Saturday, November 21, 2015

Will we ever see TAX REFORM?

The Paul And Cruz Flat Tax Plans Are Best Tax Proposal

As we've cheerfully noted on these pages, 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.
What a contrast with Bernie Sanders, who declared at last week's Democratic debate that he could live with a 90% tax rate on the rich. Why not take it all, Bernie?
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.
If Ronald Reagan, Jack Kemp and Bill Bradley had held to such a "my way or the highway" approach, the epic 1986 tax reform that collapsed tax rates to 15% and 28% never would have happened.
Which brings us to Rand Paul and Ted Cruz. The two of us helped craft their low-rate flat tax plans.
The plans are similar: 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. (Against our wishes, they retain the tax write-off for charitable organizations and have family deductions that are too big. But no one's perfect.)
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.
That's the last thing we want.
But nearly all leading flat-tax plans have some form of VAT to replace the god-awful corporate income tax. If these plans didn't eliminate the corporate tax entirely, and the new tax was a European-style add-on VAT, we'd be standing shoulder-to-shoulder with Kudlow in denouncing them


Read More At Investor's Business Daily: http://news.investors.com/ibd-editorials-brain-trust/112015-781892-paul-and-cruz-flat-tax-proposals-best-candidate-tax-plans.htm#ixzz3s8hP9O30
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