WASHINGTON — Republican presidential candidate Ted Cruz told business groups Wednesday that if he is elected president his top two priorities to grow the economy would be to institute a flat tax for businesses and individuals and roll back regulations that he said have hurt small business owners across America.
Cruz, a senator from Texas, participated in a teleforum and addressed questions posed by members of the National Retail Federation, National Association of Manufacturers, Associated Builders and Contractors, the Associated General Contractors, the Business-Industry Political Action Committee and the National Federation of Independent Business.
“Two of the most important things for economic growth and two of the most important things for small businesses are tax reform and regulatory reform,” Cruz said. “They’re the two most important levers that Washington has to help small businesses grow, thrive and prosper.”
Cruz has proposed replacing the corporate income tax of 35 percent with a simple flat tax for businesses of 16 percent. According to a fact sheet on his campaign Web site, the flat tax would be based on revenues minus expenses such as equipment, computers and other business investments. Cruz has also proposed to allow for full and immediate expensing of business equipment and repeal the estate tax.
One executive pressed Cruz on the flat tax concept, asking why his plan does not permit a deduction for wages and questioning whether it would deter growth and employment.
Cruz said in addition to allowing companies to immediately expense capital investments, instead of the current depreciation schedules, it would also eliminate the payroll tax.
“It is true that you do not deduct wages and salaries, which you do currently under the corporate income tax, but the critical piece to remember is we’re getting rid of the payroll tax, too,” Cruz said. “Right now, the payroll tax is 15.3 percent. So instead of paying 15.3 percent, every business is paying a simple, flat tax of 16 percent across the board. The impact for small business owners is dramatic.”
Cruz also argued that small businesses “get hammered” under the current corporate tax structure, while big corporations are able to “game the system” to a tax advantage. He said a flat tax would level the playing field.
Another area he pointed to was exporting. Cruz said under his plan, U.S. manufacturers or farmers making or growing product to export would not be subjected to the 16 percent flat tax.
In the area of regulatory reform, Cruz said he would work to repeal many regulations imposed under the Obama administration, including the sweeping health-care reform that contains an employer mandate.
“We’ve seen regulations descend from Washington like locusts on small businesses, destroying small businesses,” Cruz said. “As president, I would take on the regulatory state, take on the Environmental Protection Agency and pull back job-crushing regulations, take on the Consumer Financial Protection Bureau….But the most important regulatory reform I believe is the repeal of Obamacare.”
Neil Trautwein, vice president for health-care policy at the NRF, explained that under the Affordable Care Act, businesses with less than 50 full-time employees, defined as those who work 30 or more hours a week on average, are not subject to an employer mandate and do not have to provide health insurance.
However, companies with 50 or more full-time employees must provide health insurance and if they fail to offer insurance to their full-time workforce, they face a $2,000 penalty per full-time employee after the first 30 such workers.
Cruz pledged to abolish the CFPB and repeal the sweeping Dodd-Frank financial regulatory reform if elected.
“Whether you are talking about the CFPB, EPA [Environmental Protection Agency], NLRB [National Labor Relations Board] or any of the other alphabet soup in Washington, we need a president with the willingness to take on the fight,” he said.