For the better part of his political career, Republican presidential candidate Ted Cruz has vehemently opposed government bureaucracy and out-of-control spending. But at least one organization is now expressing alarm after completing a detailed review of Cruz’s plan for budget reforms, declaring that his proposal will result in skyrocketing debt and a further expansion of the gap between America’s rich and poor.
The Tax Policy Center, which is based in Washington, D.C., recently published a 37-page analysis of the Cruz tax plan, citing a number of potential problems with its fundamental tenets. Generally speaking, Cruz’s proposals include three major components: 1. repealing a number of controversial taxes including corporate and estate taxes; 2. replacing the current graduated income tax with a flat tax; and 3. a 16-point “consumption tax.” According to the Tax Policy Center, the measures would inflict unprecedented changes to the American economy, but not necessarily the kind of developments that working Americans would enthusiastically endorse.
“The plan would cut taxes at most income levels, although the highest-income households would benefit the most and the poor the least,” explains an abstract to the The Tax Policy Center’s document entitled “An Analysis of Ted Cruz’s Tax Plan.”
“Federal tax revenues would decline by $8.6 trillion (3.6 percent of gross domestic product) over a decade,” the authors continue.
Jeanne Sahadi, writing for CNN Money, further noted that the Tax Policy Center’s analysis indicates that deficits would ultimately top $12 billion in the second decade of implementation. Further, Americans of lower socioeconomic status would not see anywhere near the same benefits that the country’s wealthiest would enjoy.
“The Cruz plan would cut taxes for everyone in 2017 by an average of $6,100, boosting after-tax income by 8.5%… But the bulk of those tax cuts would flow to the richest of the rich. The analysis estimates that the top 0.1% of filers (those with incomes over $3.7 million) would see a boost in after-tax income of $2 million on average, or nearly 29%.”
It’s worth noting that the Tax Policy Center has been accused of political bias in the past, particularly in 2012 when the organization concluded that Mitt Romney’s plan disproportionately favored rich Americans. But with regard to Ted Cruz’s tax plan, even some noted conservatives have expressed reservations regarding its costs and risks.
According to Time Magazine, James Pethokoukis of the conservative American Enterprise Institute, believes that Cruz’s consumption-based or value-added tax will pinch consumers, ultimately causing detriment to the economy as a whole.
Florida Senator Marco Rubio has also roundly attacked Tex Cruz’s use of the value-added tax, suggesting that the government-imposed surcharge effectively becomes a sales tax.
Despite the controversy about his tax plan, Cruz has bigger hurdles to overcome as he challenges Donald Trump for the Republican nomination. As previously reported by Inquisitr, Trump has threatened to sue Ted Cruz on two different fronts moving forward. Ted Cruz is also engaged with Marco Rubio, who has accused Cruz of lying about his positions on a number of occasions. Thus, although the ramifications of the Ted Crux tax plan are far-reaching, they have been relegated to a decidedly low priority heading into the South Carolina primary.
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