New Evidence from Japan Shows Why Romney’s Interest in a Value-Added Tax Is So Troubling
by Dan MitchellIn a recent column for the Wall Street Journal, I explained why Mitt Romney’s interest in a value-added tax is deeply troubling.
One of my key points was that the VAT is a money machine for big government.
But don’t believe me. Look at Japan, where the politicians see increases in the VAT as a way of financing a much larger burden of government spending. Here’s some of what is being reported by Bloomberg.
Noda reshuffled his cabinet last week, aiming to win support for doubling Japan’s 5 percent national sales tax by 2015… Japan’s finances are “getting worse and worse every day, every second,” Takahira Ogawa, Singapore-based director of sovereign ratings at S&P… Japan’s aging population is also weighing on Noda’s struggle to achieve fiscal health. Social-security expenses have more than doubled in two decades and will account for 52 percent of general spending for the year starting in April, according to a budget proposal the cabinet approved last month.
The key point in this excerpt is that the VAT is a substitute for entitlement reform. Without the VAT, politicians might actually reform the welfare state. But because of the VAT, they want to take the easy (but extremely destructive) route and boost the tax burden.
This is why I get so agitated about the threat of a VAT in America, as illustrated by this recent appearance on Larry Kudlow’s show.
By the way, you won’t be surprised to know that the fiscal pyromaniacs at the International Monetary Fund support a bigger tax burden in Japan. Here’s another passage from the Bloomberg story.
The International Monetary Fund has said a gradual increase of Japan’s sales tax to 15 percent “could provide roughly half of the fiscal adjustment needed to put the public-debt ratio on a downward path.”
Isn’t it nice that we give these international bureaucrats big tax-free salaries so they can run around the world pushing for bailouts and higher taxes?
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52 Comments
Adding more taxes is worthless, the people in America are already taxed to the max! You can barely eat and live witha roof with the ratio of work pay/cost of food and rent.
Just make these 30 corporations pay tax, and for the rest of the issue we need to curb spending in major ways, quit letting the mafia pay government and in exchange get all construction contracts, for many reasons including they do a poor job and our infrastructure is now collapsing, they promote murder and violence, they waste all our tax dollars in bribes and pay offs and virtually none of it goes into our roads bridges, power grid etc.
Quit letting congress do insider trading and make millions, and lets see nancy pelosi pay her own travel instead of using government planes for millions of dollars wasted.
How can they dare to go after citizens who work hard, and ask to tax them higher when these corporations here are not paying any tax.
Exxon Mobil made $19 billion in profits in 2009. Exxon not only paid no federal income taxes, it actually received a $156 million rebate from the IRS, according to its SEC filings.
Bank of America received a $1.9 billion tax refund from the IRS last year, although it made $4.4 billion in profits and received a bailout from the Federal Reserve and the Treasury Department of nearly $1 trillion.
Over the past five years, while General Electric made $26 billion in profits in the United States, it received a $4.1 billion refund from the IRS.
Chevron received a $19 million refund from the IRS last year after it made $10 billion in profits in 2009.
Boeing, which received a $30 billion contract from the Pentagon to build 179 airborne tankers, got a $124 million refund from the IRS last year.
Valero Energy, the 25th largest company in America with $68 billion in sales last year received a $157 million tax refund check from the IRS and, over the past three years, it received a $134 million tax break from the oil and gas manufacturing tax deduction.
Goldman Sachs in 2008 only paid 1.1 percent of its income in taxes even though it earned a profit of $2.3 billion and received an almost $800 billion from the Federal Reserve and U.S. Treasury Department.
Citigroup last year made more than $4 billion in profits but paid no federal income taxes. It received a $2.5 trillion bailout from the Federal Reserve and U.S. Treasury.
ConocoPhillips, the fifth largest oil company in the United States, made $16 billion in profits from 2007 through 2009, but received $451 million in tax breaks through the oil and gas manufacturing deduction.
Over the past five years, Carnival Cruise Lines made more than $11 billion in profits, but its federal income tax rate during those years was just 1.1 percent.
Did you know G.E. didn’t pay any taxes? That’s right, in 2010, G.E. made $14.2 billion in global profits, $5.1 billion inside the United States, paid zero taxes and got a $3.2 billion dollar refund from Uncle Sam.
Mr Mitchell thank you for your continuing diligence as regards VAT and Romney. The problem with any new taxes, it leads to even greater debt as spending balloons. The liberal agenda never adds up, period. Liberals blow! Time for that on a huge bumper sticker…heck I'm going for the full Monte, vehicle wrap.
