The Value-Added Tax Must Be Stopped-Unless We Want America to Become Greece
by Dan MitchellSooner or later, there will be a giant battle in Washington over the value-added tax. The people who want bigger government (and the people who are willing to surrender to big government) understand that a new source of tax revenue is needed to turn the United States into a European-style social welfare state. But that’s exactly why the VAT is a terrible idea.
I explain why in a column for Reuters. The entire thing is worth reading, but here’s an excerpt of some key points.
Many Washington insiders are claiming that America needs a value-added tax (VAT) to get rid of red ink. …And President Obama says that a VAT is “something that has worked for other countries.” Every single one of these assertions is demonstrably false. …One of the many problems with a VAT is that it is a hidden levy. …VATs are imposed at each stage of the production process and thus get embedded in the price of goods. And because the VAT is hidden from consumers, politicians find they are an easy source of new revenue – which is one reason why the average VAT rate in Europe is now more than 20 percent! …Western European nations first began imposing VATs about 40 years ago, and the result has been bigger government, permanent deficits and more debt. According to the Economist Intelligence Unit, public debt is equal to 74 percent of GDP in Western Europe, compared to 64 percent of GDP in the United States (and the gap was much bigger before the Bush-Obama spending spree doubled America’s debt burden). The most important comparison is not debt, but rather the burden of government spending. …you don’t cure an alcoholic by giving him keys to a liquor store, you don’t promote fiscal responsibility by giving government a new source of revenue. …To be sure, we would have a better tax system if proponents got rid of the income tax and replaced it with a VAT. But that’s not what’s being discussed. At best, some proponents claim we could reduce other taxes in exchange for a VAT. Once again, though, the evidence from Europe shows this is a naive hope. The tax burden on personal and corporate income is much higher today than it was in the pre-VAT era. …When President Obama said the VAT is “something that has worked for other countries,” he should have specified that the tax is good for the politicians of those nations, but not for the people. The political elite got more money that they use to buy votes, and they got a new tax code, enabling them to auction off loopholes to special interest groups.
You can see some amusing – but also painfully accurate – cartoons about the VAT by clicking here, andhere.
For further information on why the VAT is a horrible proposal, including lots of specific numbers and comparisons between the United States and Western Europe, here’s a video from the Center for Freedom and Prosperity.
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Americans are ignorant/un-informed of Agenda 21 and here are the facts of what is going on that will eventually, completely control you:
http://www.newswithviews.com/Morrison/joyce36.htm
http://www.americanthinker.com/2009/10/un_agenda_...
http://www.dailymotion.com/video/x5udza_agenda-21...
http://gulagbound.com/12218/agenda-21-the-death-k...
http://gulagbound.com/12977/agenda-21-part-iii-ma...
http://green-agenda.com/globalrevolution.html
With a new "value" tax to products, I sure won't be seeing much value in the product….
Smart, just raise the bloody price on everything and what will happen? Riots, just like they are seeing everywhere else. When people can't afford to feed their families what do they do? They steal, rob whatever it takes.
Cartoon w/VAT speaks for itself….
add; http://img44.imageshack.us/img44/4082/joking.jpg
If they pass this tax you are going to create the largest black market in barter you have ever seen this side of planet Earth.
This is insanity.
States are trying the same thing.
Blago tried to pass the Gross Receipts Tax in Illinois in 2002. It would TRIPLE the corporate taxes in Illinois. Even the greedy dems in Springfield couldn't bring themselves to do it.
That was then. Watch out!
Be patient….
The violence is coming…..
I saw this at american thinker. Scary stuff. Thanks for sharing it.
People are already bartering small home repairs, car repairs, and other services that don't need "parts" – service for traded service. Because they can't afford to get things fixed.
Will take the saying "Taxed Enough Already" to a whole new level = a Revolution to be sure.
VAT is wrong way to go a FLAT TAX not fair tax is what the US needs while abolishing the current tax code. Art Laffer went over it a few times on Glenn Beck and it made a heck of a lot of sense. I think he suggested 11% across the board would be the best way to go. http://www.savingtherepublic.com
ANY POLITICIAN VOTING FOR THIS NEEDS TO BE TARRED AND FEATHERED!
http://theantiliberalzone.blogspot.com/
THE ANTI LIBERAL ZONE
"CRUSHING LIBERALS SO YOU DON'T HAVE TO!"
I've never seen that happen. Every American I have ever met has always paid their taxes. Including Charlie Rangel who once shook my fathers hand.
Once again – I say this loud and clear – They [liberal democrats] have screwed with the wrong generation of Americans. We are going to stop this. November 6, 2012. Not long now . . .
