What Exactly Are Rand Paul’s ‘Economic Freedom Zones’?
Sen. Rand Paul (R-Ky.) is running for president in 2016, in case you haven’t heard. Following his recent announcement, Paul has become the second prospective Republican candidate, along with Sen. Ted Cruz (R-Texas), to formally announce his bid for the presidency next year. It’s exciting news for some, completely unsurprising to others, and all-in-all still far too early to start speculating about either candidate’s realistic chances at winning.
But as a part of his plan to fix the country, Paul does have an interesting provision in his platform that he is willingly discussing now. It doesn’t concern any of his political stances, per se, but instead concerns his plans regarding economic policy and helping spur business growth.
They’re called ‘Economic Freedom Zones’, and this isn’t the first time we’ve heard about them. In 2013, Paul pushed for the same idea in Detroit. “What Detroit needs to thrive is not Washington’s domineering hand, but freedom from big government’s mastery,” Paul said, according to The Washington Times. “The answer to poverty and unemployment is not another government stimulus. It is simply leaving more money in the hands of those who earn it.”
He even introduced a bill to Congress, the Economic Freedom Zones Act of 2013, which effectively went nowhere.
So, what is an Economic Freedom Zone, exactly?
According to a document written by Paul himself, “‘Economic Freedom Zones’ allow blighted and bankrupt areas to remove the shackles of big government by reducing taxes, regulations, and burdensome union work requirements. These zones give parents and students the flexibility to find better schools, allow talented immigrants to pursue entrepreneurial and job-creating endeavors, and will provide additional incentives for philanthropy to help those in need.”
Basically, they consist of economically-endangered areas in which Paul wants to conduct an experiment with considerably lower tax rates and regulation. It’s kind of like ‘Hampsterdam‘ from The Wire, but with businesses, not heroin.
While the details are quite extensive regarding Paul’s plan for Economic Freedom Zones, some of the major bullet points include a plan to put a universal tax rate — for both individuals and businesses, regardless of income level — of 5% into place, suspend capital gains taxes, lower payroll taxes, introduce “entrepreneurial visas” for immigrants, and many, many other things.
It’s ambitious, yes, and there are plenty of things that would have left-leaning legislators and community members pulling their hair out. For example, there are a few very worrisome parts of the plan, like stripping Davis-Beacon prevailing wages for union construction workers (taking that money that would have gone to wages, and instead redirecting it back to infrastructure projects), and perhaps most notably, the near-gutting of environmental protections in proposed areas. Oh, and the option for local lawmakers to open up protected lands — like wildlife refuges and National Heritage Sites — for commercial development.
These are just a handful of the many things included in the proposal, so it’s best to read through the entire thing to get a better grasp. Still, it’s easy to see what Paul wants to do: erode government regulation and allow the chips to fall where they may.
Would that help spur economic activity in these areas? It’s hard to see how it wouldn’t. But the concern is at what cost. Is the destruction of the environment, wildlife, National Heritage Sites, a reduction in wages for workers, and a bold tax experiment worth it to pull some areas out of poverty? Plenty of people probably think that trade-off is indeed worth it, and would love to see Paul’s plan put into action. Others, however, find it “terrifying.”
It’s hard to actually comment on the merits of this plan, as there really hasn’t been a similar experiment conducted in the U.S. in modern history. But again, the stipulations Paul is calling for would likely attract investment from other areas, which would be good for the communities in question. Or, the experiment could fail, and these areas could end up in a similar position, albeit a lot more polluted and dangerous.
It is refreshing to see a candidate seriously propose some radical action to stimulate local economies. But the problem with Paul’s plan is that it is a bit extreme. He gets points for creativity and boldness, but it’s hard to imagine his plan for “Economic Freedom Zones” actually going anywhere.
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