Economy

Ted Cruz’s Tax Plan For ‘Hard-Working Americans’ Is Really A Gift To The Wealthy

CREDIT: AP Photo/Andy Manis

Republican presidential candidate Ted Cruz

In a new ad, Republican presidential candidate Sen. Ted Cruz (R-TX) promotes his tax plan, which he paints as a way to boost working-class Americans. Yet every analysis finds his proposals would give the rich the biggest benefits with little left over for everyone else.

“As Washington pads Wall Street’s pockets, hard-working Americans get left behind,” he says at the beginning of the ad. “My tax plan will change that.”

A voiceover claims that by abolishing the Internal Revenue Service and instituting a 10 percent flat tax on all income, “working families” will get “higher take-home pay.” The ad finishes with Cruz saying, “When the playing field is level, American workers win.”

Yet the details of Cruz’s plan would significantly skew the playing field in favor of the wealthy and corporate interests. Different analyses making different assumptions have found differing results, but they all paint the same picture: the wealthiest 1 percent would get the biggest benefits from his plan, with very little going toward everyone else. The conservative Tax Foundation found that about 30 percent of the benefits would flow to the 1 percent. The centrist Tax Policy Center found that half of all benefits would be captured by the 1 percent, and the richest fifth of the country would see more than 80 percent. That leaves the middle and lower classes with less than 7 percent of the benefit, with the poorest tenth actually experiencing a tax increase over a decade. The left-leaning Citizens for Tax Justice found that the 1 percent makes off with 65 percent of the tax cuts, with increases on the middle and lower class.

And far from cracking down on Wall Street, the plan offers some benefits for bankers. It would reduce the capital gains tax, paid on money made from investments rather than salaries, to the flat 10 percent rate, a drop for the already lower rate they pay. Large corporations would generally benefit from the 16 percent “Business Flat Tax,” much lower than the on-paper tax rate of 35 percent or the effective 19 percent rate many big companies pay.

Cruz’s plan also comes with a big price tag: the Tax Policy Center found it would cost the federal government $8.6 trillion over a decade. Assuming that tax cuts are paid for with a mix of half spending cuts and half tax increases, Citizens for Tax Justice found that his plan would cost nearly everyone in the country even more while padding the pockets of the richest. A person in the poorest fifth of the country would have about $6,000 less, while someone in the top 1 percent would have about $364,000 more.