awareness of being a captive?

serotonindumptruck's picture

Good point.

Most people are aware of the fact that if they don't pay their taxes, then bad things might happen to them.

Oldwood's picture

The main thing is we MUST maintain the illusion that we should pay no taxes, that it must be OTHERS who pay taxes...the RICH or CORPORATIONS or BUSINESS, anyone but us, and continue to believe that we can fund our entitlement state by taxing the people who OWN government, the people we work for, the people we purchase everything we want and need from, the people who can pass every fucking dime of taxes they are levied back onto US.

End the charade.

TheEndIsNear's picture

Taxes on personal income from labor is slavery.

Oldwood's picture

And I suppose being forced to pay for food is slavery too. How about rent?

Unless you are planning to revert to prehistoric times, taxes are as universal as eating. Even tribes demandedpaid tribute to their religious leaders.

And there are PLENTY of people in this country that pay NO taxes, many even getting net payments FROM government.

 

hxc's picture

I'll cut you some slack since you have mostly libertarian leanings... just need another redpill, I guess.

 

Taking something someone does not wish to give = theft

Nobody wants to pay taxes

Therefore taxes = theft.

 

Whatever is done with the proceeds of said theft, is no matter. Even if those stolen from have absurd social programs foisted upon them, or even benefit from those somehow (something I am doubtful of), the taxes collected are still taken via coercion; i.e. they still constitute simple theft.

Oldwood's picture

I'm not going to argue that taxes shouldn't? be voluntary, but they never have been. Every nation has a government and that must be paid for. I support sales tax in lieu of income or property as it is the most transparent and the most voluntary...assuming you are not forced to buy.....and that sales tax would not be levied upon unprepared food.

Aside from sales tax I would support import tarrifs as it makes far more sense to tax foreign production than it does our own.

Practicality and especially fairness and transparency unfortunately are at the bottom of our government's priority lists for obvious reasons, therefore will NEVER happen.

Debt Slave's picture

Funny how Republicans don’t want to talk about cutting off ALL foreign aid to the Middle East and getting out of Iraq and Afghanistan. I wonder how much that would save? But hey, we can just keep printing moar.

Cabreado's picture

With great respect for (and votes for, even via pencil when need be)... until the venerable Ron Paul, and a critical mass like him, change focus and urgency from "political party" to a Thoroughly Corrupt and Defunct Congress, and therefore protection of Rule of Law and Representation, his message is going nowhere... and the opportunity cost there is beyond "huge." 

WTFUD's picture

We need a Private Militia in every State, no pussies need apply, only the kind of people who'd take a club to a baby seal. Unfortunately our Political Marks have hired most of those as personal protection ( on our fucking dime too, it's scandalous, an injusteeez ) lol.

Oldwood's picture

So, are we now pretending that $25 trillion in debt is any less payable than $20 trillion? Are we going to pretend that ANY debt will be repaid and that any unpayable service on that debt is not going to be paid with MORE debt?

We know this is funny money that will never be paid, and yes we know it is not infinite, but we must also agree that not all dollars spent are wasted. IF we had ANYTHING to show for the $20 trillion we are already on the hook for, and if we had ANY hope of coming up with the addition $100 trillion in unfunded liabilities, we might have something to argue over....but we don't. At this point the only hope we have is "magic" of creating accounting and a strong dose of economic exuberance that might actually create a new and prosperous dynamic.

At this point for me it is like waking up from a drunken binge to discover that I have maxed out my cards, mortgaged my house, borrowed from loan sharks and lost my job. What am I to do?

I can admit my failures while wallowing in guilt, take up residence behind the McDonalds on the freeway in a cardboard box and panhandle for booze or drugs that will make me forget what a loser I am, OR,

I can beg for credit, pledge myself to ridiculous commitments and expectations and then do everything in my power to make good.

What should I do? What should we do? Roll up in a ball, admit our failures and quit?

Our system is nothing but the flow of money. We saw what happened when credit was shut off in 08.It is sad and disappointing for me that this is our world, but it IS. If we can extend our credit to actually build infrastructure, to expand our capabilities and abilities to compete, I believe THAT is our best shot. Ron Paul wants us to commit to austerity, to stop spending. This is laudable IF we believed that progressives would EVER restrict spending on ANYTHING. Obama spend trillions on NOTHING except maintaining the status quo while raising taxes on everybody. How much ground did we gain. We can be consumed by our principles while ignoring our reality, and our reality is that progressives still control almost everything....especially if you count progressive REPUBLICANS.

Our only choice is to invest in our economy while carrying the waste and corruption on our backs because it is NOT going away...especially with our economy as fragile as it is.

hxc's picture

Love ya man, but I sadly have to call you out again.

The '08 crash was never allowed to burn itself out. Instead the Fed reinflated all the bubbles in the economy and tacked on more. Way too much malinvestment in the economy now, as you rightly mention... so now we have to let it crash, burn, then begin anew without the artificial credit creation that has created 3 massive bubbles in the last 20 years. Trying to keep a bubble going forever only causes hyperinflation.

Stripping all the crap out of the economy (and unfortunately taking out a huge chunk of the good stuff in the process) is not only necessary, but inevitable, sans QE23541345234 and ZIRP/NIRP which will lead to hyperinflation at some point or another.

