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A new piece today in the Washington Post suggests that Obama administration officials and members of Congress alike are considering the possibility of a VAT, or value-added tax, which would impose a levy on all goods and services in order to cover the nation's gi-fucking-normous budget deficit. Along with raising taxes on the highest earners, the idea of a VAT seems to be gaining traction as something that has worked for 130 other countries worldwide.
Both Ezekiel Emanuel (Rahm's brother), who's serving as a health care advisor to the President, and former Fed chair Paul Volcker who's serving as a tax advisor, have allegedly expressed interest in such a tax -- which would add a surcharge onto everything from a pack of gum to a haircut. Some see the tax as one of the only ways out of the hole we're in while also funding Obama's trillion-dollar expansion of health care coverage. Crazy, you say? This tax-despising nation would never stand for it and it unfairly impacts the poor?
To quote the post:
The surge of interest in a VAT is testament to the extraordinary depth of the nation's money troubles. While some conservatives have long argued that a consumption tax would provide a simpler and more efficient alternative to the byzantine U.S. income tax code, this time it's all about the money.
The trouble is, those 130 countries that have a VAT probably don't also have state-by-state sales taxes which in some cases (like California) are 9%. A couple percentage points in states that have no sales tax, or where the tax is 4% wouldn't hurt that much, but what about here?
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There are dozens of more sensible ways to raise money than another sales tax added to the ridiculous taxes we already pay (not against taxes in general, but the way this country spends the dollars is fucking ridiculous).
Cut the bloated defense budget. Quit giving money to companies who produce products I wouldn't be caught dead purchasing (ie, shitty american cars), quit throwing money down the bank rathole, etc., etc.
In other words, I'm against the VAT (and increasingly sick of spineless Obama).
Perhaps us Tea Party protesters aren't nuts after all, eh?
You're actually admitting to being one of those retards? Did you get a grownup to type that?
Are you really so stupid and partisan that you missed the point of my post? Obama said "95% of taxpayers will get a tax cut"........yeah, he lied dumbass.
Stupid AND Partisan!
ha!
/laughs
/ points
/ takes photos for future generations
oh & enjoy your tax cut
HA! We have a tea-bagger! Right in our midst!
/takes photos
/laughs
/points
But is there any way to do this so that it's actually a progressive tax?
I mean, I'm all for eliminating the horrible tax code we have, but still.
It will be interesting to see how a VAT is implemented that affects only those earning more than $250K per year -- I mean I assume that Obaba will steadfastly stand by his pledge not to increase taxes on anybody else.
A VAT might be OK if the income tax were to be eliminated, but as that is not going to happen this looks just like a way to increase taxes but to keep that increase hidden (unlike a sales tax, you generally don't see the VAT because it is paid at multiple points in the production process).
It costs 65c to collect $1 of VAT (as someone said, you have to collect it from the producer of the raw material (farmer), the refiner of the raw material (slaughterhouse), the manufacturer of the good (Goldenwest), and finally the seller of the good (McDonalds).
Just collect all the unpaid taxes from the fuckers who celebrate "paying cents on the dollar", impose an income tax on all the states that currently don't pay one, and sell Texas to the Arabs.
Get used to the barter system returning as people find creative ways of getting around the tax system. I know of several groups of people in the Northeast (leave it to the New Englanders) who already engage in this sort of practice. The plumber, electrician, carpenter, service station, grocery store, handyman etc...exchange goods and services in fair trade.
No cash is exchanged so nobody bothers to call the IRS.
or local scrip. Maybe Norton was on the right track after all...
Visit Italy sometimes. VAT-dodging is a national pastime. To the extent that (used to be, don't know about now) for a customer to discard the sales receipt from a store within some XX meters distance was a minor offense, so as to deter off the book sales.
Boo to regressive taxes! It upsets me that Obama may be considering this.
A VAT is a far more inelastic tax. If we replace income and capital gains with a VAT, we won't see our tax revenue implode every time the economy goes through a lull.
Why would anyone bother working with a 10-15% VAT on top of a 9.5% Cali sales tax, state income tax, fed income tax, and SSI? I'll wait for my government coupons in the mail so I can go wait in the government bread line. Why work? The output goes to the government, not to my family.
This idea will crush any economic recovery.
Or the other option to avoid paying sales tax is you just, you know... don't buy a bunch of shit you don't need.
But perhaps that's out of the question for you.
oh, could we really have a sensible tax?!? it only hurts if you want to buy (expensive) things. and it could finally even the playing field some for all those poor brick-and-mortar retailers that have to charge sales taxes while the internet/phone based mega-stores (based in who-knows where) get to under cut them. 'bout time. That said, a carbon tax would make even more sense but Steven Chu has ruled that out, alas.
This tax will also be levied against the house you want to buy and cost most people a minimum of $10,000 in taxes. This tax will increase rents for people who choose not to buy a house. This because those who buy a rental property will have to pass along the added tax expense. For example. Assume I buy a $300,000 rental property with a 10% VAT. I'll pay $30,000 in tax on the home. I'll also have to add increased maintenance cost to the rent. If I have to replace/fix the roof at a cost of $10,000 I'll pay $1000 tax. I'll have to pay tax to the plumber, to the exterminator, to the landscaper, and to the trash-man. I would have to pass these expenses onto my tenants. If the current tax system is abolished this may even out. I've little faith the feds would abolish the IRS.
If a VAT is added nationwide and bumps the overall tax per transaction >10%, I wonder how many transactions at the local level will end up being conducted in CASH instead?
From my friends in other countries where this is true, I'm told such behavior is rampant for service industries like plumbers, mechanics, etc.
If the goal is to make our tax system more progressive (i.e.: the rich pay a larger % of the tax bill), why instigate such a measure in order to make the people at the lower end pay a substantially larger chunk of their income? Nuts.
-mm