"The key point in this excerpt is that the VAT is a substitute for entitlement reform"
The only problem with the premise, is, we have a defacto VAT tax right now. You can mince words if you like, but when you add up all the governmental fees, taxes, surcharges utility fees, transportation fees, fuel surcharges, gas taxes and everything else, I dont know how anyone can argue to the contrary.
Yeah, a few cents here, 20 cents there, doesn't seem like much, but BAM there it is, everywhere you look.
Taxation while it sounded good on paper, for infrastructure and self sustenance and so on, it has morphed into a ever expanding wealth redistribution vehicle. I dont know it could be construed as anything else.
Yes and lets abolish the USDA who allows all these people to continue after their food comes up contaminated with salmonella, but goes after organic farms, even though there isnt a single case of salmonella in an organic farm.
Then USDA uses tax money to pay their lawsuits because they discriminated against minorities. Yes all the while if you want your food listed as organic you must pay the usda 10-15% of your profits to have the organic label. Yes our department of agriculture is a threat to the food supply and its outrageous that our tax money pays to keep them in operation!!!
Lets abolish the FDA, who allows drug companies to constantly sell drugs that they know will kill people, just to pay a few million in law suits later on, thats called pre meditated murder, and the FDA is paid for by tax dollars, and it allows drug companies to lie on drug trials, and allow consumers to die, and the only penalty they even receive is a law suit from the victims families, yet the FDA goes after real cures of cancer, and cures for all diseases! This all is paid for by the taxes, why spend money to protect drug company profits, and attack real natural cures?
There is so much senseless spending, the entire TSA waste of money, FTC waste of money, CIA waste of money, these people do much more harm then good and we have to fund them!!! its an outrage, and they dare say lets tax people more!
In for a penny, in for a pound.
Everyone who is Pro-Romney is Pro-VAT.
You just keep that in mind for the next time you feel like talking Romney up… or talking any other Republican candidate in the Race down.
Again, we do not have a review generating problem. We have a spending problem. Fix that first then let's talk about alternative taxes to the income tax…..
Otherwise, STFU politicians……
You Tax & Spend politicians had better listen up. We are fed up with supporting a corrupt Govt with every penny we have. Govt is supposed to keep us safe and provide Law and Order. From what I see, you're doing neither!
NO MORE TAXES! We're going to put in TERM LIMITS and throw all of you crooks out including most of your scam Agencies! We're not paying anymore, and you won't be in power to make us. Next.
Its a crime, and im not just saying businesses, because I like business, its just these certain corporations that I have listed, they are at fault, and should pay.
Liberal? Do you actually believe democrats and republicans have different view points? They are together in view points.
Just what we need is another TAX with the free spending Congress & a President that thinks money comes out of free air. We need to stop ALL NEW SPENDING and cut the size of government in half & remove ALL government unions. Also term limit all members of congress.
Its a crime, especially when they claim its for infrastructure!!! Mafia's pay government bribes, in return they get all the construction contracts. Its called pay to play. The mafia is free to own every construction contract, and we can see from the potholes the sad job they do!!!
Look at NJ roads, terrible!!! Look at the soprano's they were from Jersey, its clear huge mafia presence in NJ and look at how it affects infrastructure!!!!!
Look at the entire mob, of italy, and portugal, if you ever meet a mob boss, he is always part of a local, the unions are run by mob, and they take all the tax money for jobs, and good honest people cant get those contracts.
Jimmy Hoffa, mob, union, buried under giant stadium, by whom? Construction workers, even Giant stadium was a mob contract!!! Why do you think with America's huge budget for infrastructure we have the poorest roads and bridges?
Whoever votes for a republican or democrat, is clearly not paying attention and just a silly biased person.
Both democrats and republicans are hurting America.
exactly, we need spending reform!!! its insane that we fund, homeland security, tsa, cia, ftc, fda. all these agencies hurt citizens and protect politicians and huge corporations! its a crime.
now please read this, before thumbing me down! i am for a national sales tax, only if all other taxes are first repealed. a national sales tax can make all of american made products even more competitive against other international markets. anything made in the usa contains the entire tax burden of each and every supplier is in the final cost of every product sold. if we were to use a national sales tax, and remove all other taxes, the cost of making everything drops like a rock. also, those with the most money, will pay the most of these taxes, as they spend the most too. but the tax rate needs to be capped to between 3-5% maximum. we still need to starve the beast. but a national sales tax also removes the tax filing requirements from every taxpayer, but still leaves a smaller burden on businesses. and businesses will not be penalized for spending, or saving money. but the wealth redistribution would also end, sorry moochers, the gravy train is over!
