Deroy Murdoch:
Senator Ted Cruz’s victory in Tuesday’s Wisconsin primary cements him as the clear, conservative alternative to Donald J. Trump. The Texas Republican trumped the New York real-estate mogul, 48 percent to 35. This landslide confirms Cruz, not Governor John Kasich (R., Ohio), as the life boat for GOP voters who wisely worry that the high-decibel tycoon’s juggernaut would sink beneath the waves next November — to the applause of women, Hispanics, immigrants, the disabled, and millions of others whom he has frosted.
Cruz now should crank up the volume on campaign 2016’s best idea: a 10 percent flat tax that is perfectly timed as smart policy and smart politics.
Cruz’s Simple Flat Tax Plan would:
Collapse today’s seven personal-income-tax rates into one: 10 percent.
Some economists have criticized Cruz’s 16 percent business levy as an opaque, value-added tax. Consumers usually pay corporate taxes through higher prices, lower wages, reduced dividends, and other less obvious costs.
“If the government is going to take our money,” argues Cato Institute scholar Chris Edwards, “it should mug us on the street in broad daylight, rather than sneak into our homes at night and burglarize us unnoticed. The VAT would encourage more burglary.”
Cruz’s commercial tax could be more simple and visible, but it hurts less than the current system. At 16 percent, it is nominally less than half of today’s corporate tax. America’s 35 percent rate is the civilized world’s highest. Cruz’s 53.4 percent chop in the nominal corporate rate would reduce massively the demand for the corporate inversions — the practice of firms moving to low-tax offshore locales – that Obama unilaterally restricted last Monday via tighter regulations rather than lower rates.
The Simple Flat Tax would be a badly needed testosterone shot for the effete Bush-Obama economy. The Tax Foundation estimates that, over a decade, Cruz’s tax modernization would boost wages by 12.2 percent, GDP by 13.9 percent, capital investment by 43.9 percent — all above current projections. Cruz’s blueprint also would spur 4.9 million new jobs. While this initiative would reduce tax receipts by $3.7 trillion, higher revenues from economic expansion would generate $2.9 trillion in taxes. The net price tag for all of the above comes to $768 billion. That’s $62 billion cheaper than Obama’s failed $830 billion “stimulus.”
Atop making tremendous economic sense, Cruz’s flat tax is exactly what his campaign needs right now.
