More than six years after experts officially declared the recession over, we continue to endure the weakest economic recovery since the Great Depression. Barely half of U.S. adults are working full time. For every job created under President Obama, two people have dropped out of the labor force completely. Median household income and net worth have fallen to near 1989 levels, continuing to fall during the so-called “recovery.”
But Democrats like Hillary Clinton would double down on Obamanomics: They see no problem that cannot be solved by higher taxes, more spending, more debt, and more government red tape. Just look at taxes: Tax revenues have grown by 30 percent over the past three years, but you’d never know it the way Washington keeps spending and demanding more revenue. The Democrats would continue the long slide towards stagnation, whereby Washington politicians and bureaucrats accumulate ever more power at the expense of families.
As president, Marco Rubio will protect the family budget from the federal budget. He’ll cut tax rates and simplify the tax code. He’ll help families by ending the marriage penalty and introducing a new $2,500 child tax credit. All families will benefit from Senator Rubio’s economic plan.
On the business side, many family businesses currently pay higher tax rates than Fortune 500 companies. The corporate tax code is every lobbyist’s dream and every entrepreneur’s nightmare: the highest corporate tax rate in the world, but with enormous loopholes for the well-connected. This pushes American companies to relocate overseas and keeps them from using income earned abroad to invest in America.
Marco Rubio will eliminate these wasteful corporate-tax loopholes and use the savings to reduce tax rates. And he’ll ensure that family businesses no longer pay higher marginal tax rates than corporations. These commonsense reforms will encourage entrepreneurs, bring jobs home, and raise wages.
#share#I wish I could be equally complimentary toward other Republican tax plans. Unfortunately, while Ted Cruz touts a low, flat income-tax rate, he centers his plan on the creation of a burdensome 16 percent value-added tax.
As president, Marco Rubio will protect the family budget from the federal budget.
A VAT is basically a national sales tax. Since it’s collected directly from businesses, it’s hidden from consumers, but rest assured, its cost will be embedded in the price of everything you purchase. When Ted Cruz asserts that a family of four will pay no income taxes on its first $36,000 earned, he’s excluding all these new value-added taxes.
Since they consume a larger share of their incomes, lower- and middle-income Americans will bear the burden of the VAT. Buying a newly built $250,000 home? $40,000 will go towards the VAT. Eyeing that new $20,000 car? Expect $3,200 to go toward Senator Cruz’s new VAT. Even charities will be caught in the VAT.
Liberals have dreamed of imposing a VAT for decades. Democratic leader Nancy Pelosi says that “a value-added tax plays into” her vision of tax reform. President Obama has called a VAT a “novel” idea. The Left loves that a VAT can raise enormous sums of money for the government in a hidden way. Because it’s embedded in the cost of everything we buy, Washington can increase the VAT rate and then blame businesses for the higher consumer prices they bring.
#related#Combining Senator Cruz’s proposed VAT with current state and local sales taxes would mean a tax of around 26 percent on consumption. This is higher than most of Europe and the OECD, and in fact, high consumption taxes are what allowed European governments to grow so large. Once countries like France realized that there was a limit to how much money they could squeeze from the income tax, they used the VAT to extract resources from a broader swath of the population. No wonder President Reagan argued that a “value-added tax actually gives a government a chance to blindfold the people and grow in stature and size.”
We don’t need to give Washington a brand new tax. Let’s go back to basics: lower tax rates, fewer tax loopholes, and more simplification. That is Marco Rubio’s recipe for jobs and growth.
— Chris Chocola is a former congressman from Indiana.
editor’s note: This article has been amended since its initial publication.