Except for the child tax credit and the earned income tax credit, a key source of income for the poor, all other credits would be repealed. Cruz would also repeal all federal estate and gift taxes.
Universal Savings Account
Through a new “Universal Savings Account,” taxpayers would be allowed to deduct contributions of up to $25,000 annually. Most taxpayers don’t have $25,000 in savings, so the account would result in most of them paying no income tax on their investment returns, the report said. Burman said that “for the vast majority of Americans, savings would be untaxed.” Cruz hasn’t detailed what the account could be used for.
While the business flat tax would reduce individuals’ pre- tax wages in general, most workers would have higher after-tax wage income from reduced income taxes and lower payroll taxes, according to the analysis.
Taxpayers in the top 0.1 percent of the income scale -- those earning more than $3.7 million annually -- would get an average tax cut of more than $2 million next year, the analysis found. Overall, taxpayers earning in the top fifth would see their after-tax income rise by 11.3 percent. Those in the middle would get an average cut of $1,800, or 3.2 percent of after-tax income.
Some 47.8 million tax filers, or the bottom 20 percent of taxpayers, would receive an average tax cut of $46, or 0.4 percent of after-tax income. Some taxpayers in that bracket would eventually see their after-tax income decline by 0.6 percent, due to the effect of the VAT, the analysis found.