Small businesses are “the backbone of the country.” That was again the recurring theme as a third presidential candidate addressed a joint coalition of construction, manufacturing and other trade associations in a teleforum Wednesday.

Texas Sen. Ted Cruz was the latest candidate to speak on a call hosted by the National Association of Manufacturers, Associated Builders and Contractors, the Associated General Contractors of America, BIPAC, the National Federation of Independent Business and the National Retail Federation. Thousands of members of the coalition listened in, and some were able to pitch questions to Cruz during the 45-minute forum.

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Ted Cruz

Cruz said his number one priority is economic growth, which is “foundational of everything else” and comes from small businesses.

“Two thirds of all new jobs come from small businesses, and if we have an environment where small businesses are prospering, growing and expanding, and the economy is booming, then that lifts all ships,” he said. “Today, for the first time since these statistics have been measured, more businesses are going out of business than are being formed. That is an incredibly dangerous dynamic.”

He said tax reform and regulatory inform are “the two most important levers that Washington has to help small businesses grow, thrive and prosper.”

Cruz proposes a simple flat tax. On the personal side, for a family of four, the first $36,000 of income earned would be tax free. Above that, everybody pays a simple flat tax of 10 percent. “Across the board, it is fair, it is uniform,” he said. “That means that no longer do you have hedge fund billionaires paying a lower effective tax rate than their secretaries.”

“What that will enable is for every American to fill out their taxes on a post card, so you get rid of the massive compliance cost and all of the dead weight loss coming from our current bloated tax code,” he added.

On the business side, Cruz proposes a business flat tax of 16 percent, which he said would in turn abolish the corporate income tax and the payroll tax. It also allows abolishment of the Estate Tax, which Cruz said, “is an enormously unfair tax that can be crippling to small businesses,” he said.

He noted that the non-partisan Tax Foundation has concluded that his plan would produce 4.9 million new jobs and would increase capital investment by 44 percent. Part of the plan, much like other conservative plans proposed, allows businesses to immediately expense investment in new machinery or any other capital investments. “And on top of that, every income level in America, from the very poorest to the very richest, will see double-digit increases in after-tax income of 14 percent or more.”

When asked to further explain his business flat tax, he said businesses take net receipts and deduct all payments to other businesses, including all capital investments. He said there is a “massive benefit” to businesses that are exporting because it is “border adjustable.” He explained, “If you’re exporting, you don’t pay it. It is exempt from the business flat tax.” For a manufacturer, “to any exporter, that’s a much bigger benefit than the EXIM bank.”

He said all imports are subject to the 16-percent flat tax of 16 percent, so any foreign company sending imports into the U.S. pays. “The two together is effectively a 32-percent differential,” he said.

Cruz also discussed regulatory reform and said he would take on the Environmental Protection Agency to “pull back on the job-crushing regulations.” He said he believes the most important regulatory reform is repealing Obamacare, which he said is “the biggest job-killer in the country.” Cruz proposes that in its place, “we will have common-sense healthcare reform, which makes healthcare insurance personal and portable, and affordable, and keeps government from getting in between us and our doctors.”

His healthcare plan would allow people to purchase health insurance across state lines. “The biggest barrier to access to healthcare is cost,” he said. “… If you want more access, what you want is more choices and lower cost. You want a 50-state national marketplace for health insurance, which will expand the ability of low-cost, catastrophic insurance. What Obamacare does, is it has fewer choices and higher costs.” He also proposes to expand health savings accounts “so people can save in a tax advantage manner for more routine healthcare needs and preventions.”

Additionally, he said the key is to “de-link health insurance from employment.” Cruz pointed out that if someone loses their job, they don’t lose their car, house or life insurances. “There’s no reason on earth you should lose your health insurance,” he said, adding that “it’s the worst insurance to lose. … We need to work for health insurance reform that makes health insurance personal, portable and affordable.”

Cruz reiterated his opposition to the Export-Import Bank, saying that an overwhelming majority of loan guarantees go to a handful of giant corporations and that less than two percent of businesses in America are benefiting from it. “[I]t is putting the taxpayer on the hook for the benefit of a handful of corporations.”

He was also asked about balancing the budget and reversing the growing debt.

“In just seven years of the Obama presidency, our national debt has gone from 10 trillion to over 18 trillion,” he said. “What we’re doing is both unsustainable and profoundly immoral. If we don’t change the path we’re on, our kids and grandkids will spend their whole lives not working to meet the challenges and the needs of the future, but simply working to pay off the debts of their deadbeat parents and grandparents.”

He said the only first-order variable that has a dramatic impact on the federal budget is economic growth, pointing to Ronald Reagan’s tax and regulatory reforms that helped turn around an economy that had been growing at a similarly low rate to today’s. “[Reagan] understood small business is where economic growth comes from,” Cruz said. “And we saw an explosion of growth and opportunity—so much so that by the fourth year of Reagan’s presidency, our economy was growing at a rate of 7.2 percent a year.”

Beyond that, he said “we’ve got to rein in the waste, the cronyism, and the corporate welfare in Washington that is often favoring giant corporations at the expense of everybody else.” He rolled out a plan of specific spending cuts of more than $500 billion dollars, which he detailed on his website.

Other candidates still invited to speak with the groups are Dr. Ben Carson, former Secretary of State Hillary Clinton, former HP CEO Carly Fiorina, former Arkansas Gov. Mike Huckabee, Ohio Gov. John Kasich, Sen. Bernie Sanders (I-Vt.) and businessman Donald Trump.

[Read about Florida Sen. Marco Rubio’s teleforum here and former Florida Gov. Jeb Bush’s here.]

2 Comments

  1. Love the tax plan. However, the tax attorneys and CPAs will not. It is too simple and their lively hoods are based on billable by the hour residual income. I fell we will never have the reform we all want an deserve. We are still paying our CPA for 2014 taxes. However it is better than giving our money to the IRS for fraudulent wasteful spending by the government.

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