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Republican presidential candidate Rand Paul has proposed a 14.5 percent flat tax on all American individuals and businesses. He repeatedly claims his plan would "blow up the tax code" and "pull America out of the slow-growth rut of the past decade," underscoring the audacity of such a policy.

He concludes with an assurance that the plan's execution will see the American economy roar. But the key to fiscal growth is not as easy as implementing a flat tax.

Paul's tax plan, as with many flat tax proposals, is not a pure flat tax. He includes a tax exemption for the first $50,000 of family income and the maintenance of mortgage and charity write-offs.

In addition, Paul proposes a 14.5 percent "business activity tax" that would operate much like a European Value Added Tax or VAT. Despite its widespread popularity among OECD nations, VATs serve as a pernicious form of taxation, harming American consumers through increased prices and broader tax bases.

Unlike a conventional sales tax that is only charged at final sale, VATs are charged in small amounts along the entire supply chain. Ironically, the "business activity" component of Paul's proposal will be primarily borne by consumers, as corporations charge higher prices to customers in order to shoulder increased costs. Furthermore, due to their subtle nature, VATs tend to grow over time, as 20 of the 29 OECD nations with VATs haveraised their rates.

Paul's policy has deep roots in American history. The government has twice flirted with the flat tax, both in the 19th century. Due to the rapid evolution of the American economy however, there is not much to glean from a single digit flat tax rate forincomes over $4,000.

A flat tax would simplify a system characterized by convoluted loopholes and incomprehensible deductions. In a given year, U.S. taxpayers and businesses devote7.6 billion hoursto comply with the IRS's 3.7 million-word code.

To analyze the feasibility of Paul's tax proposal, one could look at tax cuts enacted by previous administrations. Granted, comparing a simple tax reduction with an entirely new flat tax plan seems like a gross conflation of fiscal policy.

Yet, on a certain level, Paul's tax plan is achieving the same ends as previous tax reductions, just with a reduction in the corporate tax rate and the outright elimination of the payroll tax.

Consider the tax cuts enacted under the Coolidge administration during the 1920s. Dubbed the Mellon tax cuts, these reductionsslashed federal income taxesfrom 73 percent (for income over $200,000) in 1921 to 50 percent in 1923. Simultaneously, taxes paid by the top income earners rose from $300 million to $700 million. Rather than decrease government revenue, lower taxes bolstered federal earnings by an additional $1.2 billion.

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Rand Paul's flat tax proposal is an economy killer ...