Posted on 11/02/2015 2:04:51 PM PST by gwgn02
Ted Cruz spent a fair amount of time discussing his new tax plan in detail with Larry Kudlow on his radio show today.
The tax discussion begins around the 6 minute mark so skip ahead if you don’t have a ton of time:
Ted Cruz spent a fair amount of time discussing his new tax plan in detail with Larry Kudlow on his radio show today.
The tax discussion begins around the 6 minute mark so skip ahead if you don’t have a ton of time:
Read more: http://therightscoop.com/ted-cruz-discusses-his-new-simple-flat-tax-plan-with-cnbcs-larry-kudlow/#ixzz3qNHLYve6
Your model assume income would be static, which it would not be. The economy would explode.
That said, I agree there would be a shortfall, at least in the short run, but the 10% number is like a used car negotiation.
You start low, and meet in the middle — say a 15% flat tax.
1. Cutting the current US$1 TRILLION cost of yearly tax compliance and economic opportunity costs by over 90%.
2. Bringing back most of that US$15 TRILLION in American-owned liquid assets now sitting in foreign financial institutions.
3. Removing over half the lobbyists in Washington, DC and their corrupting influence.
4. Making the USA one of the world's best places to operate a business because we don't tax the very process of earning money.
5. Eliminating a huge source of identity theft since we don't need to send in intimate details of our finances with yearly tax filings.
I like some of trump’s but he pushes even more people off the tax rolls completely. Our biggest flaw now is too many people as takers. Everyone but the truely poor and incapable should be paying in. Trump’s is simpler than this, which I like. Both have merits. I like keeping the mortgage and charitable deductions in Cruz’s. Not remembering exactly how it’s treated by the Donald.
Seems to me, as a business owner, that the largest issue is to define what is and what isn’t a legit business expense. Just because a business pays for something with a business check doesn’t make it a legit business expense. IRS does it now through thousands of pages of regulations. Don’t see any difference between now and Cruz plan except for rate. Need to get the IRS and their interpreting what is and what isn’t out of the equation.
out of curiosity, why?
All good candidates should clearly state they want a simple system that puts people’s time to productive use. They should state that they are flexible on the details...whatever can pass congress. Flat? Fair? 999? Simple? Hybrid.
Neither Cruz nor Carson not the others should get pushed into a corner defending a specific feature other than replacement of the current system.
In discussing features, they should discuss the features that benefit the pro-lifer flipping burgers or changing oil at JiffyLube. The obsession with the top end is not a winning strategy.
Both plans do NOT tax low income people. Cruz’s plan gives a $36,000 flat deduction to family of 4. Which means if you made $36,000 or less, there is ZERO income tax.
Thanks for info.
My only point is I think everyone should pay something.
I think it's safe to say that wages will be deductible. I'm not so sure about depreciation.
S corps generally pass income to the individual's return. That's one of the reasons the meme that says "very few corporations pay income taxes" is bogus, because all but the largest corporations (including mine) do this.
Lots of questions.
Yes, I agree. I haven't found anything quickly that actually reports total corporate income (by any measure), which can be divided by total corporate income tax. The CBO reports some numbers every year, but it's distributed among households per the distribution of capital.
So, I can't evaluate the corporate income tax to determine if it is a net gain, or a net loss -- and if it will offset the differences in individual income taxes.
Actually, People making less than $50,000 pay plenty in social security tax. Aprox 13%. They should be exempt from federal income tax. Otherwise they have little chance of upward mobility. They can’t save and invest.
The goal should be to make poor people middle class,
AND
make middle class upper middle class
AND
make upper middle class richer class.
That way more taxes will come into Treasury, and have a chance to pay the huge national debt.
For me, a true reform would get rid of deductions on salaried income. Do that, and there is no reason for individuals to file individually. The employer deducts based on whatever table they have and its done. Its not the employee’s responsibility. If a mistake is made, IRS comes knocking on the employer’s door, not the individual.
If you are a business, or self-employed, then obviously you are taxed as such and have to keep track of your expenses. But a salaried employee should not be individually responsible for his tax.
