Friday, November 13, 2015

A Close Look At Ted Cruz's Tax Plan

James Kwak has not commented on the tax policies of GOP candidates until Ted Cruz's tax proposal went well over the top.  Everyone likes tax cuts so Cruz gave everyone a present.  His proposal reduces tax revenue by $3.6 trillion over 10 years.  That is more than US military spending over that period.  Cruz's plan is very generous to the top 1%.  His plan gives 60% the of $3.6 trillion tax cuts to the top 1%; the remaining 40% is split among 99% of taxpayers.  His plan also eliminates the inheritance tax so the super rich can pass on their wealth to future generations more easily.  This, of course, is what one would expect from politicians whose campaign contributions come from the top .001%.  Cruz's tax plan is just more generous than others that have been proposed by GOP candidates who also pay a tribute to their benefactors.

All of the GOP plans would cut tax revenues.  Cruz's plan cuts revenues more than the others but they all explain away the lost revenue by claiming that the tax cuts will stimulate economic growth and actually increase government tax revenue.  Cruz's plan will have to double the US growth rate to replace the $3.6 trillion in tax cuts that go primarily to the top 1%. 

Ted Cruz's plan, like those proposed by his GOP competitors, is laughable in another respect.  Cruz and the other candidates are packaging their tax policies as populist plans.  They give a few crumbs to their populist base and don't say much about the real beneficiaries from their tax plans.  This is a time tested tradition in the Republican Party.  It has been relatively easy for them to put a populist cloak on tax polices which are harmful to the bulk of the GOP base.  The top 1% understand the GOP plans much better than its populist base.

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