[sitetest]

I hope wages are deductible. But I don’t know that for sure. That would be the biggest thing in making this not a VAT. But then, I’m a little doubtful about the revenue-raising ability of his plan. I really don’t want to add a trillion dollars per year to the deficit like the trump plan.

On the plus side, a lot more folks will have to pay than the trump plan, which I view as a positive. And it does away with the extraterritorial tax of American corporate profits. Which will help reduce inversions.

trump’s plan, to combine a lower rate with a mandatory corporate tax on overseas profits is just a terrible power grab and will have the opposite effect that trump desires, to stop corporations from fleeing America.

[justlurking]

But then, I’m a little doubtful about the revenue-raising ability of his plan. I really don’t want to add a trillion dollars per year to the deficit like the trump plan.

I've run the numbers, using data from the IRS and the Social Security administration.

Per the scant details provided, Cruz's plan would add over a trillion a year to the deficit. See my post #36 for the details, and that was using someone's claim that the rate would actually be 15%.

The only way it would work is if the business tax raised far more than is currently collected by the corporate income tax. And frankly, I don't see how that could make things better -- businesses don't pay taxes: their customers pay them in the form of higher prices.

And once again, I'll reiterate: this analysis is from someone that LIKES Cruz. I don't see how this does Cruz any good, because the result is pretty obvious to anyone that knows where to find historical tax collection data.

[justlurking]

I hope wages are deductible. But I don’t know that for sure.

Sorry, but I meant to respond to this and forgot.

I think you might be right to be concerned:

The corporate income tax – the source of endless waste and fraud in our tax system – will be eliminated. No longer will American businesses face the highest top tax rate, 35 percent, in the developed world. The trend of American companies and jobs moving off-shore will stop. Instead, all companies will pay a simple, low rate Business Flat Tax of 16 percent. The tax will be based on revenues minus expenses such as equipment, computers, and other business investments.

If payroll isn't included in "expenses", this would be a killer for labor-intensive businesses, and be enough to push them over into no longer being profitable/viable. And, that would be the end of those jobs.