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.
I notice the comment section got one negative rebuttal and Bushbots shut down the comment section over at AEI real fast.
I hear you... I have posted the above link regarding the 'accidental' leaving out the VAT tax from TPP... and then strangely enough Cruz, slyly and quietly has a VAT tax, that he never mentions .
I will add for the lukers there is NOTHING Christian about a VAT tax.
Your very amusing, thanks for the laugh.
Tarrif would be added to a product, like a car, at the point of entry, then when the dealer sells the car, the 16% VAT tax would be added.
Trump threatens to apply a Tarrif in order to encourage China and others to play by the rules...a threat of a Tarrif is a tool in his tool box, not something he necessarily wants to do but will if that is what it takes to get these guys to play by the rules.
In your Ford Scenario the 16% would be added by the manufacturer when he sold the car to the dealer, AFTER he had determined the price for which he intended to sell the product...thus, value added (VAT)
Your Honda thing...no....the VAT is added to all products after sales price is determined, it is not figured in as part of the cost.
The Cruz plan would destroy our economy, it is extremely inflatioary, it creates hardship for the most vulnerable, it will impact jobs, it will force more companies overseas...Cruz has no economic background or experience. He is a 1st term Senator Lawyer who has spent his life climbing the political ladder. He pretended to be an outsider when he was an insider all along and proof of that is when he was President of the Senate Committee and in conjunction with McConnell upended the campaigns of several conservative candidates...Tax Plan is a disaster.
By this article’s definition of a VAT tax our current federal corporate tax system is a VAT tax (at 35%). Cruz’s corporate tax plan (https://www.tedcruz.org/tax_plan/) is a 16% tax on revenues minus expenses (once), not a every stage of manufacturing like a VAT tax.
VAT tax definition:
http://www.investinganswers.com/financial-dictionary/tax-center/value-added-tax-vat-2335
http://www.dictionary.com/browse/value-added-tax
http://www.businessdictionary.com/definition/value-added-tax-VAT.html
https://en.wikipedia.org/wiki/Value-added_tax
http://www.investopedia.com/terms/v/valueaddedtax.asp
BTW: It appears that Trump’s corporate tax plan is the same as Cruz’s only at 15%. https://www.donaldjtrump.com/positions/tax-reform
GOPe hit piece from back when Jeb was still running.
With SS the wage earner is only paying the 7.65, with VAT he pays 16% plus 10% on income. It will draw all from the lower 3/4 and near zero from the upper 1/4..Those folks don’t pay income tax and they don’t consume anything near to their income. Add taxes to welfare, we will just end up having to add more to the welfare checks:(
This tax is sneaky and dangerous. This type of tax has destroyed other countries, WHY would we bring it upon ourselves?
Well that ended today. I started an idea on twitter for people to use what I call #StickyTweets4Trump, we can use that same concept with this. Simply, get yourself a sticky note pad, write on it The Cruz Tax is a VAT TAX or whatever you like and stick them everywhere you go.
Other than that, here, on twitter, on facebook, I think if we work toether we cn get the conversation going.
“If it replaces the business tax of 34 % with a 10 % tax and it is applied to the full price of any import, does it not effectively do exactly what Trump was with regards to making US business more competitive with Tariffs?”
Vats do not replace other taxes.
The vat is added to the product at every stage and is based on the increase in value between raw materials and finished products. You do not get to deduct expense for the increased value. My example above may have been confusing let me try again.
This time with numbers
Pretend I cut down the huge mango tree in my back yard and sell the truck and large branches to Bob the saw mill owner for $100 plus the VAT making the total cost to Bob $116.00
Bob processes the trunk and large branches into lumber and sells the lumber to Sam the custom furniture maker for $1000
$1000.00 - 116.00 = 884.00 x 0.16 = 25.44.
So Sam pays $1025.44 for the lumber.
Sam turns the lumber into a matching dinning table, with 8 chairs, side board and china cabinet which he sells to a Phil who owns a furniture store for $5000.00.
$5000.00 - 1025.44 = 3974.56 x .16 = 635.93
So Phil pays s total of $5635.93 for the lumber.
Phil places the custom furniture in his store priced at $15,500.00
$15,500 - 5635 = $9865.00 X .16 = $ 1578.40.00
Phil sells the furniture to Suzy who pays $15,000 + 1578.40 = $1707.40
Add all that tax together equals
$1578.40 + $635.93 + $25.24 + $16.00 = $2255.57 in tax on an original purchase of $100.00
At no point does the VAT tax replace income for the business or sales taxes.
