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No way that gets passed
National Sales Tax Chatter Draws Fierce Opposition
Now that the federal government is doling out billions in stimulus spending and bailouts, and looking for billions more for health care reform, the prospect of a national sales tax could be gaining some traction.
By Judson Berger
FOXNews.com
Thursday, May 28, 2009
The idea of a national sales tax was once unlikely. But now that the federal government is doling out billions in stimulus spending and bailouts, and looking for billions more for health care reform, the prospect could be gaining some traction.
The frenzy over the idea kicked up after a Washington Post article Wednesday reported that Congress is starting to pay closer attention to this largely academic proposal and that the Obama administration, though shushing speculation, is soliciting advise from supporters of the idea.
"It should certainly raise alarm bells that they think they can inject it into the debate," said Phil Kerpen, policy director at Americans for Prosperity.
The value-added tax, or VAT, as it is called, amounts to a tax-on-everything -- or TOE, for the acronym-inclined. It's a tax on goods that's applied in pieces throughout the chain of production and distribution and results in an increase in the cost of virtually everything you buy.
Aside from raising revenue for the government, the move could have a number of things going for it, say proponents -- it's tough to evade, it's simple by comparison to the income tax and it encourages saving.
Some conservatives have called for something similar -- the so-called Fair Tax -- that would replace the federal income tax system with a national retail sales tax.
But critics of the VAT say it would almost certainly not be implemented as a replacement for the income tax system -- rather, it would be just another tax, on top of the income tax, the state sales tax and everything else.
"This isn't a tax reform proposal that the White House is talking about. This is a new source of income for the government," said Max Pappas, public policy vice president at FreedomWorks. "The government needs big taxes and we've got big government, so now they're trying to decide how to pay for it."
It's unclear how far along the idea is on Capitol Hill.
"That's not something that I understand is under discussion," White House Press Secretary Robert Gibbs said Thursday. A White House official also told the Post it's "unlikely" to be tapped to pay for health care reform.
But Sen. Kent Conrad, D-N.D., chairman of the Senate Budget Committee, was open to that idea, and the article noted that one of Budget Director Peter Orszag's health care advisers is a VAT advocate and Paul Volcker, the former Federal Reserve chairman who's now an Obama economic adviser, is at least willing to hear arguments.
Leonard Burman, co-director of the Tax Policy Center, wrote in a Virginia Tax Review article last month that the tax-on-everything could finance health care reform, and could reach a rate of 25 percent.
One of the chief criticisms of the consumption tax is that it is regressive -- it would hurt the poor the most. Because lower-income earners use a greater percentage of their income for consumption, the tax could end up being a bigger burden on the poor.
But Burman argued in a separate article for the review that using the revenue from the tax for health care would offset this effect, since "the voucher would be worth more than the VAT tax paid by most households."
If that's the best-case scenario, critics see a worst-case scenario that is devastating. Though the tax is used throughout Europe, opponents cite Europe's rapid growth in government over the past several decades as one of its potent negative side effects.
Pappas said the system would be exploited to grow government over the decades, since the tax is relatively easy to obscure.
"This is a big deal," he said. "This fundamentally changes the size of government indefinitely, permanently, and you can see that by the expansion in Europe over the past 40 years."
Plus it could have the unfortunate effect of discouraging spending in a time of recession -- effectively serving as an anti-stimulus.
Critics saw Wednesday's article as a trial balloon, which may or may not find its way into real-world negotiations over revenue raising.
It's not so outrageous considering proposals that are already being discussed. A memo circulated at a recent Senate Finance Committee meeting floated the possibility of a federal excise tax on sugary drinks -- not just sodas, but fruit and vegetable drinks, energy drinks, ice teas, iced coffees and flavored milk drinks.
An across-the-board consumption tax could make that look pleasant by comparison, since it's more than a sin tax -- it's a tax on virtuous and moral-neutral items as well. Small-government advocates, though, have pledged to fight both ideas.
