GOP presidential candidate Ted Cruz is sticking to his conservative roots with his plans, revealed in November, pertaining to the future of the American economy. Among his ideas, Cruz claims that when he becomes president he will try to eliminate the IRS (Internal Revenue Service) and introduce a new tax plan. This tax plan would consist of a "flat 10 percent individual income tax" and a "16 percent broad-based consumption tax" (Reuters, Washington Post).
An analysis completed by the nonpartisan Tax Policy Center concluded that Cruz's plan would slash federal revenues by $8.6 trillion in 10 years, causing a substantial addition to our already increasing debt. Additionally, these flat income taxes would more largely impact poorer Americans rather than middle- and high-income taxpayers. In fact, these taxes would substantially decrease the tax burden on the wealthy and would also slightly decrease the tax burden on middle-income families.
Cruz's campaign spokesperson Rick Tyler responded to the Tax Policy Center's analysis by saying that "'tax cuts create economic growth...economic growth creates more taxpayers who make more money and have more revenue to be taxed, which creates more revenue for the government'" (Washington Post).
Opponents of Cruz's tax plan also cite that historically large tax cuts by GOP presidents such as Ronald Reagan and George W. Bush have resulted in increased national debt. According to the Washington Post, these increases in national debt occurred because the economic growth that was predicted or proposed to happen afterwards, to hypothetically offset the decrease in federal revenue, never occurred.
After reading Tyler's response, I could not help myself from noticing the large gap in the vague phrase "'tax cuts create economic growth.'" Tyler elaborates on how economic growth would aid our government but never actually bridges the gap between tax cuts and economic growth. After reading about economic growth in tonight's homework, do you think that Cruz's tax plan will really increase economic growth? And if so, how? Also, what do you think about Cruz's proposal to get rid of the IRS? What consequences, good and/or bad, could this proposal possibly have? Lastly, do you agree or disagree with Cruz's policies. What are some alternative ideas for spawning economic growth for our country?
Sources:
https://www.washingtonpost.com/politics/analysis-cruz-tax-plan-would-benefit-rich-explode-deficit/2016/02/16/9e8353ca-d50d-11e5-a65b-587e721fb231_story.html
http://www.reuters.com/article/us-usa-election-cruz-taxplan-idUSMTZSAPEC2GNQMPP4
