Posted on 04/15/2016 10:56:53 PM PDT by Hanna548
Make no mistake here. Cruz is proposing a VAT add-on to the existing personal income tax system.
2/3s of my monthly bills are taxes. Even when it doesn’t break it out, I know it is there.
For example, green energy mandates raise my electricity rates.
I thought I heard cruz say all the other taxes are extracted out first.
you and your friend hannah are both wrong.
Reading both viewpoints has really confused me on this Cruz ‘vat’ idea even after I wrote two vanities on it and encouraged feedback.
[I’ll post some info to ‘all’ after this. Would still like informed feedback.]
While I’m a Trump supporter, we should go back to only taxing consumption:
1. We get rid of the IRS.
2. Taxing businesses is also more efficient than trying to snoop into the income of every US resident.
3. LESS CORRUPTION.
Lobbying has a lot more trouble hiding in the woodwork because purchase prices are much simpler than calculating net profits.
4. Income tax is a damper on earning income. An economic drag. Changing to a consumption tax encourages saving money.
5. If done pragmatically, the poor can get better and more evenly distributed tax credits than ever to boot. No more social engineering.
~~~
The transition into this tax plan is what scares people. ‘Better the devil you know’, they think. If you go piecemeal, then you still have the income tax. If you go whole hog and leap from the plane, they wonder if the parachute was packed properly.
And unfortunately for Cruz, if FReepers are baffled by his plan, then he’s had a tough row to hoe on this issue.
That’s why Rubio went at him the way he did. Cruz failed to clarify his message.
[now for specific info posted to ‘all’]
from his site:
BUSINESS FLAT TAX – SINGLE RATE: 16%
The corporate income tax along with the payroll tax are abolished, replaced by a 16% Business Flat Tax.
The current corporate tax code is riddled with years of accumulated loopholes and special favors, burdening U.S. businesses with the highest top tax rate among the advanced nations. This convoluted and anti-competitive structure will be replaced with a simple 16% tax on net business sales (gross sales minus expenses and capital expenditures).
The current payroll tax discourages work and job creation. The vast majority of Americans pay more in payroll tax than in income tax. The Simple Flat Tax will eliminate the payroll tax, boosting jobs and wages for working Americans, while guaranteeing funding for Social Security and Medicare.
shame on you and others that spread lies about the cruz family.
There’s no constitutional solution that voters would accept right now that actually improves our economy, so the word ‘progressive’ means little on this issue at this time.
According to Patlin, both Cruz and Trump have unconstitutional tax plans:
Quote:
Cruz’s plan is not a VAT tax, however, it is an unconstitutional tax as it would continue to misapply the law just as the current income “excise” tax is misapplied. Also, $36,000 for a family of four is NOT middle class in today’s economy.
The fact is, the numbers in Ted’s tax plan do not add up, and not to be biased about the subject, as a Trump supporter, I can honestly tell you that Trump’s flat tax plan is not any better. The problem is downsizing government, educating the public as to the true nature of what and “excise” tax is and does that “excise” refer to “all that one deposits in their bank account”. Therein lay the problem of the bloated government beast, the misapplication of a 100% constitutional Article 1 “excise” tax.
— patlin
[quoting Babwa]
Here is a better explanation of Cruz’s business tax. It replaces current 35% Corporate tax And all payroll taxes - approx. 15:
What Is Ted Cruz’s Business Flat Tax?
Ted Cruz’s “Business Flat Tax” is what most tax policy experts would call a “tax-inclusive subtraction-method value-added tax” (VAT) or a “business transfer tax” (BTT). These terms are pretty technical, so I’ll try to distill them down into something a little bit easier.
What this means, in plainer terms, is that it’s a broad tax on all kinds of income, levied on businesses and organizations. You, personally, wouldn’t have to file it for yourself. Instead, it would be taken care of at the organizational level.
That does not, of course, mean it’s free. When businesses pay taxes on people’s behalf, it still ultimately means that the government gets some money that otherwise would have gone to people. Further on, we’ll talk about who would end up losing money from the existence of this tax.
How Would It Apply To an Ordinary Business’s Income?
The starting point for a subtraction-method value-added tax is pretty simple, especially when it comes to everyday private businesses. You start with all of a business’s revenues. (Most likely, this tax would be filed on a quarterly basis.)
[Cruz avoids ‘double counting’ — very clear description here.]
However, you don’t stop there: a problem with counting all business revenues is that it ends up being a double-counting. For example, suppose you love watching Disney movies on Netflix. Netflix gets revenues from your subscription, and then it uses some of that money to pay Disney for the rights to Disney content. If we counted that money both at the Disney level and the Netflix level, we’d end up taxing the same basic product twice, merely because it involves two different companies. This is not good tax policy; that’s why modern tax systems try to avoid this.
The way the subtraction-method VAT fixes this is by, well, subtraction. Under this kind of tax system, Netflix would count all of its revenue, but then subtract the amount that it pays to other businesses, like Disney. Disney would then have to account for its own revenue and also file taxes. The result is that everything gets neatly single-counted, and nothing gets double-counted.
There’s also one other thing the tax subtracts: capital costs. That is, when Ford builds a new auto plant, it can deduct those business costs as well. This is an important aspect of the tax, and it marks a slight difference with corporate income taxes today (which also allow these costs to be deducted, but over a much more complicated schedule.)
http://taxfoundation.org/blog/ted-cruz-s-business-flat-tax-primer
— Babwa
[quoting wolfie]
‘VATs act as an ersatz tariff on imports. Germany, for example, has a VAT that tacks on 19% to the cost of all imports. This raises the price on all imports and favors the purchase of domestic goods.’ ...