Amen brother. Thanks for your service. This kind of corrupt Anti-American Obama Admin with Holder, the cover man, is going to go down in flames. We've had enough Socialism. We see what they've been doing for 3 years and they cannot hide any longer. We will remove them and return America to her glory.
They need to be tried for treason.
YESSSSS!!!!! TERM LIMITS!!! They were there already, until democrats and republicans took them out!!!! we need to never vote a democrat or republican again!!! except ron paul.
Corporatism has a way to infiltrate both of the large Parties.
No one can say that libertarianism is at fault for all the fraud, waste, unconstitutional laws, ad infinitum that we've routinely seen from the liberal neo-cons and Democrats.
They'll never get that we have a spending problem….not a revenue problem
If there is a crime commited, it should be investigated. If not, then they are entitled to whatever the tax code provides. Just think how many gas pumps are in your neighborhood, in your town, in your state, in the U.S., in the western hemisphere, in the world. The income would be enormous. The profit in percentage of revenue provides a different picture.
That is a great idea, but wait are you an expert because the media says only experts are smart enough to handle our economic matters LOL!!! You help prove my point anybody can do a better job then democrats and republicans!!!! Your idea is sound, and it would make our economy go up in huge ways!! Yes lets end that gravy train!
hey misinformed poster, did you know for every dollar in gas profit, four dollars was paid by the american consumer in taxes already on the gas? these large corporations do not make the rules, they just adjust their businesses to lower the tax burden on the corporation. perhaps the rules need changing, but don't blame the corporations, blame the lawmakers who twist the rules.
Your drawing parallels between the mob and government holds some relevance. Like I said in the prior, ideologically, taxation would serve a good purpose if the kleptocrats used the money for what it was intended. Reality is, it is used almost exclusively for the expansion of power, and wealth redistribution. Still every year Americans sit down and pay their taxes in good faith, thinking this money is ultimately going to the benefit of the Republic, and the "general welfare". It really is sad that too few can really see it for what it is, SLAVERY.
Arguing about what percentage of a slave you are is semantics.
No more Pension Plans for corrupt-o-crats! Serve your time in Govt, and return to your tax paying job. Representing We The People is not a career.
As for you Union thugs. We do NOT have to be Unionized. We will turn every single State into a Right to Work State, you Commies. We have freedoms and we intend to exercise them!
LOL ok yes i suppose your right, there isnt a need to argue the percentage of how much of a slave we are.
We just need to never ever vote these democrats or republicans in office again, because they only represent themselves and lobbyist, and aren't representing citizens at all.
Also, anyone who thinks that WE caused the Radical Islamists to mass murder 3,000 innocents on 9/11 had better get out of politics! …
…The same goes for anyone who thinks that having a chat with Ahmadinijhad in Iran is going to stop him from blowing US up. A politician who thinks that strategy will work is UNFIT to serve in public office! next.
no sir, i did not proove a single point you made. businesses do not pay any taxes. they want to return a certain profit to their shareholders/owners. in order to do this, all taxes, fees, and the cost of doing business are added up, then they tack on their return to the top. so when the year is up, they made their return. tax them more, they charge more. you were assailing corporations in your first post, but they are in the business of making money. if making money means i am required to pay graft to politicians, then that graft is a cost of doing business. dumb voters, vote for dumb politicians, and some smart ones, who take advantage of the dumb voters, and the system. we need to starve the beast, of campaign cash, and perks to elected offcials. no more retirement for elected officials, or silver platter benefits after leaving the post. also ban all money from outside of their district they represent, and all money other then individual voters. that would be a start.
Oh they get it, but it has gone on largely unchallenged for decades. The Tea Party was the closest thing they have seen in regards to a challenge, and it scared the crap out of them.
MORE TEA!
Hey Monty23- Why do you like Ron Paul so much?
Amen Brother on all accounts!!
Ever notice they always want to add a tax but never take one away
I am not sure Japan is such a good example as their need for more tax revenue is not because of public union parasites or fraudulent regulatory bodies but rebuilding from a second nuclear disaster.
Exxon APPEARED to pay no taxes because of an OVERPAYMENT THE PREVIOUS YEAR.
Most of these refunds are due to overpayment of taxes. Remember, businesses pay taxes quarterly, not once a year….
Yep. Chop the size of Govt down to 1/3rd. Get rid of most of the useless bloated Agencies starting with DHS! and puppet Napolitano. Lots of crimes committed there. Investigate and remove a lot of people from the DOJ starting with Holder.
