This is one area that I have trouble with Cruz. And for those of you who claim that I think Cruz is a savior, please take note of this.
Where is the line for business income? Retirement income? Rental income? Royalties? State tax refunds? Bartering? Prizes? Lottery? Lawsuit settlements?
Of this picture from the cabinet above my side desk, how many inches of the Code (red books) and Regulations (blue books) will Cruz' plan save? As a point of reference, that's a FAR/AIM on the far right.
I'm not against simplification, and I'm confident I won't be without tax work if his simplification is passed. Hell, the instructions for the 2015 Federal Form 1040 is 105 pages! Knock that bitch down. But A Flat Tax? I'm all for it.
You're all for a Flat Tax but against Cruz's plan? That's essentially what this is, the only difference is that there is a 3 tiered level to tax rates.
The simplicity is that you don't classify income differently...perhaps you're so deep into it that you don't recognize that calling it all "Comes-In" IS the simplicity. As an individual, t doesn't matter if you made the money by an employment contract with someone else, by doing work independently, winning the lottery or any other means. If you take cash in then it's cash in.
There's a little bit of differentiation on the "Goes-Out", but I'm ok with that as long as it doesn't expand.
The total tax due formula is something like ((Sum(Comes-In) - Sum(Goes-Out)) * rate. As a bonus, we ought to be able to compute that down to the penny on the payroll taxes and neither pay nor get a refund every year.
If we adopt this as out tax policy, I expect you would see a great drop in the tax business.