Explain Ron Paul's tax plan?

Please explain Ron Paul's excise tax plan and the effect of the US economy if we were to eliminate the income tac in echange for combination of taxes including excise tax.

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  • MrOrph
    Lv 6
    1 decade ago
    Favorite Answer

    Ron Paul wants to give the poor working people of America a raise of up to 28%. He wants to do this by eliminating the IRS, ending the income tax, and making social security voluntary.

    How does this give working poor people a 28% raise? First, consider that the average worker retiring TODAY gets less than a 1.5% return on his money invested in Social Security, and this downward trend is expected to continue until workers begin lousing money. By opting out of Social Security, a worker earning between $1 and 100,000 will be able to take home just over 6% more of their own paycheck. This worker will then be free to invest whatever percentage of their income wherever they want, and easily get better than 2% on their money.

    As for the other 22%, this comes in the form of increased purchasing power. According to Dr. Dale Jorgen, chairman of the Harvard Economics Department, 22 percent of the price of consumer products represents the costs of federal taxes and tax compliance costs paid by producers and suppliers in the process of making the product. Ultimately, these costs are passed on to and paid by the consumer. We know from basic economics that once a cost is removed industry wide, competition will push the price down by the amount of the cost in a very short time. The net result is an across the board drop in consumer prices of about 22% nation wide. 22% + 6% = 28% net increase in consumer purchasing power among Americas working poor (or more if you are earning enough to pay income tax).

    Although not every single American would opt out of social security, the downward pressure on prices will be strong. The consumer savings will undoubtedly be significant even if 100% of Americans stay in social security, and only the corporate income tax and its compliance costs are eliminated. Not even the most socialist of the democrats can come close to giving the poorest Americans a very large raise.

    But what about the government? Without an income tax, the budget would be balanced if the government were reduced in size to early 1990s levels. Current revenue from the gasoline, alcohol, tobacco taxes, and other sources would be enough to fund all federal services as they were 17 years ago.

    Rom Paul plans to shrink the government to much smaller levels than where it was in 1990, and use the budget sir plus to keep Social Security viable to those who do not opt out. He believes the government should keep its promises to Americans.

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  • 1 decade ago

    labken -- I do realize from your other postings that you are anti-Ron Paul, so not sure if you made your conclusion before finding out the answers to questions like the one you are asking here.

    Anyway, Ron Paul's tax plan is not just excise taxes. It's that AND user fees.

    User fees, examples:

    1. The Federal tax on gas is how the government pays for roads (R.Paul pointed out that this is abused, they collect more than what is needed for roads, and use the excess for other unrelated things.)

    2. Passport fees - you pay a fee for the application and beaurocracy

    3. Stamps - pay to run the post office / mail service

    4. Federal fees on your airline tickets: pay for air traffic control ..

    All these are just a few examples of user fees that are currently in effect.

    Then excise taxes cover general expenses not covered by user fees.

    The overall effect was quoted in a few interviews.

    Income tax represents 40% of all federal revenues currently collected. Ron Paul plans to eliminate this entirely.

    So result:

    Federal revenue drops 40%

    Federal spending is cut 50% (Ron Paul recommends cutting it in half)

    Spending will be cut more than taxes, closing out the deficit.

    Now people may disagree with this: if you are a socialist and want large govt. programs, you should not vote for Ron Paul. Also, if you believe we should have large military campaigns, you should vote for somebody else.

    But his economic policy does not advocate any kind of deficit, or any type of unsound scam to make people feel good. There is nothing vague about what he wants to do, if you simply research the details.

    It is very close-minded to think that governments cannot exist with taxing income. Many states in the US have no income tax: e.g. Nevada (last I heard they were booming), NH, WY, Alaska, Florida, Texas, South Dakota, Tennessee, Washington ... and prior to 1913, income tax was not even part of the US Constitution.

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  • Anonymous
    1 decade ago

    If you understand economic, as long as currency is moving around, the economy is good. It is when it stops that it is bad. That is when resessions, depressions and collapse happens.

    Like right now, everyone in debt...no money is really moving.

