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Author Topic: Tax Policy  (Read 88219 times)
Power User
Posts: 7110

« Reply #600 on: November 05, 2015, 09:34:04 AM »

(From Ted Cruz thread)
I wrote previously about the VAT tax plans on the Presidential thread.  Posting more info on the Cruz plan here.  His strategy with it puzzles me.

Ted Cruz’s “Business Flat Tax” is what most tax policy experts would call a “tax-inclusive subtraction-method value-added tax” (VAT)

Senator Cruz’s (R-TX) tax plan would enact a 10 percent flat tax on individual income and replace the corporate income tax and all payroll taxes with a 16 percent “Business Transfer Tax,” or subtraction method value-added tax. In addition, his plan would repeal a number of complex features of the current tax code.

The tab for taxes collected from businesses is ultimately passed through to individuals in the form of lower wages, reduced dividends, or higher prices. So for transparency, the best thing would be to scrap business taxes altogether, and collect the full tax load from individuals at a flat rate. That way, people could accurately perceive the full cost of government.

(famous people caught reading the forum?)
So what happens 10 years from now or 25 years from now if statists control both ends of Pennsylvania Avenue and they decide to reinstate the bad features of the income tax while retaining the VAT? They now have a relatively simple way of getting more revenue to finance European-style big government.
And also don’t forget that it would be relatively simple to reinstate the bad features of the corporate income tax by tweaking Cruz’s business flat tax/VAT.
   - Dan Mitchell, Senior Fellow, Cato Institute
Power User
Posts: 7110

« Reply #601 on: November 05, 2015, 09:40:56 AM »

Bringing a couple of other posts over to the tax thread as well.  Crafty is optimistically thinking there will be life after the 2016 Presidential election.
What's up with the Republican VAT tax? Herman Cain's 9-9-9 is alive and well??
« Reply #625 on: November 03, 2015, 08:55:29 PM »  DougMacG

The tax plans from Bush, Trump and Rubio-Lee are all of the same general framework.  Rubio doesn't cut the rates low enough and Trump doesn't raise enough revenue - these are details to be negotiated with congress to get a final bill - if the candidate wins. 

On the other side of it, in addition to Huckabee and his fair tax (VAT tax), are Rand Paul and Ted Cruz who have both come out with tax plans that rely on a new VAT tax.  Paul calls for a 14.5% flat tax on income and a 14.5% Vat tax called a 'business transfer tax'.  Ted Cruz is proposing a 10% flat tax on income plus a 16% 'tax on business', VAT tax.  Great if you think this country with all the tax the rich rhetoric is going to change  that suddenly and switch the emphasis over to the more regressive consumption tax. 

It isn't realistic to me, that we would could a) pass near repeal the income tax on the rich, and b) implement a whole new layer of taxation and c) hope that liberals wull not someday come to power and raise up both tax rates to the sky, on top of the 8-10% tax many states and localities already put on sales and consumption.

My view is that we can't and won't agree to a new consumption tax (or any other new tax) without repeal of the income tax - and that isn't ever going to happen.

On the income tax side. bold cuts like Reagan's would be great but are also not likely to be politically possible, so we have to steer this big ship around a little more gently and gradually.  Propose cuts that are significant enough to grow the economy but modest enough to get elected..  Pass tax reform and regulatory reform and see results enough to turn the corner.  Turn around the trend of people leaving the workforce and businesses closing faster than new ones are opening, grow incomes, grow startups, grow the participation rate enough to curb spending demands.  Then cut again, both tax rates and spending.  And again.  Why not have our growth spiral be upward?

Hong Kong did something like this.  Their flat tax and free trade policies were so effective that they needed to keep lowering the rate to get rid of the excess revenues.
Power User
Posts: 7110

« Reply #602 on: November 05, 2015, 09:46:43 AM »

Brininging this post over as well from the President Rubio thread.  This whole stupid argument with the biased and brain dead press ('professional journalists') is a big part of tax policy as well.

Two Weeks After Correcting Himself, CNBC's Harwood Lies About Rubio's Tax Plan — Again

By Tom Blumer | October 29, 2015 | 1:41 AM EDT

The competition for the worst moderator moment of Wednesday night's GOP debate is fierce. John Harwood's rephrasing of an old and discredited charge that Marco Rubio's tax plan disproportionately benefits the top 1 percent has to be in the running.

That's especially true because Harwood himself had to back away from a similar contention two weeks ago, yet still brought up the same issue with a similar dishonest assumption Wednesday night. After Rubio refuted Harwood and pointed out that the CNBC hack previously had to correct himself about the substance of the Rubio-Lee plan, a finger-wagging Harwood still insisted he was correct (bolds are mine throughout this post):

JOHN HARWOOD: Senator Rubio, 30 seconds to you.

The Tax Foundation, which was alluded to earlier, scored your tax plan and concluded that you give nearly twice as much of a gain in after-tax income to the top 1 percent as to people in the middle of the income scale.

Since you're the champion of Americans living paycheck-to- paycheck, don't you have that backward?

