“The current system isn’t fair,” 2016 presidential candidate Sen. Ted Cruz responded before explaining the details of his recently released tax plan at Tuesday night’s Fox Business-Wall Street Journal debate.
Fox Business moderator Maria Bartiromo asked Cruz, “Explain how your plan works. How can you cut taxes as much as you propose without running up debt and deficit?”
Cruz responded, describing the current system before describing his “simple flat tax plan” and how it benefits all Americans.
“You put your finger on what the problem is. The current system isn’t fair. Washington is fundamentally corrupt. There are more words in the IRS code than there are in the Bible and not a one of them is as good.” The audience responded with laughter.
Every one of them reflects a carve out or a subsidy, and it’s all about empowering the Washington cartel. My simple flat tax says that for a family of four, for the first 36,000 dollars you earn, you pay no taxes whatsoever, no income taxes, no payroll taxes, no nothing. Above that, every American pays 10 per cent across the board, a flat, fair tax. Which means that no longer do you have hedge fund billionaires paying a lower tax rate than their secretaries.
Cruz went on to describe his 16 percent across-the-board business flat tax plan.
Right now, with our corporate income tax, giant corporations with armies of accountants regularly are paying little to no taxes while small businesses are getting hammered. This is fair and across the board.
Now you asked how do the numbers add up? I would encourage folks, if you go to our website—tedcruz.org—we have the specific numbers on the website. This plan eliminates the payroll tax, eliminates the death tax, eliminates the corporate income tax, and it abolishes the IRS.
The website also lists the elimination of overseas profits tax, the alternative minimum tax, and Obamacare taxes.
Cruz proclaimed that the effect of eliminating these items would be massive economic growth at all income levels.
It means every income group will see double-digit increases—from the very poorest to the very weakest—of at least 14 percent. So if you’re a single mom, if you’re making 40,000 dollars a year, what that means is an extra about 5,000 dollars in your pocket to provide for your kids, to make ends meet. It has a powerful, powerful effect.
Cruz’s website details results of his plan:
The Tax Foundation estimates that the Cruz Simple Flat Tax will, over ten years, increase the size of the U.S. economy by 13.9% above what is currently projected, create an additional 4.86 million jobs, and boost wages by 12.2%. Every category of worker will see a double-digit increase in after-tax income.
During the debate, he pointed out a caveat in the business portion of his plan:
And there’s one other really powerful feature of my plan, which is that it’s border adjustable. Which mean if you’re an exporter, if you’re a farmer, if you’re a rancher, if you’re a manufacturer, you don’t pay the business flat tax. Exports are free of that tax, but all imports pay that 16 percent business flat tax, which means this tax plan would cause jobs to boom and it would let America compete with China and the world on a level playing field.
Bartiromo questioned how America would pay for the plan.
The numbers the tax foundation have put out is that the static cost of the plan is $3.6 trillion over ten years, but the dynamic cost of the plan, which is the cost that factors in growth, is about $768 billion. It is less than a trillion. It costs less than virtually every other plan people have put up here and yet it produces more growth and it’s one of the very few plans that abolishes the IRS. But on top of that, today we rolled out a spending plan. 500 billion dollars in specific cuts.
Cruz touched on at least two of the five points in his “Five for Freedom” plan to reel in government spending. Point one, as listed on Cruz’s website, is to eliminate five agencies: The IRS, Department of Education, the Department of Energy, the Department of Commerce, and HUD. He went on to say that, in addition, he would cut 25 specific programs.
You want to look at specificity? It’s easy for everyone to say, cut spending. It’s much harder and riskier to put out chapter and verse specifically the programs you would cut to stop bankrupting our kids and grandkids.
Cruz later chimed in using sugar subsidies as an example of a corporate welfare. Sugar farming makes up 0.2 percent of the farmland in America, according to Cruz, but the special interest accounts for 40 percent of lobbying money.
Cruz concluded, “That sort of corporate welfare is why we are bankrupting our kids and grandkids. I would end those subsidies to pay for defending this nation.”
Ted Cruz’s website also provides an example of the incredibly simplified “Cruz Flat Tax Form 2017.”
Follow Michelle Moons on Twitter @MichelleDiana.