The Black Market is in full gear in many states already, Joe. Cigarettes happen to be one of the biggest items that comes to mind. We are in deep, rough waters my friend.
Increased or new taxes are not the answer. It is the spending you idiots in spin city east. Cut the spending. Get a grip on your insatiable desire to spend what we don't have. Face it congress. Your desire to save the world and everyone in it has led us to this point of insolvency. We are broke, flat, busted, tapped out in every sense of the word. There is no money tree or magical hat into which you can dip your grimy hands and pull out money. Neither is there a way to create dollars from nothing. Grow up and destroy the credit card. It's now pay as you go or get the heck out of the kitchen and let someone else in to clean up the mess you jerks have caused over the years.
Value added tax. Isn't that like getting a cigar when you get robbed?
Or the means to buy it.
It is quite good isn't it? Pretty much shows where we are headed without a paddle to reverse course..
Just wait until the food wars.
Yep, except you have to give back the cigar.
I hear ya, Oldman …as do so many other Constitutional Conservatives. Maybe we need to ask these A$$wipes FACE to FACE not only "Can you hear me now?" but "What exactly does 'cut the spending' MEAN?" A$$wipes …a flock of them, a cackle, a plethora …Buttmunchers – EACH and everyone of them.
"you don’t cure an alcoholic by giving him keys to a liquor store"
Actually, that would be one FORM of a cure. In very short order, that alcoholic would be dead, hence no more an alcoholic.
Likewise, obama's plans are one FORM of a cure. In very short order, the nation would be dead, hence no more America.
Got my "Whats_Up" Stash …and plenty of barter items from cigs, gum to ammo.
Now, now.
I am ALL for a VAT tax as long as it is on goods at the cash register and there is NO way to get out of paying and no subsidy for anyone.
Raise the price on everything in this country by 20% across the board for EVERYONE. If this is a Value Add Tax, and not an income tax…there can be no graduated enforcement, no subsidies, and no way out of paying.
I LOVE the idea of Obama voters going to the grocery store and not having enough on their WIC cards to cover their bill.
I'll pay the cost. Cause I know Obama will be run the fu(k out of DC.
Imagine if we reduced federal student loans: we could be like the UK.
I wonder if anyone else is seeing a pattern.
I do so want to bring back the days of tar, feathers, and the splintery rail. It is so much more effective and economical.
These liberals are idiots: Taxation is the only answer they seek.
I'll give you the VAT (Value Added Tax……ie………….. National Sales Tax)………..
IF………..
The GOVERNMENT abolishes……..
THE FEDERAL AND STATE INCOME TAX,
THE SOCIAL SECURITY TAX,
THE MEDICARE TAX,
THE CORPORATE TAX,
THE CAPITAL GAINS TAX,
THE TRANSFER TAXES (GIFT, ESTATE, GENERATION SKIPPING TRANSFER TAXES…..ie….. DEATH TAXES)
THE EXCISE TAX (ON GASOLINE, DIESEL, ALCOHOL, AND FIREARMS),
AND PROPERTY TAX………
from………"TAXATION IN THE UNITED STATES" http://en.wikipedia.org/wiki/Taxation_in_the_Unit...
When he said it "worked for other countries", obama meant that it had not worked.
That's not a VAT, that's the Fair Tax. The Fair Tax is a national sales tax that eliminates income taxes. The VAT is a multi-level tax on products at each step of production. So when a tree is cut down and sold, it's taxed. When it's cut into rough lumber, it's taxed again. When it's turned into a piece of furniture, it's taxed yet again. And when it is sold at a furniture store, it's taxed one more time.
I'm all for the Fair Tax. But the VAT is pure government evil.
I still say the way the Democrats intend to pay off their spending spree the last 2 years in through inflation. Borrow today and pay tomorrow with tomorrows inflated dollars. China gives us $100 today and we agree to pay them tomorrow. But tomorrow $100 is only worth $90 in today’s valve. You get more for your money today and pay back less tomorrow.
You have more in your wallet than Bank of America pays in taxes.
http://www.truth-out.org/you-have-more-money-your...
I have one dollar in my wallet. That’s more than the combined income tax liability of GE, ExxonMobil, Citibank, and the Bank of America. That means somebody is gaming the system
He does have a bad habit of misstating the facts. Typical BO BS.
A VAT would make the poor finally pay tax to live in America….. thank God.
The Income Tax must be ended and the US should move to a VAT only Tax system.