Then pass Term Limits to stop the quid pro quo and Pension Packages among public Govt "servants" Dump their sorry arses out! ….Pelosi, Reid, Boxer, Axelrod, etc All the Congress elders! Why are they getting rich from US while simultaneously robbing US and stealing our Freedoms via voter fraud!?
the damage from the earthquake far outweighs the damage at the nuclear power plant. which by the way, is paid for from private insurance funds from the power plant operator.
Hey monty23- Why do you like Ron Paul so much? Is it his hands off approach to Iran?.. or his Open Borders Policy?… or ……
his belief that We the People of the United States instigated 9/11, and that exonerates the Radical Islamists that mass murdered 3,000 innocent working people? Just wondering.
i only targeted certain corporations. i didnt say what you said i said, hopefully this clear up your thoughts on what i said
Exxon Mobil made $19 billion in profits in 2009. Exxon not only paid no federal income taxes, it actually received a $156 million rebate from the IRS, according to its SEC filings.
Bank of America received a $1.9 billion tax refund from the IRS last year, although it made $4.4 billion in profits and received a bailout from the Federal Reserve and the Treasury Department of nearly $1 trillion.
Over the past five years, while General Electric made $26 billion in profits in the United States, it received a $4.1 billion refund from the IRS.
Chevron received a $19 million refund from the IRS last year after it made $10 billion in profits in 2009.
Boeing, which received a $30 billion contract from the Pentagon to build 179 airborne tankers, got a $124 million refund from the IRS last year.
Valero Energy, the 25th largest company in America with $68 billion in sales last year received a $157 million tax refund check from the IRS and, over the past three years, it received a $134 million tax break from the oil and gas manufacturing tax deduction.
Goldman Sachs in 2008 only paid 1.1 percent of its income in taxes even though it earned a profit of $2.3 billion and received an almost $800 billion from the Federal Reserve and U.S. Treasury Department.
Citigroup last year made more than $4 billion in profits but paid no federal income taxes. It received a $2.5 trillion bailout from the Federal Reserve and U.S. Treasury.
ConocoPhillips, the fifth largest oil company in the United States, made $16 billion in profits from 2007 through 2009, but received $451 million in tax breaks through the oil and gas manufacturing deduction.
Over the past five years, Carnival Cruise Lines made more than $11 billion in profits, but its federal income tax rate during those years was just 1.1 percent.
actually you did, i didnt say you proved a point i wasnt ever trying to make. im saying you proved the point that anybody who isnt a dem or rep can easily turn this economy around with sound idea's
do these corporations make the rules? no they do not, so why blame them for playing the game others are to blame for? government makes the rules, and smart businesses do what they can to lower their tax burden. who do these companies work for, you, or their shareholders? again, you are misinformed, as such sound like a clown. if you were the ceo of one of these corporations, would you not do what ever you could to keep as much money as you can? all money does not belong to the government, we the people are supposed to control government, not the government control us. so, yes you did say what i said, and you still do not get it. take conoco phillips, you mention the 16 billion in profits, what about the 64 billion gasoline consumers paid in road and sales taxes on that very same fuel? you are complaining about 16 billion, what about the 64 billion, you seem to forget about that. you and i paid the 64 billion, would you like to explain why? and this was not personal income taxes, or payroll taxes, but hidden taxes on the sale of motor fuel.
He is the only candidate who isn't a complete liar, like all other republicans and democrats.
The peoples records speak for themselves, look it up your self, every other candidate supported such sad bills its gross. except Obama of course because he doesnt have a record, except that of being handed his first job ona platter by Henry Kissinger, and a long list of being in the cfr and other such elitest groups with such sad agenda's.
why do you think the debates are soo dumbed down, where the debates have been reduced to a sound byte contest. The reason is anybody can stand there and read a list, of bills that each candidate supported, and win the election in a heartbeat, and if that was the case, independents would win across the board, or at least Ron Paul would because he didnt ever once vote to raise a tax, and he didnt support these sick bills like the patriot act and all kinds of sad sad bills.
Thats how Jesse Ventura became an (I) governor, because he destroyed his opponents in the debates back when a debate was more than just a sound byte contest.
Your right, they do have to take care of those nuclear disasters, which were the worst the world has ever seen. However their way of life is terrible over there, you go to work 4 months straight, sleepin in a tiny cylinder at your job, and then you may go home to see your family for a week, and then your back into work again for months.
They seem free, but the thing is they say its all about honor there, and if you cause a dishonor, then your done for, your relegated to the lowest levels of society. So it seems free but you must comply or you face them saying your not honorable, in which case people would opt for suicide at that point.
