The Tax Policy Center’s analysis of Sen. Ted Cruz’s tax plan forecasts federal tax revenues would decline by $8.6 trillion (3.6 percent of gross domestic product) over a decade.
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“The plan would cut taxes at most income levels, although the highest-income households would benefit the most and the poor the least.” the report reads.
The report also claims Cruz’s plan will not succeed in reducing taxpayers’ filings to a postcard. “I would think the form would have to look not that different than what you do now,” said Tax Policy Center Co-Director Eric Toder.
CNN Money reports:
There are plenty of elements in the Cruz plan that could benefit the U.S. economy, the Tax Policy Center found.
“Repealing the corporate income and payroll taxes, imposing a new VAT, and significantly reducing individual income tax rates would boost incentives to work, save, and invest if interest rates do not change. The plan would also remove most of the tax distortions in the allocation of capital,” according to its report.
But it cautioned that all those good effects could be undermined unless there are “unprecedented cuts in federal spending” to ensure the Cruz plan doesn’t add crippling amounts to the nation’s already high debt load.
The plan released by the Tax Policy Center operates on the major assumption that the federal government would remain the same size during a Ted Cruz presidency.
Cruz has repeatedly promised that he would reduce the size of government, which would offset the expense of his tax plan. However, Cruz has never quantified his promise.
Cruz’s plan is “much simpler than current law and than the other [Republican candidates’] plans we’ve analyzed,” said Len Burman, director of the Tax Policy Center.
(H/T: CNN Money)