Senator Rand Paul (R-Ky) is considered by many to be the most outspoken defendant of free-market capitalism in the U.S. Senate. A son of former Texas Congressman Ron Paul, the Republican Kentucky senator is a strong advocate of auditing the U.S. Federal Reserve and has drawn both praise and criticism for his minimalist stance on U.S. military and foreign intervention.
For the print debut of The Alpha Pages, Senator Paul talked to us on a wide range of topics, including the rise of Bitcoin, his fight to audit the Federal Reserve, his views on the ongoing Iraq crisis and if and when he might announce intentions to run for President in 2016.
There’s a conventional wisdom that the “victims” of high frequency trading are small investors and that the markets are rigged. Some would maintain that high frequency trading is just an example of technology being developed to its fullest capacity and makes for more efficient markets.
Where do you fall in this thought spectrum?
Paul: I would say that I’m not for most regulation of trade, other than rules that would involve prohibitions against fraud and deceit, and some that promote greater transparency. For the most part, we are adults trading in the market, and we need to be people who are going to buy or beware.
Minnesota-based medical-device maker Medtronic recently purchased Covidien for $42.9 billion. The company will now relocate its operations overseas to reduce its tax burden. What do you think is responsible for the record number of corporate inversions since 2012?
Paul: I blame the tax code and those who wrote the tax code. I’m on the Senate Permanent Subcommittee on Investigations that Senators Levin and McCain brought in Apple executives to read them the Riot Act, make them swear under oath, and chastise them for maximizing profit and minimizing taxes for their stockholders.
During that hearing, I said, “If you want to see the root of the problems, rather than bringing Apple in, we should’ve brought a big mirror,” so Congress could look in the mirror. The problem arose from legislators who wrote a crummy tax code. The problem arose from having a corporate tax rate that is twice what Canada’s is and nearly three times what it is in Ireland. Money goes where it is welcomed, and money has been flowing overseas. I don’t fault corporations for doing what they’re supposed to do, which is to maximize their profit.
I have been beating the drums for repatriation and want to do it again. I have considerable momentum on both the Republican and Democrat sides of the Senate aisle.
If we don’t do it, Medtronic and Pfizer are examples of what will continue to happen. We received a list of about 44 different companies that have done these inversions. And every day you wait, every month you wait, every year you wait, for some holy grail of tax reform, many more companies will do what is in their best interest, and that’s to minimize taxes.
It really offended me when the Senate brought in Caterpillar as well.
I said, “Look, instead of chastising Caterpillar for making money overseas – instead of reading them the Riot Act – you should be giving them a medal for staying in business for nearly 90 years, having 55,000 employees, and paying hundreds of millions in taxes in the United States.”
I’m a big believer the sooner we do repatriation, the better. My personal preference would be a repatriation tax rate of about 5 to 5.25%.