They do have an amazing diet though compared to here! Japan's success comes from when they came here to American colleges in the 70's and they just went back and used American idea's and became very prosperous, sadly we aren't even following our own ways from the 70's because democrats and republicans have damaged the school system so much.
no they cannot, ask jessie ventura about that. say a third party president was elected, neither party would work with them, they have nothing to lose. the idea behind the tea party, was to take over the republican party, and replace the entrenched rinos with tea party candidates. then we can start a good debate, and get something done. the libeitarian party will ever win on a large scale, so that won't work. even a liberitarian like ron paul if he was elected as a republican president wouldn't work. and the no party jerks are democrats in drag, so that is a lost cause. so put your money with the tea party, and infiltrate the entrenched rinos, or go home.
did you remember how both parties laughed at jessie like a clown, and he got nothing done? look up ron paul's record in the house, name one major piece of legislation he passed? he is not a leader, if he was more of his bills would have passed. so hang it up, either pick another candidate, or vote for obama, your vote will be wasted on ron paul. if paul were nominated, i might actually vote for obama this time, this is how much i distrust his foolish ideas on foreign policy. and i would rather jump off a tall building then vote for obama.
MITT ROMNEY IS A BIG GOVERNMENT STATIST!!! How much more needs to be shown before people on our side understand this?
Another article by Mr. Mitchell about the VAT in which he fails to mention the words "AS A REPLACEMENT FOR PARTS OF THE CURRENT TAX CODE." Where was he 4 years ago when Huckabee was proposing the "Fair Tax"? Where was he when Cain was proposing his 9-9-9 plan? They also proposed replacing part of the current tax code with a VAT.
Is this the best the he can do?
Actually Romney's exact words were that he was open to "replacing parts of the current tax code with a VAT", so he did in fact suggest taking one away. However, Mr. Mitchell doesn't want you to know that.
How can you pretend to support limited government and spending and then complain that a politician has not passed enough bills?
every bill/law whatever that they pass will tend to make government bigger and stronger. Instead of what he's passed why not look at what he's proposed. If he has proposed good bills that have not passed it's the voters fault for not putting more politicians in office that want to reduce government.
So Japan had no monetary problems prior to the earthquake?
it shouldn't be a "part of the current code" Simply replace the current tax system with a vat and i'd be all for it…
Leaving in the current system simply means they can continously get more and more from us and do it from different venues to try and confuse the common taxpayer.
ok, name one big spending bill that ron paul had the leadership to kill? no, not vote against, but entice fellow congressmen to gang together to put bars in the cogs of a done deal? see, ron paul could never use leadership to convince anybody in the congress or senate to go along with him. as a president, ron paul would need to do the same thing, convince both houses to cut spending. he can't do that in the house, that means he could never do it from the whitehouse. but to directly address your question, a bill do defund any department of government would be a bill passed, that does not spend money. where is a single one of those from ron paul? you make this wayy too easy.
did i say that? i was saying the nuclear disaster was going to be paid for with mostly private dollars, or yen. but i was also mentioning the earthquake damage was more severe then the nuclear one. i don't think i ever mentioned the out of control spending over in japan, did i? now had i said they didn't have a spending problem, your question might seem smart, but instead it looks like a typical off subject gotcha from a disgruntled ron paul devotee. so next time i ask any questions about japan's out of control spending, ask your dumb question again, you paulbots are wayy too easy.
Is Mitchell actually trying to tell us that he thinks America and Americans are like Japan and the Japanese? I'd think these are vastly different economies with quite different consumption / entitlement patterns. Why not look and see what the Canadians are doing with their VAT. Originally introduced in 1991 at 7%, the rate has been LOWERED to 5%, not to mention that corporate tax rates in Canada are also among the lowest in the OECD (15%). Perhaps some comparisons that are a bit closer to home would be fairer assessments of what a US VAT might look like. Americans are not Europeans, nor are they Japanese.
When have they ever taken a tax away without making sure they get more or both on the back end
True, it's pretty rare to eliminate a tax entirely, although rate reductions are hardly unprecedented. Cain's 9-9-9 essentially replaced the corporate tax with a VAT while introducing a low flat income tax and a sales tax. Four years ago Huckabee was touting the Fair Tax which essentially replaces the income tax with a VAT. I believe both are good ideas. Truth of the matter, though, is that the method of taxation is not nearly as important as the size of the budget.
The mood of the country has changed. People are fed up with complexity and cronyism of the current tax code. It appears that Romney is open to fixing that. I think it does our own cause a disservice when we take partial sentences from our politicians and twist them to mean something completely different. This is why I have a problem with Mr. Mitchell. As far as Mr. Romney is concerned the jury is out, but I have a feeling we will be finding out next January.
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