Is our children learning?
A collection of Bushisms has been assembled in the form of a poem, sorta.
Posted on 11/10/2015 10:10:35 AM PST by Jane Long
Senators Ted Cruz and Rand Paul are strong advocates of limited government. They are gifted spokesmen for free markets, and they are heroes for taking on the GOP establishment on issues such as overspending and civil liberties.
That is why their embrace of the value-added tax (VAT) in their presidential campaigns is so baffling. VATs are the revenue engine of big-government welfare states, not a proper funding source for the small federal government that both senators favor for America.
Cruz and Paul propose to rip up the current tax code and replace it with individual income taxes at low, flat rates - Cruz at 10 percent and Paul at 14.5 percent. Their plans would repeal the estate tax and corporate income taxes, while reducing the overall tax load. So far, so good.
But then we come to the VAT, which the candidates hide behind innocuous names - "business flat tax" for Cruz and "business transfer tax" for Paul. Actually, Paul's title is accurate, because these taxes would "transfer" trillions of dollars into government coffers unseen by most citizens.
"The senators are right to want tax reform - but hiding the cost of government is not reform."
The tab for taxes collected from businesses is ultimately passed through to individuals in the form of lower wages, reduced dividends, or higher prices. So for transparency, the best thing would be to scrap business taxes altogether, and collect the full tax load from individuals at a flat rate. That way, people could accurately perceive the full cost of government.
It is true that the VATs proposed by Cruz and Paul have modest rates - 16 and 14.5 percent, respectively. The problem is not the rates, but the tax bases. VATs have huge bases. That’s because - unlike income taxes - they do not allow businesses to deduct employee compensation when calculating the taxable amount. So both labor income and capital income are taxed at the business level under VATs.
The result would be that tax revenues from businesses under the Cruz and Paul VATs would be enormous. While the plans would abolish the corporate income tax (CIT), the new VATs would have corporate tax bases at least four times larger than the CIT. So every rate increase in the VAT that future politicians might push would raise vastly more than the same rate increase on current business income taxes.
I share Cruz and Paul’s passion for major tax reform, but we should not hide the huge cost of the government from the people. Federal spending currently costs 21 percent of the nation’s gross domestic product. So a simple flat tax on individuals at a 21 percent rate would more accurately convey the cost of government to the public.
By dropping individual tax rates to 10 and 14.5 percent with big exemptions, Cruz and Paul would be creating a mirage of cheap government. Those low "prices" for government would raise the demand for it - people would clamor for more subsidies from Washington. Like Cruz and Paul, I want cheap government, but the way to actually get it is to slash spending.
The VAT issue comes down to where we want to tax labor income, which is a huge base. Because Cruz and Paul shift much of the collection to businesses, more of the tax burden gets hidden from citizens and voters. For the Cruz plan, the Tax Foundation estimates that 71 percent of total taxes in coming years would come from the hidden business VAT, while just 22 percent would come from the individual income tax. By contrast, if the individual income tax is not reformed, it will raise about 50 percent of total federal revenues in coming years.
Furthermore, Cruz and Paul would abolish the 15 percent federal payroll tax. Currently, that levy is partly hidden from workers in the tax’s "employer half.""But the solution to that transparency problem is to change the administration of the tax so that the full amount is visible on workers' paystubs, which is where the burden already falls in reality.
If the government is going to take our money, it should mug us on the street in broad daylight, rather than sneak into our homes at night and burglarize us unnoticed. The VAT would encourage more burglary. Cruz and Paul want smaller government, but down the road, other politicians looking to shore up entitlement programs will say, "They could be financed with just a small tax increase on businesses." But each “small†increase in the VAT rate would transfer huge amounts of additional cash from the private economy to the government.
Cruz and Paul deserve credit for thinking big on tax reform, but they should remember the H. L. Mencken line, “Democracy is the theory that the common people know what they want, and deserve to get it good and hard.†If the common people want government spending, then the tax system ought to make them feel the full cost "good and hard."
That’s baloney....
You want a piece of me?
I am here......waiting....
What link(s) are you wanting?
The link, at this thread’s first post is clickable. The entire article is posted. You can also read Cruz’ tax plan. I think it’s posted at his site. I know it’s posted in other web locations, as well.
>>If true, it comes down to Cruz still being the best of the bad.<<
How in the world so? Best of the bad? Why settle?
Trump’s plan lowers taxes, for both individuals AND businesses....without any VAT tax.
Trump understands and has proposed corporate tax inversion...to get this country’s economy roaring.....withOUT a VAT.
The fiscal problem in the US comes from too much government, too many government employees, and deficit spending. Increasing taxes just gives them more to spend. Unless government size, reach, and spending are slashed, raping the taxpayer merely prolongs the agony.
BTTT!
VAT is nothing more that a sales tax at the wholesale level, as I see it... It’s nothing to fear here in the US as a option, proposed by a conservative, but the proposed by a liberal, it would be another tax on top of what we already have.
DC politicians thank you!!
VAT tax is just like any other NEW tax. It WILL grow, incrementally. What’s meant for ‘good’ by Cruz, will be completely abused by libs. They’re licking their chops at the thought of this.
Nothing to fear? Hmmmm....that’s what they said about Social Security, welfare, etc.
