Most people know to ignore what candidates say at rallies and on liberal news programs. They tell the truth, but not the whole truth. That is just a consequence of the format — a lot of sound bites and short answers. It short-circuits the liberal from twisting a long answer out of context. What they have really given THOUGHT to and that they know they will beheld to account for in terms of POLICY is in their position papers.
[The VAT, as you term it, is actually a flat 16% business tax that is supposed to replace payroll taxes. Please explain to me how exactly that increases the costs of goods and services, because I don’t see it.]
It is not really “flat” since it has a whole list of business costs that can be subtracted from sales revenues. Regardless, even if only labor costs and profits were not allowed to be subtracted, a 16% rate applied to those is a tax increase on businesses. Corporate income taxes are less than $400B and personal income taxes from small business owners are only $200B, and the employer side of payroll taxes is $800B, for a total of $1.4T. Cruz’s business tax is supposed to replace these but collect $1.9T, so there are $500B extra that logically will go into prices.
Even if it were revenue neutral, though, the psychological effect on the consumer of paying a 16% tax at purchase will either crush consumption or cause a lot of evasion. Except for imported goods, rents, utilities, groceries, haircuts, and other local services where evasion is tougher and people will just suffer with the 16% price hike.
“It is not really “flat” since it has a whole list of business costs that can be subtracted from sales revenues.”
I’m going to assume everything you say is true for purposes of our discussion. You seem to have these figures at your fingertips, but I have some questions about your bottom line.
If business costs can be subtracted, then how does that constitute a 16% VAT tax?
Wouldn’t the reduction in costs that reduces the tax be passed onto the consumer?
“Cruz’s business tax is supposed to replace these but collect $1.9T, so there are $500B extra that logically will go into prices.
Even if it were revenue neutral, though, the psychological effect on the consumer of paying a 16% tax at purchase will either crush consumption or cause a lot of evasion.”
Looking at your math, it appears that the 16% VAT tax that collects $1.9 trillion less the $1.4 trillion payroll taxes, leaves $500 billion. So by your calculations, my math shows $500 billion into $1.9 trillion is 26.3% of the total tax is left x 16% = 4.2% net tax (assuming no costs are deducted) on goods, not 16%, isn’t it?
So how is that a 16% price hike to the consumer?