RUBIO: No, that's -- you're wrong. In fact, the largest after- tax gains is for the people at the lower end of the tax spectrum under my plan. And there's a bunch of things my tax plan does to help them.

Number one, you have people in this country that...

HARWOOD: The Tax Foundation -- just to be clear, they said the...


RUBIO: wrote a story on it, and you had to go back and correct it.

HARWOOD: No, I did not.

RUBIO: You did. No, you did.



HARWOOD: Senator, the Tax Foundation said after-tax income for the top 1 percent under your plan would go up 27.9 percent.

RUBIO: Well, you're talking about -- yeah.

HARWOOD: And people in the middle of the income spectrum, about 15 percent.

RUBIO: Yeah, but that -- because the math is, if you -- 5 percent of a million is a lot more than 5 percent of a thousand. So yeah, someone who makes more money...

HARWOOD: (inaudible)

RUBIO: ...numerically, it's gonna be higher. But the greatest gains, percentage-wise, for people, are gonna be at the lower end of our plan, and here's why: because in addition to a general personal exemption, we are increasing the per-child tax credit for working families.

We are lowering taxes on small business. You know, a lot of business activity in America is conducted like the guy that does my dry cleaning. He's an S corporation. He pays on his personal rate, and he is paying higher than the big dry-cleaning chain down the street, because he's paying at his personal rate.

RUBIO: Under my plan, no business, big or small, will pay more than 25 percent flat rate on their business income. That is a dramatic tax decrease for hard-working people who run their own businesses.


RUBIO: ...The other thing I'd like to make about our plan, one more point, it is the most pro growth tax plan that I can imagine because it doesn't tax investments at all. You know why? Because the more you tax something, the less of it you get.

I want to be in -- I want America to be the best...

PAUL: ...John...

RUBIO: the world for people...

Sean Davis at the Federalist noted that Harwood's stance was so outrageous that the Tax Foundation's Scott Hodge had to tweet the record straight in almost real time:

Here is Harwood's tweeted correction from two weeks ago: -

A graphic representation of the Rubio-Lee tax plan by income decile plus the top 1 percent is here.

Those who want to defend Harwood on the basis that he was asking about the "middle" of the income scale and not the entire rest of the income scale need to understand two things:

Harwood's question still has a false premise, as seen in focusing on the middle 60 percent as presented in the following table from the Tax Foundation's model:

The dynamically scored after-tax income effect for the top 1 percent of income-earners is 27.9 percent. The average of the deciles from 20 percent to 80 percent is 16.2 percent. 27.9 divided by 16.2 is 1.72. That's closer to 1-1/2 than it is to 2; there no justification for calling 1.72 a "nearly twice" impact. John Harwood doesn't get to "creatively" round up like this and get away with it — and he didn't.

Harwood was treating the upper 19 percent (between 80 percent and 99 percent) and the lower 20 percent as if they don't exist. Why? Because he didn't want to admit the large favorable impact on the bottom 20 percent — because, y'know, the Republican Party is the party of the rich which never helps the less fortunate. Rubio, to his credit, got it in there anyway.
Those who believe that the GOP should never have allowed CNBC to host one of the its presidential debates, and especially should have insisted that Harwood not be one of its moderators, should feel vindicated — but still quite frustrated — tonight.

(My comments that followed that news account):

One comment on the previous Rubio post:  The argument Rubio won against NBC's John Harwood was crucial  along with all the media and opponent drivel based on static scoring that shows other plans 'costing us trillions' illustrates why his plan has to be so modest at the high end to get elected.  Yes, the top rates should be much lower but that feeds the labeling of all tax rate cuts being a 'giveaway' to the rich.  Unfortunately, you have to win the  election to reverse Obama's tax increases or repeal Obamacare or anything else.  The alternative is Hillary going further than Obama on amnesty and big government.

No wonder NBC's (no one but Clinton?) John Harwood felt the need to have his Candy Crowley moment.
« Last Edit: November 05, 2015, 10:03:06 AM by Crafty_Dog » Logged
Power User
Posts: 7110

« Reply #603 on: November 23, 2015, 12:46:51 PM »

This is why we demand dynamic scoring!  High rates apply to less income, lower rates apply to more income.  Tax it and you will get less of it.  Everyone knows this, yet deny it when doing the math.
Power User
Posts: 35075

« Reply #604 on: November 23, 2015, 03:49:16 PM »

Pasting this here as well from the Presidential thread.
Power User
Posts: 7110

« Reply #605 on: November 27, 2015, 10:37:46 AM »

"Our tax rate highly disadvantages American multinational high-tech businesses," Read said at a Wall Street Journal event. "I am fighting with one hand tied behind my back."

Companies can't wait to get out.

Everyone knows it is a global market and yet the US has the highest corporate tax rate in the world.

At what point will the Obama-Hillary-Bernie tax raisers be satisfied?  When the last company leaves and when no more are ever started??

The Dem / Obama administration response to this is to try to block the exits.  Reminds me of the Berlin wall; their borer security was to keep people in - against their will.
« Last Edit: November 27, 2015, 10:40:10 AM by DougMacG » Logged
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