At the CNBC debate on October 28, Ted Cruz . released his tax reform proposal, which I believe is the best of all the presidential candidates’ plans. At Tuesday night’s debate, Crux released a spending reduction plan showing how he will pay for the tax cut involved in the tax reform plan.
For the individual income tax under his tax reform, Cruz’s plan provides for one flat rate of 10% on everything – wages, capital gains, dividends, personal business income, rent, interest, and all other forms of individual income. The corporate income tax would be abolished, and replaced with a 16% Business Flat Tax, which applies to sales of goods and services, minus all purchases and expenses for inputs for production. It automatically provides for immediate “expensing,” or an immediate deduction for all purchases of plant and equipment, and all other capital investment, which inherently involves purchases of inputs from other businesses. It is essentially a consumption tax for business.