>>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
Until the democrats inevitably get control of congress and then the other taxes come back and the VAT stays
Also the Cruz plan is a proposal. The democrats would love to add this tax. and would happily compromise temporarily to get it.
The Cruz plan makes the same argument that was made in favor of State income taxes. “The sales tax goes away with this” But it didn’t.
NEVER add a new type of tax.
This tax is added on to the price of the product for the consumer to ultimately pay. And yes it eliminates the corporate income tax....so like I said, people like Robert Mercer will not be paying any taxes at all.
It's refreshing to see intellect in action. That is certain more rare here today than in the past.
I'm not sure why so many so-called conservatives oppose the shift from emphasis upon income taxes to an emphasis upon consumption taxes.
I think people are just conditioned to think VAT means evil or something. Which, of course, is utter nonsense.
It is a silly myth that VAT killed Europe. That's like saying a gun itself kills somebody. It is the LEVEL of taxation and spending which kills once-free governments.
Call it a business tax, VAT, whatever. It is consumption-based taxation. Which is a good, fair and moral thing.
Progressive income taxes are the bitter enemy of Freedom - which used to matter around here.
And, love him or hate him for other reasons, Cruz is the only guy left running who is correct about this aspect.
What Cruz's plan does ( which is NOT Ted Cruz's at all, but someone else's who wrote it out and gave it him ) is to revive old plans which have long ago been discarded by REAL CONSERVATIVES and EXPERT ECONOMISTS, because it's all not just unworkable, but destroys our economy and nation!
We, as a people can't survive, by having to pay a great deal MORE tax to the government to waste, make companies, even mom & pop stores become tax collectors and part of the Federal government and part of the IRS! And THAT is exactly what this plan does.