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Fast Money & Foreign Objects
By Michael Biesecker | AP February 16 at 6:50 PM
WASHINGTON — A new analysis of Republican presidential candidate Ted Cruz’s tax plan concluded that it would add trillions to the federal deficient while providing huge tax cuts to the nation’s wealthiest earners.
The analysis issued Tuesday by the nonpartisan Tax Policy Center found Cruz’s plan would cost $8.6 trillion over in the first 10 years, not including interest on the national debt.
Center director Len Burman said about two-thirds of all federal discretionary spending would have to be cut to balance the budget if Cruz’s tax plan were enacted. Not even eliminating every dollar spent on national defense, the biggest pool of money in the federal budget, would be enough, he said.
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“In Senator Cruz’s defense, I have no doubt he really wants to slash spending,” Burman said. “But these are really big tax cuts ... that would require really big spending cuts to Social Security, Medicare, defense and all the other big things we spend money on.”
The scale of the cuts that would be required to balance Cruz’s budget would likely be political unpalatable to members Congress of both parties, he added.
Meanwhile, under Cruz’s plan, the top 0.1 percent of income earners would see their tax burden reduced 23 percent. Middle-income households would receive an average 2.4 percent tax cut, while the lowest earners would actually see their payments increase by about 1 percent, according to the analysis.
The Tax Policy Center is a joint project of the centrist Brookings Institute and left-leaning Urban Institute.
Cruz campaign spokesman Rick Tyler criticized the center’s analysis, which he said fails to account for the massive economic growth that would be spurred by Cruz’s plan. He pointed to a competing analysis by the conservative Tax Foundation, which concluded Cruz’s plan would grow the nation’s economy by nearly 14 percent over the next decade and add 5 million new jobs.
“Tax cuts create economic growth,” Tyler said. “Economic growth creates more taxpayers who make more money and have more revenue to be taxed, which creates more revenue for the government.”
Cruz’s proposal would repeal the corporate income tax and payroll taxes for Social Security and Medicare, was well as eliminate estate and gift taxes. It would collapse the current seven individual income tax rates to a single 10 percent rate while increasing the standard deduction and eliminating most other deductions.
The plan would also introduce a new 16 percent broad-based consumption tax — a sort of national sales tax that would hit poorer Americans harder than wealthy ones.
Burman pointed to the historical examples of big tax cuts enacted under past GOP presidents, such as Ronald Regan and George W. Bush, which were not offset by explosive economic growth or spending cuts, ultimately resulting in increased national debt.
Cruz’s plan also fails to account for increases in spending from increased health care costs and the increasing numbers of Baby Boomers reaching retirement age, he said.
“There have been good conservatives in the White House and who were not successful in cutting spending,” Burman said. “While people like to revile government, there’s lots of things government does that people value, like Social Security, Medicare, roads that are navigable, decent education system, and things like that. You need money to pay for those things.”
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Analysis: Cruz tax plan would benefit rich, explode deficit
WASHINGTON — A new analysis of Republican presidential candidate Ted Cruz’s tax plan concluded that it would add trillions to the federal deficient while providing huge tax cuts to the nation’s wealthiest earners.
The analysis issued Tuesday by the nonpartisan Tax Policy Center found Cruz’s plan would cost $8.6 trillion over in the first 10 years, not including interest on the national debt.
Center director Len Burman said about two-thirds of all federal discretionary spending would have to be cut to balance the budget if Cruz’s tax plan were enacted. Not even eliminating every dollar spent on national defense, the biggest pool of money in the federal budget, would be enough, he said.
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“In Senator Cruz’s defense, I have no doubt he really wants to slash spending,” Burman said. “But these are really big tax cuts ... that would require really big spending cuts to Social Security, Medicare, defense and all the other big things we spend money on.”
The scale of the cuts that would be required to balance Cruz’s budget would likely be political unpalatable to members Congress of both parties, he added.
Meanwhile, under Cruz’s plan, the top 0.1 percent of income earners would see their tax burden reduced 23 percent. Middle-income households would receive an average 2.4 percent tax cut, while the lowest earners would actually see their payments increase by about 1 percent, according to the analysis.
The Tax Policy Center is a joint project of the centrist Brookings Institute and left-leaning Urban Institute.
Cruz campaign spokesman Rick Tyler criticized the center’s analysis, which he said fails to account for the massive economic growth that would be spurred by Cruz’s plan. He pointed to a competing analysis by the conservative Tax Foundation, which concluded Cruz’s plan would grow the nation’s economy by nearly 14 percent over the next decade and add 5 million new jobs.
“Tax cuts create economic growth,” Tyler said. “Economic growth creates more taxpayers who make more money and have more revenue to be taxed, which creates more revenue for the government.”
Cruz’s proposal would repeal the corporate income tax and payroll taxes for Social Security and Medicare, was well as eliminate estate and gift taxes. It would collapse the current seven individual income tax rates to a single 10 percent rate while increasing the standard deduction and eliminating most other deductions.
The plan would also introduce a new 16 percent broad-based consumption tax — a sort of national sales tax that would hit poorer Americans harder than wealthy ones.
Burman pointed to the historical examples of big tax cuts enacted under past GOP presidents, such as Ronald Regan and George W. Bush, which were not offset by explosive economic growth or spending cuts, ultimately resulting in increased national debt.
Cruz’s plan also fails to account for increases in spending from increased health care costs and the increasing numbers of Baby Boomers reaching retirement age, he said.
“There have been good conservatives in the White House and who were not successful in cutting spending,” Burman said. “While people like to revile government, there’s lots of things government does that people value, like Social Security, Medicare, roads that are navigable, decent education system, and things like that. You need money to pay for those things.”
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Follow Michael Biesecker on Twitter at Michael Biesecker (@mbieseck) on Twitter
Analysis: Cruz tax plan would benefit rich, explode deficit
