Posted on 11/05/2015 12:53:36 PM PST by conservativejoy
The tax-reform proposal unveiled by Ted Cruz last week is as transformative, intellectually dominating and economically and politically revolutionary for 2016 as Kemp Roth was in 1980. Indeed, even more so.
Cruzs plan would scrap the current income tax code and replace it with a simple, single, flat rate of 10%, to be paid by everybody on everything , wages, profits, capital gains, dividends, rent, interest and all forms of individual income. No one would be able to claim that billionaires pay lower tax rates than their secretaries or that the system is rigged to favor the rich over the middle class.
The payroll tax, the biggest tax on the poor and middle class, would be erased, with Social Security and Medicare financed in full with no deficits. Included is a $10,000 standard deduction ($20,000 for couples filing jointly) and a $4,000 personal exemption. It means the first $36,000 for a family of four is exempt from all taxes.
The plan retains the current Child Tax Credit and increases the Earned Income Tax Credit by 20%, both favoring poor and lower income workers as well. So this new system is rigged to favor poor and middle-class taxpayers.
Most taxpayers could file their income taxes on a postcard under this Simple Flat Tax reform. It means that 'we can abolish the Internal Revenue Service as we know it,' Cruz said.
The corporate income tax would also be abolished and replaced with a 16% business flat tax. The 16% rate would apply to a business’ gross receipts from sales of goods and services, minus purchases from other businesses.
That involves immediate expensing, or deductions, for the costs of plants and equipment, and all other capital investment, which all involve purchases of inputs from other businesses.
That will promote investment in worker productivity , the foundation of rising wages , and in businesses providing good-paying, blue collar jobs like heavy industry, mining, energy, farming, ranching and manufacturing. buy valium online But there would be no more corporate welfare, special interest credits and deductions, or crony capitalism as under the current corporate income tax.
Studies confirm that our current corporate income tax devastates workers: working people actually bear 80% of that tax in the form of reduced wages that would otherwise be paid. The Tax Foundation scores the 16% business flat tax as raising $25.4 trillion in federal revenues over the next decade, which would account for 71% of all federal revenue.
Cruzs reform would also abolish the death tax and alternative minimum tax, as well as the net investment income tax of 3.8% and the Medicare surtax of 0.9%, both imposed by ObamaCare. Cruz provides for a Universal Savings Account of $25,000 a year for all working people, which could be withdrawn at any time for any purpose, with taxes deferred, as in an IRA. Read more at IBD with info on Cruz plan for personal savings and investment accounts.
Senator Ted Cruz has also asked the Department of Justice to preserve all IRS related documents related to targeting conservative groups, and has claimed the right to reopen the investigation that allowed Lois Lerner to plead the Fifth, even though she had already spoken on the issue, and legally could not plead the Fifth Amendment. She has recently been absolved of her stragetic targeting of conservatives.
Mr. Cruz said in a letter to Attorney General Loretta Lynch. 'Given this Administrations refusal to conduct itself appropriately, or take the issue of the potential illegal conduct of IRS employees seriously, any subsequent administration should reserve the right to reopen the matter, conduct its own investigation, or appoint a special prosecutor to conduct an investigation.'
I liked the Trump plan, but Cruz’s plan is even better.
Wow, on the surface, best, most serious plan so far. I like it.
Oh yes they will. The justification given for progressive taxation has always been that a given percentage of their income hurts the poor more than it hurts the wealthy, so the wealthy should pay more. The left will say a flat tax is an assault on the poor.
They can say whatever they want, but every citizen needs to be vested in the country as a taxpayer.
I agree 100%. When they don't, it automatically allows the Rats to politically pit one group against the other, as we have now, which I think is the REAL reason the Rats like it to be that way . . . . It is NOT an issue of "fairness" as they like to claim.
There never will be a tax plan proposed by a conservative the liberals will not claim is an assault on the poor and a dozen other reasons they will come up with none of which would be true, it is built into the liberal agenda; the only good tax plan is a progressive liberal tax plan, that's just the way it has always been and always will be.
Agree.
If we can’t limit the right to vote to landowners, at least everyone who votes should also pay taxes.
the poor pay sales tax
...and many fees
Taxes should be levied across the board at the same rate for everybody. Just my opinion.
Trump’s plan and Cruz’ plan rely on the 16th Amendment being in effect. Because of this they are both doomed. Why?
The 16th Amendment permits future Congresses to do whatever they want. After Trump/Cruz are gone, the monster will be back out of the closet. It always comes back. The 16th Amendment guarantees a flat tax can be monkeyed with; any flat tax will NEVER STAY FLAT.
