Sen. Rand Paul says he wants to "blow up" the U.S. tax code. But his newly unveiled plan would keep two of the most well-known deductions in the system in the equivalent of a budget bomb shelter.
Called "The Fair and Flat Tax," the center of Paul's plan is a 14.5 percent flat-tax rate that would be applied to all personal income including wages, salaries, dividends, capital gains, rents, and interest. In addition, Paul said the first $50,000 of income for a family of four would not be taxed and low-income working families will receive and retain the earned-income tax credit. Paul's plan doesn't mention low-income single adults or single adults with a dependent.
Paul also says his plan would eliminate all deductions in the tax code. But, importantly, it leaves in place those for home mortgages and charitable deductions. Last year, the Joint Committee on Taxation estimated the deduction for home mortgage interest on owner-occupied homes cost the U.S. Treasury $67.8 billion in revenue for 2014.