    So if you took all the money that would go to a government who funnels it in to way too many special interest projects that comes from the individual taxes, and let the individual invest it in new businesses and project, our country would be very well off, everyone would. Money would flow and no one would have to be in debt.

    There would not be an "exchange" for another type of tax. Over the last 100 years, just about all the taxes we have were created! tax one food, clothes, sales, gas, cigarettes....on and on. Each dollar gets taxed 30 times!

    The Constitution only mentions yearly taxation for Corporations. The individual tax was "bullied" upon us and is unconstitutional. It is a voluntary system. I know I used to work for IRS! Some faught it and got in jail, other faught it and found there was no law at all.

    There are multiple pet projects of the governments that could actually be unified in to one streamlined organization to benenfit their constituents. Other presidential candidate are seeing this too. Our national government can shed special project obesity that we are paying for and therefor we don't need the "feed". We could invest it in our childrens future without going in to debt! (ie college costs $100,000 for four years now, minimum!) We cold create a health care system that worked. Right now we have a thrid party involved who did not go to medical school, insurance. What a sick plan that is!

    So I see Dr. Paul as a visionary, seeing new ways to help everyone without sacrificing. He is highly intellegent and well studied.

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  • 1 decade ago

    For Ron Paul's tax plan ron would need an across the board spending cut of ALL GOVERNMENT AGENCIES of 68%

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  • Anonymous
    1 decade ago

    Ok, here is his plan: Get rid of the IRS and replace it with NOTHING. PERIOD. He is AGAINST sales taxes, flat taxes, and all other taxes that would replace it. I had to rewind the DVR to make sure that he really gave this crazy answer, but he did. When asked how we would then pay for military, highways, veteran care, etc., he really had no answer. He was making a lot of sense right up until that point, and then the wheels came off the wagon. As an aside, firing most of the government and eliminating the IRS would take legislation from a congress that would have to have a majority of people that think like him, and would take these drastic measures. If that isn't a fantasy I don't know what is. IMHO we need a realistic person for president, and this guy is living in lala land.

    Source(s): Glenn Beck show 12-18-07
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  • Anonymous
    1 decade ago

    I've read it on his website. He speaks of lowering taxes and that we are 9 trillion dollars in debt and need to lower the deficit and follow the Constitution and he's against the Federal Reserve Bank because it is run by unelected officials, etc., etc., etc. In theory, it looks real good. In reality, in order to accomplish all that he speaks of he would have to be President for the next 20 years. I just want to remind him that when Bill Clinton left office there was a surplus and the 9 trillion dollar debt is the result of this Republican administration. And I do believe that's the Party ticket he is running on.

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  • Anonymous
    1 decade ago

    I can't since Paul hasn't explained it!

    According to what I've read - his plan is to eliminate the IRS, PERIOD! Last time I checked his website, that was all it said.

    The problem with establishing a flat tax/sales tax is that there MUST be some way to totally eliminate the current tax system. Otherwise, Congress could come back later and say they need more money and reestablish the income tax.

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  • Anonymous
    1 decade ago

    http://www.ronpaul2008.com/issues/debt-and-taxes/

    While his page doesn't fully explain his plan....he has said publicly he wants to abolish the IRS...instead he thinks we should go with combination of a local and federal sales taxes...which are both excise taxes.(a tax you can avoid paying by the choices you make)

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  • Anonymous
    1 decade ago

    Eliminate the IRS and replace it with nothing

    If we end the war in Iraq, we will have the same budget we had in 2000, and even without the IRS we will still collect enough in current taxes to cover all exspenses.

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  • Anonymous
    1 decade ago

    You can't even get Ron Paul to explain his tax plan.

    Listen to these "explanations". They make no sense.

    Here's one that really makes you scratch your head:

    "Current revenue from the gasoline, alcohol, tobacco taxes, and other sources would be enough to fund all federal services as they were 17 years ago."

    Say WHAT?!! DUH--- aren't those costs of 17 years ago adjusted for inflation? Noooooooo........

    This is a typical Ron Paul mind-bender---that somehow, everyone in government will go back to their year 1990 salaries after we fire the other half of them and they go and....and....what......yes! go on unemployment!

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