Republicans All Agree We Need Tax Reform, But Senator Ted Cruz’s Plan Holds The Most Promise

Daily Caller ^ | 11/10/2015 | Gayle Trotter

[Isara]

If nothing is certain in life except death and taxes, perhaps it's time to euthanize our tax system.

The current tax system is massively complex and unfair. It discourages entrepreneurship and stunts economic growth. And yet the leading Democratic presidential candidates offer a consistent theme of more taxes.

You can't get away from these tired ideas from the left. the New York Times recently claimed that the United States must raise federal tax rates to prevent climate change. But when it comes to U.S. tax policy, we need political climate change.

The United States has a $19 trillion national debt and $100 trillion in unfunded liabilities. We have run $500 billion deficits for each of the past seven years. There is simply no way we can tax ourselves out of this gaping hole and into prosperity.

American workers have the lowest labor participation rate since the 1970’s. While the Obama administration touts the number of food stamp recipients and encourages more, others look for another solution to our financial woes.

The wheels are about to fall off the macroeconomic wagon. No Republican presidential candidate supports a tax increase to solve the crisis. It will boil over in 11 years, when every dollar of federal revenue will be spent to pay the interest on the national debt and entitlements. Not a cent will be left to pay for our military, national defense, education, transportation or anything else our government currently does.

Many of the Republican candidates propose tax reforms that promise to change our system from the bottom up to make it simpler, fairer, and growth-oriented.

Of the proposals, Senator Ted Cruz’s holds the most promise. Cruz’s plan would eliminate six categories of taxes: payroll taxes, Obamacare taxes, alternative minimum tax, overseas profit tax, the corporate tax, and the death tax.

To replace these taxes, Cruz suggests a flat tax of 10 percent, raising the standard deduction to $10,000 per filer.

To capture business income, Cruz recommends a 16 percent business transfer tax which takes total business receipts, excludes investments (allowing for an immediate 100 percent expensing) and taxes business income at 16 percent. This business transfer tax applies without regard to a business's form of entity - corporation, partnership, or LLC - so your neighborhood dry cleaner is not paying a higher effective tax rate than a Fortune 500 company.

The Cruz plan recognizes that increasing our labor participation rate will require more businesses to hire more workers. Eliminating the ObamaCare taxes will allow businesses to hire new employees. The plan also seeks to ease the steep financial and administrative costs in hiring that first employee. By simplifying payroll tax obligations, the Cruz plan would eliminate a disincentive to hire new employees that many entrepreneurs currently face.

The plan also seeks to address the alarming flight of U.S. companies overseas. The U.S. corporate tax rate - the highest of highly developed nations - continues to drive U.S. corporations overseas. And that’s a bad thing.

Just last week, U.S.-based Pfizer announced a planned merger with an Irish company. The key purpose of such a merger, like many others, is to change the company's tax situs to take advantage of Ireland’s lower corporate tax rate.

The Obama administration and congressional Democrats propose increasingly complicated and punitive measures against U.S. companies who merely follow the perverse economic incentives that our anticompetitive corporate tax system creates.

By contrast, Cruz’s proposal would reduce the corporate tax rate from 35 percent to 16 percent and eliminate the overseas profit tax, which taxes U.S. products twice, disadvantaging U.S.companies selling their products overseas. That in turn raises the price tag for U.S. products and drives down demand for U.S. goods.

The Cruz plan moves towards three goals. First, it reduces complexity, shifting the burden for tax compliance away from the individual and businesses and to the government. Second, it removes disincentives to work by lowering the tax rate to 10 percent while assuring those who make under $36,000 pay no federal income tax. Third, it revs up the engine of economic growth by giving U.S. companies reasons to stay at home and removing competitive disadvantages that current policy places on U.S. products sold abroad.

Admittedly, Cruz's plan may not solve the bugaboo of anthropogenic climate change. But it does offer tangible steps toward a tax climate that will benefit all Americans. Consider it a solution to the anthropogenic catastrophe of U.S. tax policy.

Gayle Trotter is a columnist, political analyst and tax attorney.

[Isara]

FYI

[basil]

What’s not to like—except he doesn’t have big hair—like the thrice married Donald.

[Fai Mao]

What’s not to like?
The VAT tax by another name on business

Trumps plan is better because it includes no hidden taxes

[Isara]

Trumps plan is better because it includes no hidden taxes

Trump's tax plan still keeps the power of the IRS to pick winners and losers. I wonder why?

[Isara]

Trump supported TARP, auto bailout and Porkulus bill.

Trump's Record on Free-market Issue: (from the Conservative Review)

Trump has a terrible record on free market issues. The only bright spot is the Federal Reserve's quantitative easing, but this glimmer is countermanded by his repeated support for bailing out Wall Street and the auto industry, and increased stimulus spending. Of particular concern is Trump's belief that the government can use eminent domain powers to seize private property in the name of private economic development. This comes as no surprise, given his support for using eminent domain to profit his own company.

