The GOP field of presidential contenders is getting rather crowed. Each staking out various positions on economic, social, foreign policy as well as commenting on news event as they unfold daily.
When it comes to government policy everything can be boiled down to one thing.
And that means that taxation is one of the most — if not the most — important issue facing America today.
So far, Senators Paul, Rubio, and Cruz have been extraordinarily vocal about their particular version of how to change the system of how the government will tax. The rest of the pack may have expressed some opinions on tax policy but which do not seem to rise to the fervor of these three Senators.
Paul says he wants to blow up the tax code and start all over. His proposal is based on replacing the current tax code with a new tax code that is still based on taxing income of individuals and corporations at one flat rate of 14.5 percent.
His concept is that all the other federal taxes, such as payroll tax, estate and gift tax, telephone tax, and all duties and tariffs would also be blown up.
Rubio has a not too dissimilar plan being based on replacing the current multi-rate system with a flat tax income tax. He essentially promotes the idea of having a big benefit for families with children and cutting tax rates on investment and providing corporate tax relief while eliminating tax preferences.
Cruz has staked out two tax positions. He too wants to replace the current income tax system.
But Senator Cruz seems to be in favor of either a flat single rate income tax (with deductions limited to charitable donations and mortgage interest) or a national sales tax.
He was a co-sponsor of the Fair Tax Act of 2013 which stated that it is, "A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national sales tax to be administered by the States."
As I sum it up, Cruz is on the right track with the national sales tax.
All three senators see the problem in much the same light.
Paul is dead on when he states, "...but the tax code has grown so corrupt, intrusive, and antigrowth that I've concluded the system isn't fixable."
Rubio issued a 26 page position paper which starts with a laundry list of the evils wrought by the current income tax code. He states, "If these problem weren't bad enough, our onerous tax code is enforced by an often unpredictable Internal Revenue Service.
Simply put, our current system taxes too much, taxes unfairly, and stifles economic opportunity for American families, businesses, and individuals."
Cruz says: "We need to pass fundamental tax reform making out tax code simple, flatter, fairer. And I'll tell you, the single most important tax reform, we should abolish the IRS."
For all the reasons that these senators have stated, a tax system still based on taxing income will always require an enormously complicated tax code, which will demand obedience of 150 million individual taxpayer and 40 million businesses, and necessitate enforcement just like it is now.
There is just no way of getting around it.
In reality, all income taxes are just a form of a prepaid sales tax.
So why go through all the complications of an income tax system just to collect what is effectively a sales tax to begin with?
That is, to create the income that ultimately will be taxed, whether progressively or flatly, there has to be a sale of some goods or services to initiate the process.
Why not just tax sales in the first place and be done with it? Everybody pays tax according to how much they spend. It's better than fair, it's equal.
It also eliminates the corruption, intrusion, unfairness, and administrative unpredictability that is always an integral part of any income tax system.
As to the Internal Revenue Service, individual taxpayers won't even know it's there anymore since they will no longer have to file any federal income tax returns.
Even the business returns will be simple since they will be based on sales and not on an indefinable concept called income.
While taxing income has turned out to be a disaster for the American economy, under a sales tax system whatever is not spent is saved and invested. That is what creates the magic ingredient needed for freedom and a free-market -- capital.
As I see it, a move to a flat tax system as proposed by Paul, Rubio, and Cruz is just a waste of time.
Politics as usual.
But if Cruz is serious about getting America on a national sales tax system, then he is the one who has it right.
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