Tax cuts for the rich have always been part of the Republican rhetoric. However, they haven’t been as outlandish as what Trump and Cruz are proposing. In fact, these are some of the largest tax cuts proposed in the history of America’s tax cut proposals, especially when considered in proportion to the overall American economy and government budgets.
Both, Cruz and Trump swear that they are against the idea of a Republican establishment. However, their tax cut proposals indicate the exact opposite.
Here are a few reasons why you need to rethink Trump and Cruz’s proposed tax plans.
It Makes the Rich Richer
Trump plans to bring down the tax rate from 39.6% to 25%. This creates a massive windfall in favor of the country’s wealthiest people. That isn’t going to go down well with most people, especially at a time when the wealthy already own a majority of the nation’s wealth.
The Center for Tax Policy states that about 1/10th of wealthy taxpayers (people with an annual income of over $3 million) would receive a tax cut of $1.3 million per year if these proposals come into play. However, middle-income groups would receive a meager $2700 in tax cuts.
Lower Income Groups Will Have to Bear the Burden
Cruz plans to do away with the progressive income tax system, which taxes people according to income growth. Instead, Cruz plans to tax people based on annual expenditure and exempt income from investments. That’s really bad news for low-income workers, who will be forced to pay more taxes as their expenses tend to be higher. Plus, they are not the kind to have any significant investments.
Cruz also plans to bring in a flat 10% tax system. However, a flat tax system benefits only the rich, while low-wage workers will have to part with a significant amount of their earnings.
Apart from all of that, Cruz intends to do away with gift and estate taxes.
If these tax cuts ever see the light of day, you can be sure that federal revenues will take a hit. In fact, calculations suggest a loss of $12 trillion in the next decade or so. Neither Trump nor Cruz has provided any hints on how they plan to compensate for this loss. Plus, they are keen on investing in America’s military might, which means their only option to source all that revenue is by placing cuts on Medicare, Social Security and other assistance programs for the poor. Either that or they choose to expand the national debt.