ROGER KIMBALL: Ted Cruz’s Tax Plan Can Unshackle America:

There are two basic and opposed views of economics. One, espoused by the administration in Washington DC, holds that economics is fundamentally about the redistribution of wealth. The other, espoused most powerfully by the Republican presidential hopeful Ted Cruz, holds that economics is fundamentally about the creation of wealth.

By the time he leaves office, Barack Obama will have doubled the federal debt, bringing it up to an astonishing $20tn. And he has managed this despite taking in more tax revenue than ever before. Mr Obama has achieved another distinction: he has been the only president in history not to have presided over a single year of 3 per cent growth in gross domestic product.

Mr Cruz would change all that. How? At the centre of his economic plan are two imperatives: tax cuts and drastic simplification of the tax code.
Let us start with the cuts. His plan calls for a flat tax of 10 per cent on family income above $36,000. That is down from a top rate of 39.6 per cent today. At the same time, he would abolish the corporate tax (a variable rate that currently maxes out at 39 per cent) and institute a “business transfer tax” of 16 per cent. He would also abolish a host of other taxes, including the estate tax, payroll tax and taxes associated with “Obamacare”.

The upshot, according to the Tax Foundation, which has published a detailed review of the plan, is that the Cruz initiative would spark an explosion in economic growth. Over a decade, GDP would increase by 13.9 per cent above what is currently projected, wages would increase by 12.2 per cent and the US would see up to 5m new jobs.
But those numbers tell only a part of the story. The US tax code runs to some 70,000 pages. The Cruz plan would replace that creaking monstrosity. Instead of having an accountant produce a long and semi-intelligible document at great expense, individuals would fill out their taxes on a postcard. Mr Cruz also promises to abolish the Internal Revenue Service “as we know it”. Obviously, there would have to be a mechanism to ensure that taxes were collected. But the behemoth that is the IRS could be replaced with a vastly slimmed down operation.

But what about revenue? Could taxes be cut so drastically without creating deficits? The Tax Foundation estimates that the Cruz plan, after factoring in projected growth, would result in a $768bn revenue loss over a decade. Should we worry about that? No. This is less than 2 per cent of projected federal revenue from 2017-26, and it is a terrific investment. For every $1 of revenue loss, the Tax Foundation finds that the Cruz plan will generate $23 of new GDP, a phenomenal return on investment. This compares very favourably with Donald Trump’s plan.

The problem — and this is a feature to me, but a bug to the political class — is that it offers insufficient opportunities for graft.