... please note, I don’t necessarily support a VAT, just a tariff that would have the same effect. The beauty of the VAT is that is bypasses trade agreements that forbid tariffs:
Approximately 160 other countries are successfully using a VAT, and the playing field will never be level until we have one, too. Because these countries use a VAT and we don’t, our exports are more expensive for them and their imports are cheaper than our domestically produced goods. This puts our factories out of business.
Germany, for example, uses a 19% VAT as a protective tariff against foreign manufacturers trying to sell to the German market. When American cars are exported from the U.S. to Germany, that 19% VAT is added to the price of the vehicle. Additionally, American companies pay an extra 19% in taxes in transportation costs, including docking, duties and insurance.
German products get rebated as they leave their home country and are not taxed upon entering the United States. This means the price of German-made products is lower, both in their home nation and here in America, than American-made goods. We must level the playing field if we want to be competitive.
— Wolfie
Thank you for the “tax reform warrior” ping, Sweetie. Indeed, I do have scars, honorably earned during the nine years I spent in WDC lobbying for the National Retail Sales Tax, now referred to as the FairTax. Been there, done that!
Senator Cruz is hugely disappointing in his disregard for REAL tax reform! He became a co-sponsor of the FairTax Act(S 155) on March 10, 2015. And, he has not, to the best of my knowledge, ever promoted the FairTax in any of his campaign speeches.
I mean, JeezLouise, if you are going to cosponsor legislation, talk it up Senator!
Instead, Cruz is touting a tired old European tax scheme!
The VAT was first introduced at a national level in France in 1954! Now, the citizens of 140+ countries are burdened with VAT! And, an income tax, too!
VAT is VERY POPULAR with governments!
Let me state for the record that VAT is an evil tax!
• VAT is applied to AFTER TAX INCOME! I.e., you pay your income tax and with what is left buy stuff, on which you must pay the VAT!
• VAT has funded the huge growth and expansion of governments, wherever VAT has been imposed on the poor suffering taxpayers!
See why governments LOVE VAT!
VAT is intentionally designed to squeeze the maximum amount of cash FRom poor suffering taxpayers, wherever it is implemented. A common characteristic of VAT is that it is introduced at a low (generally single digit) rate and then gradually is ramped up to two digits.
Where have we experienced that sort of government perfidy?
The Tax Foundation estimates that the worldwide VAT rate is roughly 16%. (http://taxfoundation.org/blog/how-many-countries-world-have-value-added-tax)
I found a good article about VAT here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2291281.
Here is an excerpt:
“From relatively inauspicious beginnings in the early 20th century, the VAT has been adopted by more than 140 countries and accounts for approximately 20 percent of worldwide tax revenue. Perhaps only the income tax provides a stronger example of 20th-century tax policy convergence. As Sijbren Cnossen wrote, ‘‘The nearly universal introduction of the value added tax should be considered the most important event in the evolution of tax structure in the last half of the twentieth century.’’2
“As the only developed nation without a federal VAT, the United States remains the highest-profile exception to the trend toward VAT. This exceptionalism persists in the face of a growing belief among U.S. tax policy commentators that the introduction of a VAT is either inevitable, or at least a possibility in light of burgeoning federal government debt and spending commitments. This essay examines how the global history of VAT is relevant to the U.S. debate.”
I encourage you to read the paper.
We REALLY, REALLY do not want VAT in the USA!
FairTax is the solution to the USA’s manifold economic woes.
Please help us replace the income tax with the FairTax and abolish the IRS.
Educate yourself at https://www.fairtax.org and then become a FairTax Warrior!
The VAT is a Canadian thing, so is Canadian born Cruz.
cruz’s lack of touting the fair tax is disappointing... i am hoping his lack of pushing it is because the populace has a hard time understanding it...
hoping.
go ted.
As corrupt as our current tax system is, unless and until we acknowledge that no amount of money will ever be sufficient to fund the limitless appetite of the [federal] government, no tax system will work or be remotely fair.
As corrupt as our current tax system is, unless and until we acknowledge that no amount of money will ever be sufficient to fund the limitless appetite of the [federal] government, no tax system will work or be remotely fair.
The reason why the Evil Inside the Beltway crowd promotes the idea that the American “populace has a hard time understanding...” the FairTax is because they do not want to replace the income tax with the FairTax and abolish the IRS!
FairTax destroys every politician’s power base — his/her ability to manipulate the internal revenue code to benefit his/her FRiends, neighbors, relatives, power brokers, cronies, etc., etc.
That is precisely why We the People need to elect statesmen to public office — those American citizens willing to go to WDC and work FOR America! And not be bought off by special interests.
Ask your Representative and both Senators to sponsor FairTax!
All the more reason for Americans to rise up and take control of their government!
The introduction of a VAT, on top of an income tax, is one of the few ways you could make our stupid tax system even worse.
About that "FairTax"... as I recall it was extremely high - over 20%. And it applied to almost every product and service.
I always wondered - what would people think of paying a 20% sales tax on their house? Their car?
Doesn't seem so fair then.
Ted Cruz calls it a Business Tax, so that is what it is. Someone calling it a VAT doesn’t make it so. Calling a tax on the net profit a VAT tax goes against common nomenclature.
For those who like to spew half truths, never posting links to the info in an attempt to sway opinions, here is a link to Tax Foundations analysis of Cruz’s plan:
http://taxfoundation.org/blog/ted-cruz-s-business-flat-tax-primer
The tax is not like the add-on European VAT.
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