GOP presidential candidates Ted Cruz, Marco Rubio and Jeb Bush all defended aspects of their tax proposals during Saturday’s debate South Carolina in response to critical questions. 

Cruz, a senator from Texas, was asked by CBS chief White House correspondent Major Garrett how he would make sure his proposed 16 percent consumption-based value-added tax (VAT) would not become “an escalator of taxation to feed government spending.” Garrett noted that conservatives have been resistant to this type of tax, which exists in Europe, for this reason. 

{mosads}Cruz responded by saying that his “business flat tax” is not a VAT because his proposal is not a sales tax. He also stressed that his business tax would be imposed while the corporate, income, ObamaCare, payroll and estate taxes would be abolished.

He also referenced the fact that the Tax Foundation said his plan would increase jobs, wages and capital investment. Cruz did not mention, however, that the group considers his business tax to be a type of VAT and estimates that his plan would lower revenues by $3.6 trillion over 10 years before considering economic effects.

Rubio, a Florida senator, defended his proposal to triple the child tax credit. Kimberly Strassel of The Wall Street Journal asked Rubio why conservatives should want a tax policy that adopts an approach normally taken by liberals.

“I’m not influencing social policy,” Rubio said. “This is their money. This is the money of parents. You don’t earn the tax credit unless you’re working.” 

He added that if businesses can write off money that they invest in equipment, parents should be able to write off investments in their children.

“Parenting is the most important job any of us will ever have. Family formation is the most important institution in society, ” Rubio said, eliciting cheers from the audience.

Garrett questioned Bush about his proposal to tax hedge fund managers, asking if it would undercut the former Florida governor’s projection that the economy would grow by 4 percent each year if he were elected president.

Bush is proposing to do away with the tax break for “carried interest,” the profits that investment fund managers take for providing the service of managing the funds. He is calling for carried interest to be taxed at ordinary income rates rather than the lower capital gains rates.

Bush said that having private-equity and hedge-fund managers pay taxes at ordinary income rates is “not the end of the world” and that capital gains treatment is “not appropriate.” He also pointed out that he would lower income tax rates.

Tags Marco Rubio Ted Cruz
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