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Rand Paul: "Blow up the tax code and start over"

Republican presidential candidate Rand Paul unveiled his version of a flat tax on Thursday, proposing to "blow up the tax code and start over "in a Wall Street Journal editorial.

"The tax code has grown so corrupt, complicated, intrusive and antigrowth that I've concluded the system isn't fixable," Paul, a freshman senator from Kentucky, wrote.

Hank Paulson: U.S. tax system is a “disgrace” 02:43

In its place, he called for "an over $2 trillion tax cut that would repeal the entire IRS tax code...and replace it with a low, broad-based tax of 14.5 [percent] on individuals and businesses." Under Paul's plan, all forms of income would be taxed at that level, including wages, dividends, capital gains, and interest.

"All deductions except for a mortgage and charities would be eliminated," Paul wrote. "The first $50,000 of income for a family of four would not be taxed. For low-income working families, the plan would retain the earned-income tax credit."

The plan, dubbed "The Fair and Flat Tax," would also eliminate "nearly every special interest loophole," Paul explained, along with the payroll tax and federal taxes like the gift tax and the estate tax.

A flat tax has long enjoyed support among some elements of GOP. Businessman Steve Forbes based his presidential campaigns on the idea in 1996 and 2000, and Republican candidates have periodically resurrected it since then, most recently Texas Gov. Rick Perry in 2012 and businessman Herman Cain, whose 9-9-9 flat tax made for a memorable campaign slogan.

In this cycle, several GOP candidates have advanced some form of a flat tax. Texas Sen. Ted Cruz, for example, called in March for "a simple flat tax that lets every American fill out his or her taxes on a postcard."

Conservative economists have generally embraced the idea, pitching it as a way to juice economic growth, make the U.S. more competitive, and reduce the costs associated with filing taxes under the current complex system.

"The flat tax is good policy," Dan Mitchell, a senior fellow with the conservative CATO Institute, told CBS News in April. "It would boost U.S. competitiveness, encourage more saving and investment, reduce compliance costs, and collect revenue is a much less destructive fashion."

Left-leaning experts, though, say many flat tax proposals would destroy the progressive nature of the current tax code, in which those who earn more pay more. They're not convinced a flat tax can be structured in a way that prevents poor families from sustaining a tax hike.

"It is a misguided idea because the progressivity in our existing tax code is a critically important component, and it's something we wouldn't want to lose," Jared Bernstein, a senior fellow at the Center for Budget and Policy Priorities and the former chief economist for Vice President Biden, told CBS News in April.

"Many of the proposals that have been floated, once they're scored, you find out the flat tax rate would have to be much higher than the advocates tend to want in order for them to be deficit neutral. Or the tax would have to hit a lot more people than they might envision, and that would make it far more regressive," Bernstein explained. "At the end of the day, it's very hard to make the numbers work out."

Paul tried to preempt those lines of criticism in his op-ed. "The left will argue that the plan is a tax cut for the wealthy," he wrote. "But most of the loopholes in the tax code were designed by the rich and politically connected. Though the rich will pay a lower rate along with everyone else, they won't have special provisions to avoid paying lower than 14.5" percent.

He also argued the plan wouldn't blow up the deficit because it would be "an economic steroid injection."

"Because the Fair and Flat Tax rewards work, saving, investment and small business creation, the Tax Foundation estimates that in 10 years it will increase gross domestic product by about 10 [percent], and create at least 1.4 million new jobs," he wrote. "And because the best way to balance the budget and pay down government debt is to put Americans back to work, my plan would actually reduce the national debt by trillions of dollars over time when combined with my package of spending cuts."

The senator also made sure to get in a dig at the IRS, noting the recent controversy over the agency's targeting of conservative groups applying for non-profit status. "A convoluted tax code enables these corrupt tactics," he wrote.

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