"A VAT is among the most regressive tax schemes that can be imposed, and is a direct violation of Obama's no-tax-hike promise," Ryan Ellis, tax policy director at Americans for Tax Reform, wrote Wednesday on his group's Web site. "VATs are a gateway drug to more government spending."
No way that gets passed
doesn't Britain do the VAT thing? I mean on top of their excessive taxes already
I'm pretty sure VATs are EU wide.
No crisis to scare viewers this news cycle?
Make one up!
lol sales tax that
just another tool for revenue raising...
and just look at the other states who piggyback the system when it comes to the re-distribution of tax revenue which outlays more than what they collected...this is why some rich states hate the poorer states....
As long as federal spending growth continues at its present pace, of course taxes are going up, in some shape or form. We aren't going to be able to borrow our way out of our long term predicament. But try, we will.
Here's an idea. Quit spending.
Fine. What "spending" to cut?
Well, you could start with TARP, the auto bailouts, and the so-called Stimulus that, so far, has resulted in a massive debt and driven unemployment to over 6 million people.
You could tell Geithner, et. al. to find the trillions they've handed out and put it back in the Treasury.
That'd be a start...and, guess what, we'd be no worse off than we are now.
Then, you could stop the Cap and Trade madness coming down the pike; tell Obama to shove his National Healthcare dream; and, for the cherry on top, shut down about 85% of the federal agencies, beginning with the EPA.
So then we're back to the defense and en lement spending which was already going to bankrupt Uncle Sam.
You can do away with en lements too. Government was never cons uted to be a charity.
....Yoni wants to take on the A.R.P., this ought to be good...
Well, if we keep going, we won't have to...there's be no money to pay the blue hairs.
Yes it is, it's around 20% in Europe.
http://en.wikipedia.org/wiki/VAT#Tax_rates
. Taxes going up in Massachusetts is basically a sure thing that this point.
Sales tax is the way to go. income tax, just get rid of it, have a sales tax, and fire the idiots at the IRS. That way those of us who spend pay more in taxes, those of us who save spend less.
Make essentials like bread and whatnot tax free, or at a reduced rate, and then you can't even complain about poor folk getting screwed.
Poor people get screwed in every system.
Government takes too much care of them...THEY ARE GETTING SCREWED. They are kept weak and never learn how to fish, just to vote, hence the ing END GAME FOR THE GOVERNMENT
That's the ing incentive on not being poor anymore. Most people in this world start out poor! Eventually they work themselves out of it. That's life!!!!! Life sucks. Kill yourself or do something about it right?
Contrary to just words and just speeches, poor people are rarely truly helped by the government going after those with money.
They don't create equality, they just spread around misery.
Sure, take a consumer economy that thrives on people spending money and do whatever you can to convince them to save instead. Bright idea.
Besides the fact that my household already pays about 1/4 of income to various taxes and is about $15k below the national median household income...
Still think the federal government should have no domestic taxing authority and should survive on import/export tariffs and subsidies from the States (whatever they feel like giving them).
Eventually it will get passed through necessity.No way that gets passed
You wrongies are happy with wasting $3T on phony wars and decades of veterans' rehab, as long as you don't have to pay for any of it.
Really?No way that gets passed
The numbers tell us that this spending the democrats and President Obama are doing will already double the national debt in five years. One serious problem is that is with projected inflation and GNP rates. Everyone knows those rates are bogus also. It will likely be far more than double in five years, we will likely have double digit inflation without keeping the economy from expanding! Taxes do that rather well. They keep growth down.
Think he wants to go down in history with that fact? The only way not to, is to raise taxes on everyone!
Canada too--tho IIRC the % varies from province to province
I love how this pos can't quit spending and continues Americant tradition driving the country into acious debt, and then tells us all we are out of money.
Enjoy your retirement raking in that campus speech $$.At least someone will benefit from this agenda.
This is the interesting thing. This bull cannot be hidden in the system forever. That is natural law. Everything has an affect.
He is taking on a huge risk for his legacy by diving so deep in this direction.
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