The Cruz Missile

[Kidlicious]

I want to say no capital gains tax because he wants to abolish the IRS, but I can't confirm that.

[Dinner]

The Economist has a great article about how not one of the Republican tax plans are a serious proposal. Trump's tax proposal would require an 82% cut in the entire discretionary budget (including the military) in order to be revenue neutral and not blow up the debt while Cruz's is in the same league. Republicans are proving, yet again, they just do not care about the deficit and all of their fake crocodile tears where just a game to them.

[Dinner]

Republican tax plans
Be serious
The Republican candidates’ tax plans are welcome for their detail, but not their contents
Jan 2nd 2016

A MONTH before the first primary contest in Iowa, the Republican race is more warlike than wonkish. Yet the candidates have found time to write sometimes intricate plans to reform America’s taxes (see article). Though no one blueprint will become law, if America chooses a Republican president, he may well have a Republican Congress to work with. At that point, the winner’s tax plan will seem less like a campaign gimmick and more like a promise to be kept.

Republicans are right to seek to reform America’s incoherent, tangled-up tax system. America’s corporate tax is a toxic combination of a high rate—the highest in the OECD—and a series of complex distortions, which encourage bad behaviour such as gorging on debt and stashing cash in foreign subsidiaries. Republicans rightly want to cut the rate and put an end to most of the distortions. Marco Rubio and Jeb Bush would also let businesses deduct the cost of their investments from their taxes immediately, rather than as their assets deteriorate and lose value. This would encourage investment and boost economic growth.

[Dinner]

The candidates have interesting ideas for helping low earners, too. Mr Bush and Donald Trump want to raise the standard deduction (the amount Americans can earn before paying income tax). That would be a simple way to encourage work and to help low- and middle-income households: a similar policy has proved a success in Britain. Mr Bush would also double the earned-income tax credit, a wage top-up for low-earners, for childless workers. Mr Rubio wants to replace the standard deduction with a universal payment to those in work, which would help even those who earn too little to benefit from an increased tax allowance.

These ideas, though, are mere footnotes to the plans’ central chapters: huge tax cuts for high earners. At 39.6%, America’s top federal income-tax rate is hardly high by global standards. Yet the candidates are racing to see who can promise to cut it most. Mr Bush aims for 28%; Mr Trump 25%. Ted Cruz wants to replace income tax entirely with a 10% flat tax and a value-added tax. Mr Rubio, whose promise of a 35% top rate seems timid by comparison, serves up largesse elsewhere by promising to abolish levies on capital gains and dividends.

The first problem with these schemes is their cost. On today’s growth forecasts, even Mr Bush’s relatively moderate plan would reduce revenues by $715 billion, or 13.5%, a year by 2026—more than the projected national defence budget. Paying for Mr Trump’s plan with reduced day-to-day spending (as opposed to mandatory spending on things like pensions and health care) would require cutting budgets by a staggering 82%.

The candidates claim that tax cuts will spur the economy, filling the government’s coffers with new revenue. But the pace of any economic acceleration is uncertain. The evidence that income-tax cuts for high earners boost growth is thin at best. Predictions that tax cuts in the early 2000s would cause enough growth to pay for themselves look foolish today.

This is no time to be taking chances with America’s budget. Retiring baby-boomers are increasing the cost of providing pensions and health care for the old. There is no appetite among Republicans for defence cuts, and other day-to-day spending has already been cut by 22% in real terms since 2010. If tax cuts were paid for with more borrowing rather than lower spending, they would end up as deadweight for the economy rather than as fuel.

The plans would also greatly exacerbate inequality, which has increased in the 15 years since George W. Bush cut taxes for high earners. Under Mr Trump’s plan, for instance, the top 1% of earners would receive a windfall worth 18% of their after-tax income. Middle-earners have to settle for a 5% boost; the bottom fifth, just 1%. This belies Mr Trump’s claim to champion the cause of ordinary working people. The other plans are little better; Mr Rubio’s plan is probably more generous at the bottom than at the top, but he gives middle-income Americans little to cheer about.

The Republicans have spent much of Barack Obama’s presidency denouncing debt and deficits. Yet their proposals to introduce unaffordable tax cuts for the rich would send both ballooning. So long as such schemes are a prerequisite for winning the Republican nomination, a party that prides itself on economic management will lack a credible policy.

[Dinner]

http://www.economist.com/news/leade...re-welcome-their-detail-not-their-contents-be

I posted the article in full as they are behind a pay wall (well, you get five free articles a month and have to pay for more) but as usual the Economist speaks truth. The Republican tax proposals are all budget busting jokes which are designed to transfer wealth to the top. Trump's plan would require a staggering 82% reduction in discretionary spending including to defense spending to be revenue neutral.
Republicans need to admit nothing remotely like those kinds of cuts will ever happen and actually come up with tax plans which are not a complete ****ing joke. I love how they pretend to care about debt when it is a dem in office but as soon as a Republican gets in office increasing the deficit by a trillion or more a year is no problem according to them.

[Kidlicious]

Cruz tax cuts are intended to create jobs and economic growth. That's why working families love them. Abolishing the IRS is also awesome.

[Dinner]

They will do neither, no more than the Bush tax cuts, and will create massive debt. History has proven this.

[Kidlicious]

They will do neither, no more than the Bush tax cuts, and will create massive debt. History has proven this.

Where do you get this crap? Read an economics textbook instead of listening to NPR dude.

[Dinner]

http://www.cbsnews.com/news/did-the-bush-tax-cuts-lead-to-economic-growth/

It is called reality. Reality is not favorable to the Bush tax cuts.

[giblets]

That's why working families love them.

Citation needed

[BeBMan]

Somehow, I can't stop thinking this when Cruz gets mentioned:

[Kidlicious]

http://www.cbsnews.com/news/did-the-...onomic-growth/

It is called reality. Reality is not favorable to the Bush tax cuts.

Do you have any data from a recession when fiscal stimulus was not used to cause economic recovery to compare to the all of the other times that fiscal stimulus was used to cause economic recovery? You have to be stupid to think that tax cuts don't help in a recession. Very stupid. People much smarter than you have been theorizing about this for almost 100 years. But hey, you got some jackass from CBS to tell you that tax cuts don't cause economic growth.

[Kidlicious]

It's all very simple Oerdin. When capital goods are cheaper people buy more of them. When people have more money they buy more stuff. Only a liberal could fail to understand those very simple truths.

[giblets]

It's all very simple Oerdin. When capital goods are cheaper people buy more of them. When people have more money they buy more stuff. Only a liberal could fail to understand those very simple truths.

[pchang]

A 16% VAT will raise prices on the goods those businesses produce. Thus, it will hit consumers more than savers. Under Cruz's plan, I know that my taxes would decrease by a lot. Cruz's plan would require drastic reductions in government services or a dramatic increase in government debt.