In 1980, Ronald Reagan campaigned on a four point economic recovery plan. First, reduce tax rates, to increase incentives for job creation, investment, business start-ups and expansion, and wage growth due to the resulting increased demand for labor and increased productivity. Even liberal Keynesian economics holds that tax cuts are pro-growth.
Two, reduce regulatory costs and barriers to business, which can act as further tax cuts. Three, reduce federal spending, to reduce the government’s drain on the private sector. And four, restrain monetary policy to restore a stable value for the dollar.
After Reagan led adoption of those policies in 1981, by late 1982 the economy took off on what developed into an historic, 25 year, economic boom, which did not end until late 2007. The top tax rate of 70 percent when he entered office was reduced all the way to 28 percent, with only one more rate of 15 percent for the middle class. Inflation, which had soared to double digits in the 1970s, was cut in half by 1982, and cut in half again by 1983, never to be heard from again to this very day.
ed Cruz is campaigning today on an updated version of that same four point economic recovery plan. His tax reform proposal would scrap the current income tax code entirely, and replace it with a Simple Flat Tax with the same 10 percent rate for all forms of personal, individual income. That same 10 percent rate would apply to wages, profits, capital gains, dividends, rent, and interest income. No one would be able to claim that billionaires are paying lower tax rates than their secretaries, or that the system is rigged to favor the rich over the middle class.
The corporate income tax would be abolished, and replaced with a 16 percent business flat tax. That business flat tax would be border adjustable, which means all exports would get a tax refund for taxes paid in producing the goods, while all imports would be subject to the 16 percent tax in full. This would give American manufacturing a big advantage in all international trade.
Under Obamanomics, America has never seen a full recovery from the financial crisis, even though America’s historical record has always been the deeper the recession, the stronger the recovery. As Reaganomics proved, Ted Cruz’s economic growth plan is well-designed to liberate America’s economy for that long overdue jobs and economic growth breakout.
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