There is no such thing as a federal "business tax". The "business tax" is a NEW TAX on small business. The corporate income tax would be subsidized/paid for by the NEW TAX ON ALL BUSINESSES...IOW, the eliminated corporate tax would be paid for off the backs of small business owners.
If you have a business you would have to pay a 16% "business tax" in addition to a 10% personal income tax.
The total of payroll/self-employment tax is presently 15.2%...the NEW BUSINESS TAX is 16%...If a business owner earns $36,000 or less s/he's income tax exempt. That leaves 0.8% income tax collected. It doesn't add up.
It should be called the sCruz tax.
Best method of taxing business/corporations would be a very low tax rate on gross sales. That would reward the most efficient producers. And all the 3 martini lunch deductions will disappear. It would eliminate 75% od accounting expense, and the 90% of IRS.
Yes people who don't share the burden, vote for more free stuff.
So there's more of that in Trump's plan.
“Your model assume income would be static, which it would not be. The economy would explode.
That said, I agree there would be a shortfall, at least in the short run, but the 10% number is like a used car negotiation.
You start low, and meet in the middle — say a 15% flat tax.”
Yeah, I can go with a 15% rate, as that is approximately my current effective tax rate.
I also agree that this plan would lead to robust economic growth.
It would have essentially doubled Obama's $1T/year deficit in 2012. The economy has not, and can not expand that fast.
Looking back at 2012, which is the latest data published so far: again, I'll use the top 50% bracket. According to the IRS, the AGI floor was $36,055 for this group, which is coincidentally the same value Cruz uses for his standard deduction (for a family of 4).
Total AGI was $8,037B.
Total income tax was $1,152B.
It's tempting to just divide $1,152B by $8,037B to come up with a based percentage of 14.33%. But, you first have to subtract out the $36,055 standard deduction per return. That reduces the TAXABLE income for all households above the median to $5,584B. Divide that into the total income tax, and you get 21%.
But, let's presume the individual tax rate was 15%. Multiply that by $5,584B, and individual income tax revenue would be $838B. That means there would have been $314B LESS individual income tax revenue in 2012.
As you may remember, the deficit in 2012 was $1,100B, or 7% of GDP. So, it would have increased it another 29% -- or to about 9% of GDP.
But, we aren't done yet. In 2012, we collected another $589B in Social Security taxes. It's a little muddled because another $114B was paid to Social Security from the general fund to offset the reduction in temporary payroll taxes. But, since that already increased the deficit, I didn't want to double-count it.
Just eliminating Social Security payroll taxes (never mind the Medicare taxes) would have further boosted the deficit to $1,903, or 12% of GDP.
Looking at it another way: just to replace the payroll tax income for Social Security, we would need a 12.6% flat tax rate on the remaining taxable income after applying the $36,000 standard deduction Cruz has proposed -- and that's without funding any other aspect of the federal government.
There's simply no way to make it work. And as a guy that likes Cruz and is sympathetic to almost every other one of his positions on the issues, I'm telling you that he is going to be eaten alive by anyone that takes a close look at his proposal.
However, I think there's a lot of information missing: with a standard deduction of 36,000 and no payroll taxes for Medicare or Social Security -- approximately 50% of all households will pay no federal taxes at all, aside from excise taxes on gasoline. I really doubt that is what Cruz had in mind, so there's a simplification somewhere that hasn't been stated so far.
bfl
Look at Trump's past political giving. IOW...who did he give to?
Look who he as been friends with.
You are known by who you hang around with...and where you donate money....
Common sense....Use it!
Yeah right. I strongly suggest Senator Cruz concentrate on the benefits of the plan and drop the fairy tales.
Households with an adjusted gross income (AGI) less than $50,000 comprised about 80% of all US households in 2012. So, I think your threshold is a little high.
If you were to choose $36,000 as your threshold instead, that was about the median household income in 2012. So, 50% of households had less, 50% of households had more.
If you look at the group with less than $36,000/year, their average individual income tax rate was 3.28% in 2012. So, they were very close to zero. The next 10% (50th to 60th percentile) paid as much income tax as the entire bottom 50%, despite earning only half as much total AGI.
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