"I'll give you the VAT (Value Added Tax……ie………….. National Sales Tax)"
VAT is NOT a national sales tax. It IS a tax on PRODUCTION, not a tax on SALES. It's extremely important to know the difference, and not to confuse the terms.
Government would push for a VAT over a national sales tax for one simple reason. They wouldn't have to worry about products ever being SOLD (ie real commerce), they would already get their money during the PRODUCTION process. It's the fastest way to grow government, and kill commerce all in one evil maneuver.
GE, ExxonMobil, Citibank, and the Bank of America.have paid more in Tax than most Obama Supporters have.
Apparently not.
Please let your voice & opinions be heard and join the following Tea Party websites to become part of the movement in taking our country back from liberal/progressive left wing loons who are destroying capitalism and the Free Market System that has built this great country:
The Conservative Party is "fighting" two wars within our own borders as we speak. The first one is with the liberal/progressive Party of Food Stamps and the second is with Muslims trying to bring Sharia Law into America and its court systems and making the U.S. Islamic/Sharia compliant. Both of these wars have to be won or the U.S. and its Constitution will fail. Defeating liberalism will defeat Sharia Law since Muslims are using liberalism and the gullible, Democratic base as their vehicle to advance their radical agenda here in the U.S.
http://www.meetup.com/Informing-for-conservatism/
http://www.nbra.info/
http://www.taxfoundation.org/news/show/25962.html
Most Obama Supporters pay nothing to live in the United States of America…… and do nothing but suck off the system
That is not the same issue. It is hard to tell how much "Obama supporters" paid in taxes – that isn't on the form.
If an ITEM is taxed from raw material to finished product………….
along each step of the suppliers/manufacturers process to the final consumer…………….
is that not a "sales" tax?
Off Topic, America's last WW 1 vet passes at 110 years old. Mr Frank Buckles: http://www.frankbuckles.org/
That is the only issue.
Most Obama Supporters pay no tax, they never have, and if they have their way they never will.
Ditto!
Well if truth-out says it's true, it has to be. They pegged that whole "faked moon landing" thing, after all.
Why should they (or any corporation) pay income taxes? Technically, they don't have any money, the shareholders do. And the shareholders DO pay income taxes – lots of them.
Corporate income taxes are passed through straight to the consumer (plus the cost of collecting them…). That would be one of the FIRST taxes I'd abolish.
Maybe to the Fair Tax, but not to a VAT. A VAT is just a way of hiding what the actual tax is.
I understand that issue. It is just a different one. So, you have major corps and the riff-raff not paying taxes.
Well, then technically they shouldn't be lobbying if they don't have money. Can't have it both ways.
Corporate income taxes are passed through straight to the consumer (plus the cost of collecting them…).
Well, you can play mental games with ANY taxes. Personal income taxes mean less consumption. So…..no one pays taxes.
Actually, it was like that when we had tariffs.
Top-down, bottom-up, inside-out.
As has been stated multiple times in this thread, we DO NOT need or want a VAT!! What you should be thinking is the Fair Tax plan only.
And just what does that have to do with a VAT? Do you think corporations will pay the tax? If so you are more ignorant than I thought (not that you could get much lower on the IQ scale). The tax will be passed on to consumers.
You're arguing semantics. I'm arguing from the reality that there are TWO very distinct and very real proposals coming out of the political world.
One is the VAT. The other is the Fair Tax.
So yes, you can call it a "sales tax" if you like. But the difference between a multi-level tax at the wholesale level on every stage of production, and a simple, visible sales tax at the check-out stand is just too great to want to play with semantics.
I guarantee you that those pushing for the VAT would like nothing better than to have people thinking it is nothing more than a simple "sales tax," because it provides them cover.
In other words, when a consumer buys a product that's priced $50 higher because of the VAT, people won't be thinking it's because of the VAT. It's just $50 more expensive, and they'll blame the seller. But if the product is priced lower because there is no VAT, but the "sales tax" at the register adds $50 to the price, they will know it is the government adding to the cost.
One is a hidden tax. One is in your face. One protects the government from consumer's scrutiny. The other exposes the exact amount government is adding to the price of a product.
Which one do you think would keep the government more "honest?"
What a coincidence. Your issue is different than the topic of the thread and you complain when someone else brings up a different (although related) issue.
Ah, yes . . . "Truthout."
The same people that brought us Jason Leopold's "scoop" that Karl Rove had be indicted.
BofA lost money last year. Taxes are paid on profits. Duuuuuh.
The left has wanted a VAT since Bill Clinton. Which by the way, is one of the reasons we gave him a boot in the rear to show him how we felt about his ideas. The democrats never learn. Only a statist agenda, come what may.
