Last week I discussed Rand Paul’s EZ Tax Plan, which is a flat tax that sounds nice, but has little chance of success. Today, I’m moving to another flat tax plan, this one proposed by Tea Party Favorite Ted Cruz.
Before this post, I’d heard a bit here and there about Ted Cruz’s tax plan, but didn’t feel like I’d picked up what he really wanted. My research started with a Google serach, which basically ensures I’ll be seeing Ted Cruz ads in every Google Ad block from now until election day. I haven’t decided if this is better or worse than the the Doc McStuffins ads my daughter managed propagate (ed. note: Your daughter. Suuuuuure.).
Several sites discussing Ted Cruz’s tax plan called it “half-baked.” It’s not. That’s giving it too much credit. It’s not even a quarter baked. If anything, it’s like the gooey mound in Sleeping Beauty that the Green Fairy frosts and decorates before even considering pre-heating the oven.
In other words, I’m not a fan.
Right now, Ted Cruz has two basic proposals: (1) make a flat tax that’s simple enough to do on a post card, and (2) abolish the IRS.
The Flat Tax
Everything I mentioned about the flat tax in the Rand Paul post also apply here: it may sound nice, but unless all politicians have a Road to Damascus type change of heart, they’re never going to give up their ability to meddle with the economy through the tax code.
Unlike Rand Paul’s EZ Tax Plan, which actually had a basic structure, Ted Cruz’s flat tax is a vague waving of the hand towards the left side of the stage while muttering something about how that tax plan is “over there.” There’s absolutely no details about what it would include, what rate he would advocate, what deductions he would allow, etc.
It’s early in the political process, so those may come. More likely it’s a savvy political move, firing up the base with commitments that sound nice, but have so few specifics that pinning down actual promises is about as easy as pinning your favorite dust mote to your butterfly collection.
Really, it’s a smart political move. And despite what many (mostly left wing, but some right wing) commentators say, Ted Cruz is not stupid. It’s also something that a shrewd lawyer would do.
Abolish the IRS
When I read the headline that the IRS chief thought that Ted Cruz’s tax plan wasn’t viable, my first thought was, “well of course he’d say that.” In any situation where Person A is gunning to have Person B’s job destroyed, Person B is rarely the best source for an unbiased analysis on why their job is so important.
In this case, though, I have to agree with the Head Honcho of the Government’s Most Despised Department.
Ted Cruz has made it a bit of a crusade, since around 2013, to abolish the IRS. I understand why: the Lois Lerner controversy and accusations of IRS targeting conservative organizations left a bitter taste in many people’s mouths. Specifically, it left a bitter taste in the mouths of the very people Ted Cruz needs to win the Republican Party Nomination.
Once you get past the hot headed desire for revenge, though, where does it leave you? Somebody still has to collect the tax revenue, no matter how simple the tax system. If you want to remove the IRS name and roll it up into the Department of the Treasury, I guess that’s fine, but functionally it’s the same thing.
I mean, it’s not like we’re just going to put a big collection box outside of the White House and assume everyone is putting in the right amount. I’d like to believe that everyone in the country is perfectly honest and upstanding in every regard, including in paying all taxes they know are legally due, I’ve watched enough G.I. Joe to know that some people are just plain bad.
And knowing is half the battle.
National Sales Tax
Ted Cruz has also previously made vague mention of a national sales tax, but that one has fallen by the wayside. Many economists believe that it would be an economically preferable method of taxation compared to income taxes, so it could be an interesting way to go. Ted Cruz might even manage to get a few Democrats on board.
However, a national sales tax has other issues, including questions of Constitutionality (the Sixteenth Amendment only covers INCOME tax). Practically, Ted Cruz probably realized it didn’t have the emotional power of a vague flat tax, so we probably won’t hear about it again. At least not during the election.
More To Come?
I wonder if we’ll ever get more details out of Ted Cruz. I’m sure if it’s politically expedient, we’ll find them out. If not, we won’t.
If we do, I’ll be sure to talk about it more.
(Header Image by Gage Skidmore)