Oldwood's picture

Yes, they did intervene. Imagine if they had not. While in the long run we would have been better off, the short term would have been hell for sure. My point is that as our economy is currently constructed it is absolutely dependent upon debt, and my take is that attempting to correct that at what could quickly become the bottom of a cycle could be civilization ending. Death defying solutions are all that is left if you abandon debt. I simply believe if debt must be incurred to keep this afloat, the best purpose of that debt should be in real investment, shit that won't evaporate into thin air with the next downturn.

I believe a cleansing crash as you suggest will not just be hardship, it will be death, destruction and possibly civilization ending. The momentum created from such a crash reminds me if the total destruction of collapsing twin towers falling from great height. We have a long long way to fall with lots of associated baggage.

DaiRR's picture

The government and the financiers still have Liberty in a stranglehold, regardless.

Lanka's picture

The government is fully corrupt and has legalized such behavior.  There is no logical conversation until you cut off the head of the snake (i.e the Fed).

Cabreado's picture

A legitimate Congress could shut down the Fed in a relative instant.

WTFUD's picture

Too late for that revolving door to close!

WTFUD's picture

Well there's blood-sacrifice but i don't see that Saudi inspired suicide bomb- gig going down here in the west. Nope!

Father ¢hristmas's picture

Congress should pass this tax reform, so the Senate can redraft it with an added provision enacting a flat federal income tax rate  of 100% on individuals and families making less than $250,000/year along with eliminating all deductions for this bracket. This will help strengthen the middle class.

WTFUD's picture

Allow me to get back to you on this one, when i get my head around it.

Oldwood's picture

Exactly. You have it!

Tax the fucking rich. The super rich will always be able to defer their taxes on their customers (remember who the super rich are), but the rich (anyone making more than ME) should get a thorough soaking. I mean it's only fair. Somebody had to pay and it sure as shit shouldn't be ME.

The best part is the rich are a voting minority but not rich enough to buy a swamp critters, so we got them by the nuts. Don't you just love "democracy"?

Justice and liberty for me, and fuck thee.

Father ¢hristmas's picture

On the contrary, you read my proposal wrong.  We need to tax the earnings of individuals and families 100% if they earn less than $250,000/year.

We should tax small businesses at a rate of 99.997% because they didn't build that, so people clocking less than a quarter million are guaranteed not to have built jack shit to deserve any of their earnings.  This is America, and if they do not like paying their fair share, they should move.

Since quantitative easing began, the real middle class is composed of individuals and families earning between $250,000 and $999,999,999 per year.  They are the real visionaries, heroes, and job creators, so their lives are worth moar. 

No one cares what a person earning less than a quarter million a year is doing, unless they are committing some sort of crime heinous enough to end up on the evening news.  Or they can be used as a prop for some sort of political agenda.

The middle class should be given special tax ID's that give them a broad amount of leeway with laws and regulations.  This will make it much easier for them to provide lower caste citizens with jobs.

If lower caste citizens want funds to purchase goods and services, their tax ID's can be purchased and traded among the middle class like baseball cards, where middle class citizens can give these people stipends that the middle class can deduct from their taxes as charity.

Things like health care are not human rights.  That is stupid and wasteful.  The gubmint should not provide services to people who do not provide moar economic activity than the cost of the service they are furnished.  

Even a shepherd would not continue to feed and house sickly anemic sheep that can no longer grow wool.

WTFUD's picture

. . . but will it give the illusion, as that's what counts? One small step for man one giant Potemkin Village for Mankind.

Father ¢hristmas's picture

Enacting a retroactive 750% sales tax on firearms and ammunition will restore the liberty that this republic so desperately needs. 

Combining this with a 99.997% tax rate on small businesses, along with an elimination of all deductions and a new rate of 0% on corporations will help Main Street.

To put millions of Americans back to work and get our economy moving again, we can repeal all laws against insider trading, and require Congress to invest at least 5% of their new $22.6 million/year salaries into the stawk market based on prior knowledge of future legislation affecting the equities they will invest in.

THE DORK OF CORK's picture

Liberty  me  hole.

Paul  is  a  establishment  figure.

Everyone  but  zeros  know  this.

rejected's picture

Americans love taxes. Lets them steal from their neighbors.

DannyTX's picture

Ron, Don't you read the news?  Tax reform is dead, kaput.  

THE DORK OF CORK's picture

Ron  Paul  is  a  classical  liberal  ,  a  creature  of  Cecile  Rhodes  rather  then  Jeckl  island.

Cutting  taxes  alone  can  never  bridge  the  gap  between  prices  and  net  income.

ilovetexas's picture

Give me my money! I will go buy some freedom!

THE DORK OF CORK's picture

Ron  Paul  ,lover  of  Mammon.

Americans  will  never  have  freedom  if  they  continue  to  embrace  this  toxic  and  indeed  unchristian  scarcity  merchant

ElTerco's picture

The one time that the Republicans own the legislative process, they squander their opportunity to cut spending. Republican party -- what a joke. They've been lying all along.

Catahoula's picture

Paul strikes again! Freeze dried food anyone?