The original income tax code following the ratification of the 16th WAS 14 PAGES LONG and affected less than 2% of the working public. That’s how it got snuck in. Every income tax starts off at a low-low rate and then unleashes Hell, and that’s what happened in 1913-1914. Just a few years ago the father of Bill Gates III tried to introduce a state income tax to the State of Washington and lost the vote. Guess what the rate was that he proposed, 1%. Yeah, just a little ole 1% won’t do nobody any harm, yep. The income-taxers are liars. All of their plans may have good intentions, but we know about that road and where it leads.
Trump’s plan will boost the economy as will Cruz’, and both should be more effective that Reagan’s. But it’s only temporary. Neither will touch a vision for a consumption tax because it is considered too far afield of campaign reality. Once they are elected they should consider establishing economic regions that operate only on a consumption tax and then see how it shakes out. Then their successors will have a foundational basis for repealing the 16th and going full consumption.
The only saving grace of Cruz’ plan that is superior to Trump’s plan is CRUZ PROPOSES TO ELIMINATE THE IRS.
Why is this important? Because it allows for a consumption tax to be implemented coupled with a repeal of the 16th. A consumption tax is far superior in every aspect, every aspect to any income tax.
Trump would do well to have his people consider consumption only/income tax-free economic zones for trial. That would be historic. It would be superior to the current Cruz plan because it allows data to be gathered and used in a comparison report. Cruz could also consider doing the same thing and he should do it.
If you make $36K a year or less, your effective tax rate is zero, and you would pay no taxes.
If you make $60K per year, after the $36K exemption, your effective tax rate is 4%, and you would pay $2,400 in taxes.
If you make $600K per year, after the $36K exemption, your effective tax rate is 9.4%, and you would pay $56,400 in taxes.
The poor would pay less and at a lower effective tax rate, those making more would pay more and at a higher effective tax rate.
The claim of this tax plan being an assault on the poor can very easily disproven.
Of course, this is just for our information, for some strange reason, basic math seems to escape the average liberal mind.
“They can say whatever they want, but every citizen needs to be vested in the country as a taxpayer.”
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Totally agree. This was one of my biggest gripes about Bush 43...he took so many people off the income tax rolls that it has endangered the Republic. Generally, people vote in their economic self interest and we have too many people expecting more payouts from big government.
Cruz has long said that his flat tax plan allows us to get to the Fair Tax.
“The corporate income tax would also be abolished and replaced with a 16% business flat tax. The 16% rate would apply to a business’ gross receipts from sales of goods and services, minus purchases from other businesses.”
This is a VAT tax not a flat tax. Its a terrible idea and will stifle small business not encourage it. I owned and ran a small business successfully for 17 years. This would have been terrible for me. And it will be terrible now.
What about all the off shore money that needs to come back in?
This is what happens when you let a guy who has never run a business start making up tax plans. This tax plan was put together to get a good score from the CBO not to really work. Its going to cost some money to get out of the ditch we are in. Look what it cost to get here.
Trump’s plan is geared to bring megabucks back into the country fast and kickstart the economy by making it easy and cheap for small business to flourish. Trump’s plan will cost some money short run but it will jumpstart the economy real fast.
Best line of the piece was the last line:
“any subsequent administration should reserve the right to reopen the matter, conduct its own investigation, or appoint a special prosecutor to conduct an investigation.”
Why aren’t ALL the candidates talking about going after the bureaucrats and the 4th branch of government - the regulatory state?
As for your comment about taxes levied equally for all, I would agree; so why is Cruz raising the earned income tax credit by 20% ?
But what did the WSJ say?
/sarc
I don’t understand how Cruz’s corporate tax would work. Suppose a labor-intensive business buys $2 million worth of supplies from other businesses, pays $10 million in wages and other costs (interest and whatever), and has gross receipts of $13 million. Under current law they pay taxes on the net profit of $1 million. Cruz’s plan is for a tax of 16% on gross receipts, but that’s not counting purchases from other businesses, so the taxable receipts is the $13 million total minus the $2 million purchases, leaving $11 million taxable. 16% of $11 million is $1.76 million. Doesn’t this turn a profitable business into a money-loser?
Not bad as a sales pitch for lower taxes, but not the panacea that folks think it is. The IRS will still live.
The effect will eventually make put the IRS issues on the back burner, and they will put the screws to everybody except wage earners, and there won't be the demographic pressure to change things.
The only way to change the IRS culture is to kill the income tax AND to fire every current IRS worker with prejudice. They should never work in any government job again.
Capital gains taxes....are just legal stealing. Government does nothing...they have no risk, no skin in the game..and if I make $10k they take 38%
If I win the lottery...they take 33% at the very least. They did NOTHING for that money....
And then they turn around and give that money away...and our countries debt is killing us?
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