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.)
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
Do you know & understand what an “excise” tax is?
As defined by the Supreme Court as well as the IRS’s Legislative tax Attorney, the income “excise” tax is a tax on certain privileged activities and the amount of tax owed is determined by the dollars produced by participating in those privileged activities. The vast majority of Americans, business owners as well as their employees, are not engaged in privileged activities or very little if they are.
Milton Freidman, when testifying before Congress on the reinstating of the withholding at the source, that taxes will be withheld from a great number of people who are not subject to the tax and that those people, who had taxes withheld when there were no taxes due, will have to file a form with the IRS to receive a refund of all federal taxes withheld, including all FICA taxes, that were erroneously withheld.
So it does not matter what form of tax the candidates are proposing, because ALL the plans propose to further usurp Congresses Constitutional limits in regards to taxation.
Millions of Americans are waking up to the truth and are receiving 100% full refunds from the IRS annually and this scares the hell out of the beast in DC and those in Congress who pass the tax laws because they know a return to the Constitutional truth will end their gravy train.
Ted Cruz & all the other establishment insiders are no constitutional scholars, they are constitutional usurping political hacks seeking to gain fame & fortune off the backs of tax illiterate citizens. And Trump being the outsider, well, many of us have contacted Trump about the truth & rather benign nature of the 100% Constitutional 16th Amendment income “excise” tax and how a direct flat tax, that usurps Article 1, Section 9 of the Constitution, will further erode our freedom of our ‘pursuit of happiness’, the God given right to go out and perform unprivileged services or sell our unprivileged goods without the fear of the government directly taxing every penny that comes in from these unprivileged activities.
And NO ONE can call anything a “flat tax” when deductions can be applied. Any time deductions come into play, this makes it the same type of graduated tax system we already have. NO! We need t return to the truth about the income “excise” tax that was applied before 1942 when less than 8% of the working population paid income “excise” taxes. NOT because they did not earn enough money, but because they understood that the activities they were engaged in were NOT, as the IRS code puts it, “privileged” activities subject to taxation.