THIS IS THE TAX PLAN I WANT TO SEE CONGRESS PASS!
Sen. Ted Cruz's Simple Flat Tax Plan Summary
“Imagine 4.9 million new jobs. Instead of Obama’s income stagnation, imagine average wages rising 12.2 percent over the next decade. Capital investment rising 43.9 percent. And every income-level seeing double-digit increases in after-tax income. Imagine exports and manufacturing jobs booming. Our trade deficit falling as the tax bias against American made goods is eliminated. Imagine a 10 percent income tax, with every American filling out his or her taxes on a postcard or iPhone app. And abolishing the IRS as we know it.” – Ted Cruz
PERSONAL INCOME TAX – SINGLE RATE: 10%
The Simple Flat Tax creates a simple, single-rate flat tax for individuals. The existing seven different rates of individual income tax will become one low rate: 10%.
A family of four will pay no taxes on their first $36,000 of income.
The plan exempts a large amount of initial income for low- and middle-income taxpayers, with a $10,000 standard deduction and $4,000 personal exemption. It also keeps the Child Tax Credit and expands and modernizes the Earned Income Tax Credit with greater anti-fraud and pro-marriage reforms.
The plan keeps the charitable giving deduction and features a home mortgage interest deduction, capped at principal value of $500,000.
BUSINESS FLAT TAX – SINGLE RATE: 16%
The corporate income tax along with the payroll tax are abolished, replaced by a 16% Business Flat Tax.
The current corporate tax code is riddled with years of accumulated loopholes and special favors, burdening U.S. businesses with the highest top tax rate among the advanced nations. This convoluted and anti-competitive structure will be replaced with a simple 16% tax on net business sales (gross sales minus expenses and capital expenditures).
The current payroll tax discourages work and job creation. The vast majority of Americans pay more in payroll tax than in income tax. The Simple Flat Tax will eliminate the payroll tax, boosting jobs and wages for working Americans, while guaranteeing funding for Social Security and Medicare.
UNIVERSAL SAVINGS ACCOUNTS (USA)
The Simple Flat Tax creates Universal Savings Accounts (USA) allowing savings of up to $25,000 per year in tax-deferred dollars.
Savers can withdraw the funds at any time for any reason – whether it be for college tuition, a down payment on a home, or their son or daughter’s wedding. This savings feature harmonizes with the tax elements of the Cruz Simple Flat Tax to move toward encouraging savings and investment – a recipe for economic growth and jobs.
RESULTS: GROWTH AND OPPORTUNITY – The Tax Foundation estimates that the Cruz Simple Flat Tax will, over ten years, increase the size of the U.S. economy by 13.9% above what is currently projected, create an additional 4.86 million jobs, and boost wages by 12.2%. Every category of worker will see a double-digit increase in after-tax income.
OTHER TAXES ELIMINATED
• Death Tax.
• Overseas profits tax.
• The Alternative Minimum Tax.
• The Obamacare taxes.
BENEFITS FOR FAMILIES AND ENTERPRISE
Imagine a tax plan that:
1.) Ends the IRS and the Washington Cartel:
• Abolishes the IRS as we know it, and ends the use of the tax code as a political weapon, with a simple tax code that is transparent and resistant to corruption.
• Eliminates the complexity that invites government mischief, corporate welfare, and cronyism so that public faith in the tax system’s fairness can be restored.
• Reduces tax evasion and makes sure all businesses pay their fair share at one flat rate.
• Defeats the army of lobbyists allied with politicians – the Washington Cartel – that now sneaks benefits into the tax laws for friends and punishments for foes. Instead of the government choosing winners and losers, individuals and businesses will be free to prosper on their own merit.
• Ends the injustice of cronyism and the hidden costs associated with it, which currently damage the nation’s competitiveness and stifle the wages of ordinary Americans. By breaking the Cartel, these costs will end too, and businesses will be free to thrive, hire, and grow.
• Establishes a simple rate for individuals and businesses that is highly visible, which deflects the tendency of politicians to raise tax rates.
2.) Ignites Growth:
• Repeals the corporate income tax, with the highest top rate among developed nations, and stops driving jobs and business overseas. By replacing the corporate income tax with a Business Flat Tax, jobs and growth will return to American soil, and a chronic source of temptation to tinker with the tax code through corporate loopholes will be eliminated.
• Allows for full and immediate expensing of business equipment, which will remove the burdens imposed by the current system on heavy industry, mining, energy, farming, ranching, and manufacturing.
• Removes the current tax penalty on American businesses that earn profits abroad, encouraging those businesses to bring profits home. Businesses will flock to America rather than keep money abroad or move overseas to escape high tax rates – and jobs and growth will come home with them. Under the Simple Flat Tax, U.S. businesses could return their overseas profits to American soil for a one-time 10 percent repatriation fee.
• Eliminates a current competitive disadvantage for American products through border adjustability: foreign imports will be subject to the Business Flat Tax and American exports will have the tax removed, giving U.S. businesses a level playing field.
3.) Provides Opportunity for Everyone:
• Spares citizens from hundreds of wasted hours and expenses in tax compliance – Americans will instead be able to file their taxes on a postcard or a phone app.
• Ensures that low- and middle-income Americans have the opportunity to build their wealth and prosper by exempting the first $36,000 of income for a family of four.
• Allows for automation of compliance. Instead of having individuals report every detail about dividend or interest income, for example, banks, brokers, and financial institutions would simply withhold the tax.
• Eliminates the injustice and burdens of the Death Tax, the Alternative Minimum Tax, and the Obamacare taxes. Family farms and businesses can stay in the family.
• Enables Americans to save up to $25,000 annually tax-deferred in the Universal Savings Accounts (USA), allowing them to begin a nest-egg and secure their future and that of their children.
IMAGE: THE CRUZ SIMPLE FLAT TAX POSTCARD