A tax plan proposed by Republican presidential candidate Ted Cruz would
cut federal revenues by $8.6 trillion over 10 years, adding
substantially to the debt, according to an analysis published on Tuesday
by a nonpartisan research center.
Cruz's
plan, unveiled in November, would create a flat 10 percent individual
income tax that with other changes would mainly benefit high-income
households, the study by the Washington-based Tax Policy Center found.
Other changes include repealing the corporate income tax, as well as payroll taxes for Social Security and Medicare,
and estate and gift taxes; increasing the standard deduction and
eliminating most other deductions except for mortgage interest and
charity; and adding a broad-based 16 percent value-added consumption
tax.
"The plan would cut taxes at most income
levels, although the highest-income households would benefit the most
and the poor the least," the Tax Policy Center said.
The
value-added tax proposed by Cruz, a Senator from Texas who won the Iowa
caucuses among Republicans last month, would replace only 70 percent of
the costs of the tax cuts, according to the center.
Cruz
is a favorite of the conservative Tea Party movement who helped provoke
a 16-day government shutdown in September 2013 with his opposition to a
spending bill. The goal was to gut the healthcare law known as Obamacare.
The
TPC analysis noted that high-income taxpayers would see an average tax
cut in 2017 of about $6,100 or some 8.5 percent of after-tax income,
while those with annual incomes over $3.7 million would see an average
cut of nearly 29 percent, or more than $2 million.
"Households
in the middle of the income distribution would receive an average tax
cut of $1,800, or 3.2 percent of after-tax income, while taxpayers in
the lowest quintile would receive an average tax cut of $46, or 0.4
percent of after-tax income," the TPC said.
The changes would "boost incentives to work, save and invest,"
but the lower revenue would require unprecedented cuts in government
spending to avoid borrowing that would raise interest rates and
discourage private investment, it said.
The Tax
Policy Center is a joint venture of the Urban Institute and the
Brookings Institution, two Washington-based think tanks. It has issued
studies of other candidates' proposals.
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