Statism (or etatism) is a scholarly term in political philosophy either emphasising the role of the state in analysing political change; or, in describing political movements which support the use of the state to achieve goals.
When used to describe analyses, statism refers to analyses that use a dichotomy between state and society, with the state viewed as a homogeneous institution capable of using political power to enact policy on a passive or resisting society composed of the body of people. Such an analysis, dependent on the elitist theory of power, is contested by those who prefer the pluralist theory of power which contends that power is exercised by individuals and competing organisations within society.[1][2]
Economic statism (dirigisme), for instance, promotes the view that the state has a major and legitimate role in directing the economy, either directly through state-owned enterprises and other types of machinery of government, or indirectly through economic planning.[3][4] It may refer to the ideology of statism that holds that:
"Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master." George Washington
After those idiots waste all that money, what's next? Stop wasting all that tax payers money and they won't need a VAT.
exactly my point…
Of course the "sales tax" would keep the Government more honest……….
I guess with the current definition of the VAT it is not a true "sales tax"……………..
My point is that a sales tax……..
along each purchase level of a products travel……….
from one company/corporation to another………..
from selling raw material that subjected to "sales tax" when a manufacturer buys it………
to finished product that a consumer buys that subjected to "sales tax"…….
Maybe it would be better to classify it as a "consumption tax." ………..
but it would have to replace all our other taxes…………
and yes…………I'm all for the FAIR TAX..
Whatever…..tax us all to death!!!!
It's the only way to experience a fair and just world.
Everyone gets nothing.
LOL! Ok ok. Guilty as charged.
A VAT is not only nation busting, but enslaves it's population.
VAT is a way to sour people, a ploy to muddy the waters of debate, against a consumption/transaction tax as a replacement for the layers and layers of taxation existing today.
Flat tax is still basing taxation on income and thus it is still WRONG. Flat tax on earning is just an income tax by another name.
Do Not Be Fooled!
Taxation must occur on the spending side of the economy, not the earning side, or we have the same problems we have now (punishment for successful earning). Fair Tax is the correct direction because it taxes spending not earning.
I wouldn't mind a VAT —– if we got rid of the income tax and IRS, and had a constitutional amendment to balance the budget like the states do. That would be great. Don't ever let them have Income and VAT tax.
Another essential thing that needs to be done: Audit and End the Fed. And default on the Federal Reserve as well. Harsh? No way, when you consider what they've done to the America people for 100 years. They are usurpers of the American people like they were at the founding and in the 19th century to Pres. Jackson. They've mooched off of the American taxpayer for a century.
We can coin/print our own money and not pay usury to them, and also take back our domestic and foreign policy.
.
.
I'd kinda expect my corporation to lobby on behalf of my shareholder equity and my dividends, thank you very much.
Yep. Tariffs are the same way, but used for behavior modification. You use them to raise the price of incoming goods so that locally produced goods have a price advantage.
Not all Americans are ignorant. A county in VA just abolished their "sustainability" dept when they figured out what final goal is. Elimination of private property rights world wide.
If it is coming out of the UN, you can lay money on it that it's bad for the US.
The ObamaNation must die….
Europe is slowly waking up, but BO keeps pushing ahead with the soros plan.
How would you tax those on Food Stamps using your Tax Plan?
VAT is a VERY bad idea. It is a HUGE tax that basically is like cradle to grave tax vis-a-vis manufacturing-sales process. Most people think that it like our sales tax. It really isn't.
Nice Tater, this needs to be posted over and over…..
The VAT is not the Fair Tax. The Fair Tax would be the single best thing we could leave our children. Go study it and don't accept what the detractors tell you: they lie about what it is and then explain why the strawman is bad. People who do not like basically do not understand it and think it is a simple flat tax. But it is far from that.
Fair Tax! Now! Strip the power of the government to manipulate you via tax laws. No Income Tax. No other tax of any kind. Just the fair Tax. We would also get more of John Kerry's money that we do not get now because he didn't earn the money: his wife's prior husband earned the money.
What is the point of taxing people on food stamps? "We're going to give you money, then take some of it back." Better to end food stamps.
As to your idea that the VAT would finally make the poor pay taxes, well, yeah, that's true. And it would make the middle class pay massive new taxes. And the wealthy. EVERYONE. And wreck the economy. And massively grow an already bloated federal government. Hardly worth it just to get in some payback against the poor.
Let's hope the congressional Tea Party Movement checks BO.
Flat tax versus Fair tax
http://www.pafairtax.org/resrcs/FlatTaxFairTaxCom...
