Saturday, November 28, 2015

Paul and Cruz have best tax plans, says Laffer

The Paul And Cruz Flat Tax Plans Are Best Tax Proposals - - Arthur B. Laffer & Stephen Moore:

November 20, 2015 - "The good news on the presidential campaign trail is that almost all Republicans are now for serious pro-growth tax reform and simplification. Every candidate wants lower rates (some a one-rate flat tax), fewer loopholes and carve-outs, and a reduced role for an abusive IRS....

"All the GOP tax plans look good to us — though some are admittedly better than others. The danger now is that too many conservatives have formed a circular firing squad and are shooting down nearly all proposals on purity grounds or attacking trivial differences.

"This is the surest way to derail tax reform altogether....

"Which brings us to Rand Paul and Ted Cruz.... Paul's rates are 14.5% on business net sales and wages and salaries. Cruz has a 16% business net sales tax and a 10% wage and salary tax. These would be the lowest tax rates since the income tax was devised 100 years ago. Both are estimated by the Tax Foundation to grow the economy by a gigantic $2 trillion in extra GDP per year after 10 years.

"Both eliminate almost all deductions and special-interest carve-outs.... They completely kill the corporate tax, the estate tax and the FICA payroll tax.

"Yet conservatives are strangely griping. Economists at the Cato Institute have joined with Larry Kudlow to complain that the business tax is a value-added tax (VAT). Such a dreaded tax, they fear, would be a giant new source of revenue and lead to government gone wild, as has happened in Europe....

"But nearly all leading flat-tax plans have some form of VAT to replace the god-awful corporate income tax.... When we designed our Complete Flat Tax in our book Return to Prosperity, we came up with this business tax system with no deductions, simple as can be, and the lowest rate just about anywhere in the world....

"Almost every economist will agree that the right way to tax businesses is on their income minus their allowable expenses.

"The crux of the complaint here is that the Paul and Cruz tax plans are too efficient and too pro-growth and thus raise too much revenue.....

"The sole reason we need taxes is to raise the requisite revenues to fund government.... Criticizing the Cruz and Paul VATs based on worries about providing too much revenue to government is like arguing against cutting the capital gains tax rate — because every time we cut that rate, the feds get more revenue."

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