Republican presidential candidate Rand Paul said on Fox News on Sunday that income inequality is “due to some people working harder,” denying studies that have shown his flat tax plan would increase inequality.
Fox News anchor Chris Wallace asked the Kentucky senator about his flat tax plan, a topic Paul said he wished had come up in the first GOP debate. “Doesn’t your plan massively increase income inequality?” Wallace asked.
“The thing is, income inequality is due to some people working harder and selling more things, so if people voluntarily buy more of your stuff, you’ll have more money,” Paul responded. “It’s a fallacious notion to say, ‘oh well rich people get more money back in a tax cut.’ If you cut taxes ten percent, ten percent of a million is more than ten percent of $1,000. So obviously people who paid more in taxes will get more back.”
Rand has introduced a 14.5 percent flat tax plan, which would give families making $50,000 to $75,000 a year just a three percent rise in income, but would boost the income of families making more than $1 million a year by 13 percent.
An analysis by the nonpartisan Tax Foundation found that due to the nature of a flat tax, people making more annually would see higher increases in their income under Paul’s proposal. At a time when the gap between rich and poor is the widest on record, Paul’s tax plan would exacerbate the problem.
On average, today’s upper-income families are almost seven times wealthier than middle-income ones. The top 0.1 percent have seen their share of the nation’s wealth grow the most over the past decades to the point where they are now worth more than the entire bottom 90 percent of the U.S. population, according to a recent Pew Research Center report.
But the widening income divide isn’t caused by some people working harder than others, as Paul alleges. Workplace productivity has surged in the past few decades, but income and wages have stagnated for most Americans. While there has traditionally been a link between how much goods and services workers can produce and how much they are compensated — a link that existed until the early 1970s — the two measures have since split. Americans now work longer hours than their counterparts in the world’s largest economies, but their incomes do not reflect their productivity.
Paul’s comments echo those made last month by one of his Republican competitors, former Florida Gov. Jeb Bush. Bush claimed that “we have to be a lot more productive” and “people need to work longer hours” in order to see their incomes rise, also missing the fact that more productivity does not equal higher wages in today’s economy.
Bush responded to criticism over his comments, saying he meant that more hours should be made available to workers, but then he went on to criticize President Barack Obama’s overtime proposal just a week later, calling it “the wrong approach” and claiming it would result in lower wages.
Other Republican presidential candidates including Texas Sen. Ted Cruz have called for a flat tax system similar to Paul’s which would also lead to increased income inequality. But the candidates’ plans appear to be disconnected from what American workers’ actually want. A Gallup report from early from last year found that two-thirds of Americans are dissatisfied with the current wealth distribution in the U.S. and believe the federal government should play a role in evening the playing field.