Rubio, Cruz trade fire on taxes

Rubio, Cruz trade fire on taxes

Sens. Marco RubioMarco RubioDHS extends protected status for Haitians for six months Congress should let local communities set their own PACE Rubio: ‘People got what they voted for’ MORE and Ted CruzTed CruzGOP talks of narrowing ‘blue-slip’ rule for judges Abortion poses hurdle for Senate healthcare bill Senator's photo spurs caption contest MORE sparred over taxes during Thursday night's Republican presidential debate, with Rubio accusing Cruz of proposing a value-added tax (VAT).

Cruz's plan includes a 10 percent individual income tax and a 16 percent tax that the Texan calls a "business flat tax." The latter tax has been viewed as a VAT by Rubio and others, including the free-market Tax Foundation, which has calculated estimates of the costs of candidates' tax plans.

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Rubio criticized VATs, which are common in Europe, because they tax both the money businesses make and the money they pay their employees. He said that former President Reagan opposed VATs because they were a "way to blindfold the people."

The Florida senator also called a VAT "really bad for seniors," because they are no longer earning income but have to pay higher prices on goods. He expressed concern that the business tax could be increased at a later date, along with the income tax.

Cruz denied that his tax plan creates a VAT, saying his tax is imposed on businesses rather than on sales. He said that his tax would allow him to eliminate the corporate income, estate and payroll taxes.

Cruz also took a swipe at Rubio's tax plan because it includes a top individual tax rate of 35 percent and does not abolish the Internal Revenue Service.

"We need to break the Washington cartel," he said.

Rubio said that Cruz wouldn't be able to get rid of the IRS.

"You may rename the IRS but you're not going to abolish the IRS because there has to be some agency that's going to collect your VAT tax," he said.