I lived in the UK with a 20% VAT and they still have both
oh OK:)
Thanks for the math:))
The VAT is different from state sales taxes because it is included in the price of the good rather than added at the cash register. That’s one reason why some conservatives object to it—Rubio cited Ronald Reagan. And why Cruz may be so defensive.
Pretty clear article.
My point, it totally obsolves corporations of having to pay taxes on their profits
I would suggest to Senator Cruz that there is no tax revenue problem, only a spending problem.
This is why Cruz is calling it a “business tax” rather than a VAT TAX but it looks and acts like a VAT TAX...if it’s a duck...
I just don’t see it...
Here is how I read it:
Now:
“Bill’s Widgets” grosses $100K for 2015, subtracts a myriad of federal corp tax loophole deductions and pays a 35% corporate tax on say $50K.
Cruz plan:
“Bill’s Widgets” grosses $100K for 2015, subtracts a very limited set of legit business expenses and pays a 16% corporate tax on say $80K.
Am I way off? Possibly, but that is how I read it based on plain english. And nothing in either the Cruz or Trump corporate tax plans looks remotely like a VAT.
It’s 1998, again. Thought you should be here darling.
Second of all, a VAT of 16% ( which is what Cruz is asking for ) has to be added to EVERY SINGLE PIECE of something produced, along the line, with yet another 16% added to the finished product. That AND his suggested 10% income tax, which also excludes any and all deductibles, makes even scraping by, IMPOSSIBLE for most people.
It also means that every single company becomes an arm of the Fed Government and part of the IRS; which heavily adds to the cost of doing ANY business at all!
OTOH, Trump's idea of re tariffs, is ONLY applied to businesses outside of the USA, including American ones, at 35% per finished product! It is his way of getting American companies to make their products HERE and to curb the game playing with deflating foreign currencies, which the Chinese and some other nations engage in.
I hope that this makes it clearer to you.
>>Vats do not replace other taxes.
Cruz’ does. The corporate tax (35%), alternative minimum tax and payroll taxes are eliminated. The 16% business tax replaces them.
From the tax foundation
http://taxfoundation.org/article/details-and-analysis-senator-ted-cruz-s-tax-plan#_ftnref3
Business Tax Changes
•Eliminates the corporate income tax.
•Provides a temporary tax holiday at a 10 percent rate (instead of a full 35 percent rate) on any deferred foreign profits that are repatriated. [possibly bringing back corporate inversions - but only during the ‘holiday’ period - so companies would have to decide to return soon or pay the full rate.]
Other Changes
•Enacts a broad-based, 16 percent “Business Transfer Tax” or value-added tax. This tax is levied on all business profits, less capital investment. This would include the payroll of business, government, and non-profit institutions, as well as net imports. The tax would exempt from taxation the purchase of health insurance. A business transfer tax is also often known as a subtraction-method value-added tax. While its base is identical in economic terms to that of the credit-invoice VAT seen in many OECD countries, it is calculated from corporate accounts, not on individual transactions. [2]
•Eliminates the estate tax.
Economic Impact
Senator Cruz’s tax reform would be a significant shift from the current tax code. Under this plan, the income tax would be greatly diminished in its importance compared to current law. Instead, the U.S. federal government would raise 71 percent of all revenue from the new broad-based value-added tax. The tax is a broad consumption tax that would include most of U.S. GDP, including both wages and profits.[3] Due to these changes, the taxation of investment would significantly decline, which would greatly increase incentives to save and invest.
According to our Taxes and Growth Model, the increased incentives to work and invest from this tax plan would increase the size of the economy by 13.9 percent over the long run. The plan would lead to 12.2 percent higher wages and a 43.9 percent larger capital stock. The larger economy would mainly result from a significant reduction in the service price of capital, due to the elimination of the corporate income tax and the significant reduction in the individual income tax. In addition, the reduction of marginal tax rates on individual income would increase incentives to work and result in 4.8 million full-time equivalent jobs.
Also see page 7:
http://www.taxpolicycenter.org/publications/analysis-ted-cruzs-tax-plan/full
These children should be in school, especially the oldest girl and NOT dragged around from pillar to post, nor kept up to all hours late at night.
I honestly believe that Heidi and Ted had these two girls for political reasons, use them and yes, ABUSE them as "PROPS", when that's called for, and frankly, they appear to be lousy "parents".
I actually DO worry about these children and their future.
Yes, way off. In this scenario Bill determines what he will sell his widgets for based on cost of production and without regard for any tax considerations. Once that price is fixed, before he ships it off to the retailer he will add the 16% business tax to the bill. The retailer pays it, then the consumer pays it. The only difference between this and a VAT tax is where the add on is added and who collects it. This is essentially a Federal Sales Tax.
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