Cruz may be referring to the Linder Fair Tax. I read the 65 pages of the proposal more than ten years ago. It called for a 23% sales tax on all new products, presumably including big ticket items like cars and houses. It also called for a guaranteed monthly “prebate” equal to the amount of taxes someone on a poverty income would have to pay for basic necessities of living. Apparently there would be no tax on used houses, cars, clothing, furniture, etc. This would appeal to those who favor conservation of resources and recycling. On the other hand I did not see anything about sending money out of the country without paying taxes. This smacks of the “offshoring” that some at FR have pointed out is sending our jobs out of the country. In addition there would be no limitation on the money that the super rich could take out of the country without ever contributing to this tax. Some countries have limits or taxes on the money you can take out of country.
>>Linder Fair Tax<<
It sounded like the fair tax, only he said 16%. I haven’t looked at the Cruz site for his details.
I found this at Tax Foundation.org...
Cruz:
Establishes a flat rate of 10% on all ordinary income. Increases the standard deduction to $10,000 per filer.
Lowers the rate on capital gains and dividends income to 10%.
Replaces the corporate income tax with a 16% business transfer tax, which applies to all capital income and labor payments.
Eliminates the estate tax.
People have to distinguish between the Constitutionally allowed income tax because of the 16th Amendment, a national sales tax, and the VAT.
First of all, until you repeal the 16th Amendment, nobody should be talking about ADDING an entirely new federal tax, a national sales tax. People who think all you have to do is have legislation that disallows income tax in favor of the sales tax. But of course that is a silly idea since the 16th Amendment of Constitution authorizes the feds at any time to implement an income tax. People need to remember that the Constitution trumps legislation (Art VI, Cl 2 - the Supremacy Clause). Unless you love taxes, adding a national sales tax before repealing the 16th Amendment would be foolhardy.
Secondly, if you by some miracle actually repeal the 16th Amendment, I agree that a sales tax - a tax upon purchase at the cash register - would be preferable for a variety of reasons, some of which you mention.
Thirdly, the VAT MUST be distinguished from an actual sales tax at the cash register for purchases. NOT a “consumption tax†or value-added tax (VAT). That would be a disaster allowing the feds to tax each stage along the production and supply process and allowing more intrusion and interference the inner workings of business that would also allow more hidden taxes than ever. VAT is a disaster.