Senator Ted Cruz gave us his tax plan yesterday and the excellent part of it is the reason that we need to use dynamic scoring to judge tax plans. That is we need to look at the effect of tax laws, tax rules, after all of the various effects have worked their way through the economy, not just look at the static effects of changing rates. And this is not just because of the dynamic effects of different tax rates, as is sometime alleged. This is hugely important when we look at a different structure of taxation, which is what Cruz is suggesting. Essentially Cruz is suggesting an abolition of corporate taxation, a huge reduction in capital taxation and an increase in consumption taxation. That’s the right way for the economy to move and we would expect it to have significant dynamic effects, over and above what we might find from the mere change in rates.

The important part of the change is here:

Elimination of the payroll tax and the corporate income tax, to be replaced by a 16% Business Flat Tax. This would tax companies’ gross receipts from sales of goods and services, less purchases from other businesses, including capital investment. Simple, efficient, fair.

Read the article “The Excellent Part Of Ted Cruz’s Tax Plan Is Why We Need Dynamic Scoring” on forbes.com.