Trump supported the Supreme Court’s 2005 decision in Kelo v. City of London, allowing public authorities to seize private land for economic development by private investors; Trump said, “I happen to agree with [the decision] 100 percent.” (National Review)  This is no surprise given Trump’s attempt to use eminent domain in his own line of work. (Institute for Justice)

Trump supported President Obama’s 2009 stimulus, saying: “The word stimulus is probably not used in its fullest…you know, certain of the things that were given weren't really stimulus. They were pork, as we call it, or they were gifts to certain people. But overall, I think he's [President Obama] doing very well. You do need stimulus and you do have to keep the banks alive.” (CNN) 

Trump supported TARP, saying, "You had to do something to shore up the banks, because ... you would have had a run on every bank." (CNN) 

Trump supported the 2008 auto bailout, saying, “I think the government should stand behind them 100 percent. You cannot lose the auto companies. They’re great. They make wonderful products.” He also said that the federal government could “easily save the companies.” (Daily Caller) 

Trump criticized the Federal Reserve’s intervention in the debt market, saying quantitative easing creates “phony numbers” that mislead the marketplace and “will not ultimately benefit the economy. The dollar will go down in value and inflation will start rearing its ugly head.” (CNBC) 

Donald Trump has a history of using eminent domain to complete business deals. Multiple times Trump has supported the use of government agencies to take possession of homes and businesses for use in his private business plans. Eminent domain seizures are reserved only for public use of property rather than abuse by the government taking property from one individual and giving to another. (Washington Post) 

Donald Trump has sought and received crony capitalist tax breaks for his commercial properties in New York. These tax breaks, and even an abatement, force the property taxes of other property owners to rise at the expense of the connected. Special treatment for one business or industry over another with the tax code conflicts with free market principles. (National Review) 

In 2009, Trump supported Barack Obama's call for limits on the pay of executives. (CNN)

[Balding_Eagle]

Trump's tax plan still keeps the power of the IRS to pick winners and losers. I wonder why?

Well, you do know why Trumps plan doesn't eliminate the IRS.

You should at least be honest with yourself, and it would be nice if you respected the posters here on FR enough to be honest with them too.

[datura]

VAT cripples manufacturing. Ask Europe how well it has worked for them.

Ted’s owners want it to line their already deep pockets at our expense.

No thanks.

[gov_bean_ counter]

Ted’s owners. Cute in a shallow sort of way.

[Logical me]

Trump's tax plan still keeps the power of the IRS to pick winners and losers. I wonder why?

Funny, I have not heard this. Under any plan we still will need an IRS type organization. What hole have you been hiding it?

[napscoordinator]

Cruz wants a 15 percent VAT. Not a great idea.

[Principled]

Better than we have now to be sure.

Why tax business at all though - it just ends up making taxes invisible and hidden. Hidden and invisible taxes always increase and that’s bad.

As we all know, business doesn’t pay taxes - only individuals pay taxes. Taxing business hides taxes to individuals in 3 ways:
1) taxes paid by the business end up hidden in higher prices paid by individual consumers.
2) taxes paid by the business end up hidden in lower wages paid to individual workers
3) taxes paid by the business end up hidden in reduced ROI to individual investors.

The result is that taxes are being paid by individuals but many/most individuals won’t recognize it. Soon that certain class of people will be clamoring to increase business taxes... not realizing that it will actually be an increase on individual consumers, individual buyers, and individual investors.

The least bad tax would make all taxes visible - no business taxes. Just make the individual rate sufficient to cover things without hiding taxes in “business tax”.

Kudos though for eliminating FICA and death tax!

[lewislynn]

Trump supported TARP, auto bailout and Porkulus bill.

Cruz supported the Iran nuclear deal against our ally Israel...Not just supported but gave Obama unconstitutional authority over even his own right of veto and then gave Iran, a known America, Israeli hating terrorist supporting nation $150 billion tax payer dollars to boot.

Who's the fool traitor in that picture?

[Jane Long]

Ted Cruz’s and Rand Paul’s Strange Embrace of the VAT

http://www.freerepublic.com/focus/news/3358487/posts?page=1

[Principled]

I’d also like a plan to address welfare.

Welfare must NOT be for any illegal. There must NOT be any benefits of any kind to illegals. None. They’ll decide this isn’t the land of opportunity if the benefits stop.

[Opinionated Blowhard]

More and more, I’m coming around to being OK with a VAT because EVERYONE pays it. A huge problem with our current tax code is that the bottom half doesn’t feel the pain of voting themselves more benefits.

[Fai Mao]

Really?

Here is a link to his plan where does it do this?

https://www.donaldjtrump.com/positions/tax-reform

[St_Thomas_Aquinas]

More and more, I’m coming around to being OK with a VAT because EVERYONE pays it.

Including the trust fund babies.

I don't remember a VAT in Cruz' plan. Are they calling his 16% business tax a VAT? It amounts to one in practice, but it isn't formally a VAT.

[factoryrat]

Flat tax, 10% personal income, 16% corporate, no exemptions, no exceptions, abolish the IRS, and repeal the 16th amendment on top of it.

The power to tax is the power to destroy. Take the power away from an overbearing and vindictive government and their financial interests, and put it back into the hands of the people.

If you can’t agree with that, then more than likely you’re part of the problem, and more than likely, profit from an oppressive tax code.

This is an idea that Cruz needs to hammer home. If he can come up with a convincing reason for his positions on H1B’s and TPA, I’d try to talk everybody I know into voting for him.

As it is, Trump is the top of the heap, he has a message, he has a goal, he won’t back down, he takes the fight to the enemy, and he plays by his rules, and not theirs.

[EQAndyBuzz]

“You can’t get away from these tired ideas from the left. the New York Times recently claimed that the United States must raise federal tax rates to prevent climate change. But when it comes to U.S. tax policy, we need political climate change.”

And a smart politician would demand the NY Slimes shuts its doors because of all the paper it wastes.

[cymbeline]

A “tax plan” is good to talk about but what will happen is not one hail mary tax plan but step by step changes, or maybe not even that.

The main question for me is not which candidate’s plan is best, but which candidate can get something done.