But the experience since the turn of the century has been that the wealthy and corporations have been afraid to invest (create more supply) because the market isn’t there. In a sense, it’s an operation of the false theory of supply-side economics, which essentially says that if you make it and put it up for sale, they will buy it. The first idea ignores decades of data to build its case on the disproved notion that if you cut taxes on the wealthy, they will invest more in the economy, thereby creating more jobs. 2) End all deductions, except for mortgages and charities. Paul’s program consists of two changes to the current tax code: 1) Establish a flat tax of 14.5% that’s the same for every tax-paying entity (personal or business) and every kind of income (earned or investment) note that included are payments for Social Security and Medicare, which fulfills the conservative dream of comingling Social Security funds with the general budget, the first step in making major benefit cuts.

Since the birth of the industrial revolution, our economy has thrived most when tax rates have been relatively high, such as after World War II and during the Clinton years (when compared to the eras immediately before and after Clinton).

Paul’s premise comes up short in the reality department. Now Paul does not mention the Laffer Curve by name, but he is proposing the same twisted reasoning-lowering tax rates will lead to economic growth which will lead to higher tax revenues. When I interviewed Laffer in 1981 for a television news report, he denied the myth. Laffer Curve theory has been around for ages but is associated with right-wing economist Arthur Laffer who supposedly drew it on a paper cocktail napkin for some government luminaries during the 1970’s. His plan, which he outlined in a Wall Street Journal opinion piece that has been reprinted on many other news websites, is based on the old Laffer Curve myth that proposes that lowering tax rates always leads to economic growth, which then always produces greater tax revenues. Kentucky Republican Senator Rand Paul wants to create a flat tax of 14.5% that he says will reduce government revenues by trillions of dollars, but magically lead to greater tax revenues in the future fueled by economic growth.

Rand paul flat tax