From The Washington Post:
Common around the world, including in Europe, such a tax — called a value-added tax, or VAT — has not been seriously considered in the United States. But advocates say few other options can generate the kind of money the nation will need to avert fiscal calamity.
At a White House conference earlier this year on the government’s budget problems, a roomful of tax experts pleaded with Treasury Secretary Timothy F. Geithner to consider a VAT. A recent flurry of books and papers on the subject is attracting genuine, if furtive, interest in Congress. And last month, after wrestling with the White House over the massive deficits projected under Obama’s policies, the chairman of the Senate Budget Committee declared that a VAT should be part of the debate.
“There is a growing awareness of the need for fundamental tax reform,” Sen. Kent Conrad (D-N.D.) said in an interview. “I think a VAT and a high-end income tax have got to be on the table.”
Ladies and gentlemen, readers of this blog, you have got to understand one primary thing: you, me, us, we have all been taken for a ride by Mr Obama. He has outright lied to ensure his installment into the White House.
Once present, the gloves are off and the primary agenda is to ensure The Chicago Way becomes The Washington Way, along with any number of social experiments embraced — up to and including actual Socialism. Some Conservative pundits, writers and radio hosts — such as Hugh Hewitt — chastise fellow Conservative callers, readers and bloggers for using the “S” word — Socialism. I believe this to be simply too accommodating and “understanding” of the situation and bordering on disingenuous.
Part and parcel of this entire mess is a situation that, in actuality, will work to Mr Obama’s benefit. Started and embraced by the prior Bush Administration by way of TARP I — a completely wrongheaded action — the current economic crisis will allow Mr Obama to quite take full advantage of said crisis and, thusly, to institute any number of onerous restrictions, regulations and taxations.
You wish a national tax, ladies and gentlemen? I do believe your wish may soon be granted. And the US Mint’s presses continue working overtime.
BZ
P.S.
The Heritage Foundation has an excellent article from 2005 entitled “Beware the Value-Added Tax.”
America is one of the few nations without a value-added tax (VAT), but there is growing pres sure to impose the levy. In simple terms, a VAT is a type of national sales tax. However, instead of being collected at the cash register, it is imposed on the “value added” at each stage of the production process.
However, many people dislike the VAT. Supporters of limited government oppose the tax because it makes it easier for politicians to expand the size of govern ment. By contrast, some on the left oppose the VAT because of its one redeeming feature—it is a con sumption-based levy and therefore not as easy to use for economically destructive income redistribution.
Even back in 2005, The Heritage Foundation thought:
Although it is a relatively non-destructive way to collect revenue, a VAT would be a serious mistake for the United States. The only condition that would make a VAT acceptable is complete repeal of all income taxes and a constitutional amendment that prohibits Congress from re-imposing taxes on any type of income. But this is not a realistic option, which is why the VAT should be stopped.
The Heritage Foundation believes that a VAT will do the following:
– Expand the cost of government.
– Inadvertently increase income tax rates.
– Slow economic growth and destroy jobs.
What, specifically, is a VAT?
A VAT is levied on the “value added” to goods and services as they pass through each stage of the production process. There are two ways to impose a VAT, and both require businesses of all types to serve as tax collectors. The most common form, the credit-invoice VAT, operates somewhat like a sales tax. As explained by the Congressional Budget Office:
[The credit-invoice VAT] is typically administered by taxing the total value of sales of all businesses, but allowing businesses to claim a credit for taxes paid on their purchases of raw materials, intermediate materials, and capital goods from other businesses.[1]
By imposing a tax on receipts but then allowing a credit for VAT taxes collected at earlier stages of production, the credit-invoice VAT taxes the “value added” by each business. The total tax, regardless of the stage of production at which it was collected, ends up being added to the final sales price.
No matter how many steps there are in the pro duction process, a fixed percent of the final price of the product would represent the value-added tax, just as a retail sales tax is a fixed percent of the final product price. However, unlike a sales tax, the cost of the VAT to consumers would be hidden. Unless politicians took the unlikely step of requiring retailers to state explicitly the portion of the sales price that is due to the VAT, consumers would be unaware of the tax.[2]
