DETROIT (AP) — Lowering taxes for businesses in struggling cities like Detroit is the best way to confront poverty and unemployment, said U.S. Sen. Rand Paul.
The Kentucky Republican, who met with business and community leaders Friday at a Detroit Economic Club luncheon, touted legislation he's sponsoring that calls for "economic freedom zones."
The areas would include flat federal personal and business tax rates of 5 percent in neighborhoods with unemployment rates above the national figure. Social Security taxes also would be lower and capital gains taxes would be eliminated.
"The answer to poverty is leaving more money in the hands of those who earn it," said Paul, who estimates his proposal would leave more than $1 billion in the city over 10 years.
Paul didn't shy away from discussing a judge's decision Tuesday to make Detroit the largest U.S. city to enter bankruptcy, but said other parts of the country face similar struggles.
Detroit is in state receivership. State-appointed emergency manager Kevyn Orr, who filed for bankruptcy in July, pegs the city's debt at $18 billion. Much of that debt is from pension and health care liabilities.
City workers and retirees are concerned about huge cuts to both. Orr's proposed restructuring will be revealed in an adjustment plan he expects to present to federal bankruptcy Judge Steven Rhodes in early January.
"If there's a way for the city to remove its burden of debt by bankruptcy, that'd be good," Paul told reporters after his speech. "But you also have to understand there are human lives involved with all the pensions and things."
Paul, a tea party champion, is considering a 2016 bid for the Republican presidential nomination. He has been firmly opposed to any federal bailout for Detroit, but no one is proposing such relief.
He also wants Congress to change the rules for certain immigrants to settle in Detroit if they have plans to create jobs.
While in Detroit, Paul also attended the Friday morning opening of a Michigan Republican Party office on the city's west side. Detroit is more than 80 percent black and mostly votes Democrat.
"We're starting ... almost at zero," Paul said of the GOP outreach to Detroit residents and blacks, in general. "We haven't been trying, either in Detroit or across the country. I think showing up will make a difference. It doesn't mean next week we're going to win the African American vote in Detroit. But if we're at 5 percent and then to 20 percent Michigan would become a competitive Republican state."
But Michigan Democrats called the GOP Detroit office opening "the latest example of failed Republican outreach."
"Republicans are looking at changing demographics in Michigan and around the country, and they don't like what they see," state Democratic Party chair Lon Johnson said in a statement Friday. "Forced to confront this new reality, they must choose between changing their policies or changing the rules whenever they can in order to solidify their grip on power."