Wednesday, May 27, 2009

National Sales Tax???!!!

Just when I thought things couldn't go any worse, they do, and these days that happens almost every single day. Today, it is this headline from Washington Post.

Once Considered Unthinkable, U.S. Sales Tax Gets Fresh Look

"With budget deficits soaring and President Obama pushing a trillion-dollar-plus expansion of health coverage, some Washington policymakers are taking a fresh look at a money-making idea long considered politically taboo: a national sales tax.

"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."

Fiscal calamity of their own making, and what does the government do? Come up with a new, equitable tax, of course. For what purpose? For the latest plug from the White House and lawmakers: health care.

"A VAT is a tax on the transfer of goods and services that ultimately is borne by the consumer. Highly visible, it would increase the cost of just about everything, from a carton of eggs to a visit with a lawyer. It is also hugely regressive, falling heavily on the poor. But VAT advocates say those negatives could be offset by using the proceeds to pay for health care for every American -- a tangible benefit that would be highly valuable to low-income families. "

""Everybody who understands our long-term budget problems understands we're going to need a new source of revenue, and a VAT is an obvious candidate," said Leonard Burman, co-director of the Tax Policy Center, a joint project of the Urban Institute and the Brookings Institution, who testified on Capitol Hill this month about his own VAT plan. "It's common to the rest of the world, and we don't have it." "

It's common and we don't have it, so we'd better have it? Mr. Burman also thinks 25% VAT "should do it all..."

"And in a paper published last month in the Virginia Tax Review, Burman suggests that a 25 percent VAT could do it all: Pay for health-care reform, balance the federal budget and exempt millions of families from the income tax while slashing the top rate to 25 percent. A gallon of milk would jump from $3.69 to $4.61, and a $5,000 bathroom renovation would suddenly cost $6,250, but the nation's debt would stabilize and everybody could see a doctor. "

And here's a kicker for me in the article:

"And the threat of a VAT could pull the country out of recession, some economists argue, by hurrying consumers to the mall before the tax hits."

A value added tax will pull the US out of recession! Please tell me then why Europe, with high VAT, has stagnated economically all these years.

The article also tells us that Obama's budget director at the White House has hired the brother of Obama's Chief of Staff, Rahn Emanuel. He is a VAT advocate, and he will advice the budget director on "health care" issues.

In my area (a county in California) we already have state/county sales tax that amounts to almost 10%. Does that mean the total sales tax would double overnight with the introduction of national VAT? (I don't see how the state can let go of this steady revenue source.) So that the federal government can provide health care for all Americans? Whether Americans like it or not? This is too unreal for the morning.


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