They tax you for that as well. When you die your family has to pay a tax.
Those of you that aren't religious will have to excuse this reference, but any time that a friend or coworker argues for a VAT or Universal Healthcare, I am reminded of the story of Samuel and Saul in the Torah. The argument I hear often goes "tell me why we're the only industrialized nation without universal healthcare", or the common "it seems to be working fine for Europe". We can see a moral lesson in the behavior of ancient Israel. The people at the time were under a divinely inspired system of government, essentially under the rule of law (the law being the law of Moses). However, they saw their neighboring nations had kings, and they wanted to be like everyone else:
"Nay; but we will have a king over us, That we also may be like all the nations…" Samuel 8:19-20
This didn't end well for Israel, and eventually led to the scattering. The lesson here goes well beyond religious references. As the world becomes smaller via the use of mass communication, the effect of peer pressure is going to translate to larger subsets of the population. Our current system of government has been the most free and most prosperous in history, yet we're falling to the same pressures which nearly destroyed civilizations far older than our own. We need to remind people of the miracle of the founding, and that, like ancient Israel, we are unique among our neighbors. The same rules that work for those nations will necessarily mean the same restrictions and the same overall consequences.
It was the commissioners in Carroll County, Maryland who broke ties with the ICLEI/Agenda 21 crowd. Obviously, more cities and counties on that list should follow suit.
People are sheep. That is why we need a good Shepard to guide us, not the leftist crazies.
The amount of taxes being paid is NOT the problem, it's the government spending our taxes on every little thing that comes down the pike that is the problem.
Flat tax is still an income tax, we still have the IRS, and the 16th Amendment can still be bastardized… Fair Tax supporter, all day long!
The only tax for America is the Fair Tax. It's a fact that less than half of Americans actually pay taxes to the government. You get to keep your entire paycheck (if the state follows suit). Necessities (like groceries) would not be taxed as high (24% I believe). Then if you really want that $4000 T.V. then you won't mind paying the tax. Even better, all illegals, drug dealers, welfare recipients, tax dodgers, etc… would pay just like the rest of us. The fairest thing I can imagine for America.
Americans are not under taxed. The government over spends. Why does no one in Washington seem to understand that?
Fair tax means someone who is successful in life gets forced to pay more b/c they have more thats socialism. One rate everyone pays regardless of class, income, social status etc is fair.
Will a USA VAT tax be the 4th or 5th straw on top of the one that already broke the camels back…….?
By the time the Socialists get it to the Senate it will be too late anyway.
Too late. Forget VAT, we need to get those lost industries back from China first.
America needs to consume less and export more to get out of the hole.
I'd like to see all Food Stamp, and Welfare programs ended right now, but, it is doubtful that it will end right now, or any time in the foreseeable future.
So, Tax the hell out of them….. dont pay more, just take a lot of it back in Tax. Make them do away with Cable TV, Internet, Cell Phones, Steak, Lobster and such.
Don't like paying to live in the United States of America? Well, those people can get the hell out of my Nation then.
They can see if there are any better deals around the Globe.
Excellent!
And communists always want domstic violence and instability.
They never have anything to replace the system, but they seem pretty sure it needs to be destroyed.
And taxes always seem to be at the top of the list for destroying the economy.
Be watchful, mindful of what corporations are exempted from this new tax. GE comes to mind.
If you want credibility you need to cite credible sources. truth-out.org isn't a credible source. Just more social justice horse manure.
As a retired economist who spent years studying the options available, I have arrived at the conclusion that the best solution is to repeal the 16th amendment and pass a new constitutional amendment specifying a 15% flat tax that can only be changed by another constitutional amendment. Additionally, all forms of government taxation should be severly limited, if not actually outlawed. Most federal and state government taxation is merely a device to pick winners and losers in line with the desires of one political party or another.
I'm with you on the Fair Tax. But I'm afraid that here in CA the pols will simply declare the EBT cards to be tax exempt.
In theory, a VAT at a sensible level (assuming the elimination of all other taxes) is not a bad idea — the problem is, we don't live in a theoretical world. It's better that we see and feel how we are taxed at the most obvious level — lest we never forget.
Didn't go to the link so let me ask you this. Did the corporate officers, shareholders and employees of BOA pay taxes? If so, your argument carries no water. Because as we know, corporations do not pay taxes, but the individuals that make up the corporation do. That's the way our form of capitalism works.
Corporate Tax and VAT is not going to help bring them back.
i won't be buying those products anymore either.
not only that, but i'll be making all cash deals.
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