No thanks. No Sale. No VAT tax, here, EVER!!
I can’t believe any conservative would propose this, in ANY shape/form, in this country.
Let’s rephrase the label being used here...
Let’s call it a consumption tax, because that is what a VAT is...
Conservatives have been in favor of this sort of tax reform for decades..
Why all the sudden is this unacceptable?
Maybe it’s because Trump and his backers, are not conservative and in fact are progressive statists..
But like a person who is insane, it’s unlikely that this will ever be publically admitted as true.
If it’s not Cruz supporters defending Carson, who is it?Carson is liberal. He supports amnesty. He supports Obama’s sovereignty killing TPP. He favors massive gun control. He directed women to abortionists and says as long as tissue banks stock aborted baby tissue, it would be “insane” not to experiment on it. He wants two new Dem senators from Puerto Rico. He favors socialized medicine. He’s taken far left positions re Trayvon Martin and Ferguson. He’s a fan of Al Sharpton.
You want me to go on?
I’ve read that article...days ago.
Bottom line....you do NOT, EVER want a separate VAT tax of ANY kind instituted!
Once that foot is in the door, liberals/progressives will run with it....just like they’ve done with SS, welfare, etc.
Europe is a perfect example.
Remember....GOVERNMENT has NEVER met a (new) tax they don’t love.
“Canadians regularly put up with 32% tax on every purchase without serious complaint.”
Yeah but they didn’t complain about George III either.
About 1/3 of them are Mennonites that won’t fight back over anything and 1/3 are socialist who are trying to “Check their privilege”
Canadians are not normal. At least the ones I worked with were not.
Not exactly; while both have the name Value Added Tax, the taxes in Europe are closer to sales taxes in many ways. They're charged on a transaction-by-transaction basis. In order to avoid duplication, businesses send paperwork (invoices) to each other, and then they get tax credits for taxes paid by previous businesses in the chain of production. This is called the “invoice-credit†system, and this is the tax used by the majority of OECD countries.
However, economists tend to believe that despite the different collection methods, these taxes end up actually being about the same in the end. So some comparison to invoice-credit VATs elsewhere in the world is worthwhile.
The Cruz plan would give us a rate of equivalent to 19 percent, by the invoice credit method. Furthermore, if you counted sales taxes levied at the state and local level, this plan would put our consumption tax rate at around 26 percent, tax-exclusive.
Is our children learning?
A collection of Bushisms has been assembled in the form of a poem, sorta.
Good try at twisting...by bringing Trump/progressive/statists into the fray.
Sorry, cold, not buying what you’re selling.
It’s not a consumption tax, just because you want to call it a consumption tax. Why ANY new tax, at all??
This - or ANY - VAT stinks to high heaven. No matter how much you try to dress it up and take it out to dinner.
I oppose corporate tax and VAT tax; but I have been a long time supporter of the FAIR Tax. In reality, this is the FAIR tax implemented without the paperwork... Also, the 10% residual income tax is the payroll tax legacy...
That's the same specious argument being used against the Convention of States....
OMG....the liberals will take over....yaddayadda.. I wish you people could see this from my perspective rather than that of a Trump supporter.. Screwing about with our current tax code is what we have been doing since it's inception, which is why it is so voluminous. Simplifying the tax code cannot be done by playing with brackets alone, and using your logic, the Libs will just change it back... So there ya go...
First of all, the 16th Amendment MUST first be repealed before we institute a national sales tax or else we’ve just ADDED another tax to the constitutionally protected income tax.
Secondly, once the 16th Amendment is repealed and the national sales tax is a go, yes, VAT would be a TERRIBLE mistake, allowing federal intrusion into all sorts of things where thy don’t belong and opens up the door for massive corruption and multiple taxation.
Thirdly, we’re probably wasting our time on this becasue it is doubtful the 16A will ever be repealed.
I need to learn more about it, but my gut feeling is that a VAT would be a good thing IF, the income tax was abolished (not just business income tax, but personal income tax as well), and the VAT was limited Constitutionally to not exceed, say 15%. Otherwise, it’s just a new can of worms that we don’t want to open.
“What link(s) are you wanting?”
This one: https://www.tedcruz.org/tax_plan/ stating:
“For businesses, the corporate income tax will be eliminated. It will be replaced by a simple Business Flat Tax at a single 16 percent rate. The current payroll tax system will be abolished”
How is this substantially more VAT than simply closing exemptions/credits/loopholes and shifting payroll tax?
“Best of the bad? Why settle?”
Not settling because he’s the best of the bad. I like Trump, but less so than Cruz. Trump still holds views (universal healthcare, squishy on abortion, etc) that I abhor but have to set aside because he’s the most tolerable/productive candidate most likely to win, and we can’t fix this thing without first winning the POTUS election with someone who can actually get something good done. With this VAT issue (to wit “is Cruz supporting VAT or just flattening corporate taxes?”) Trump may be better on taxation but that’s not my litmus test.
Nope...sorry....using a VAT tax, to do what you’re suggesting, is just setting up businesses to continue to pay an INCREASED tax, incrementally. Government has NEVER met a tax they did NOT increase.
Once it starts......
Thank you, very important article.
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