The biggest tax in his plan is a 16 percent value added tax. Mr. Cruz describes this tax as a business flat tax, but it’s not a tax on business profits. Businesses would pay the tax on their total sales, minus the cost of the things they bought to produce the thing they sold. They would not be able to deduct wages, meaning they would pay the 16 percent tax on an amount far greater than their profits. The conservative Tax Foundation estimates this tax would generate $25 trillion in revenue over a decade, making it about six times bigger than the existing corporate income tax, which Mr. Cruz would repeal, and more than twice as big as his proposed personal income tax.
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