July 30, 2010
Democrats and some Republicans are floating the idea of a value-added tax to help ease the crushing deficits caused by the (Social) Democrats’ massive spending binge. Before you say “Sure, why not?”, take a look at the VAT rates that would be required over the next ten years to eliminate the deficit:
(Click to enlarge)
Remember, that tax would be applied at every stage of production, from raw materials to the moment you purchase the item, and the costs would be passed along to you. Oh, and then you’d pay state sales tax, too.
Still think it’s a good idea?
Here’s a better one. Maybe they should cut spending and borrowing, instead.
RELATED: Reasons why a VAT won’t work.
(via dmataconis on Twitter)
April 17, 2010
George Will, declaring that he could support a VAT only if the 16th amendment is repealed:
When liberals advocate a value-added tax, conservatives should respond: Taxing consumption has merits, so we will consider it — after the 16th Amendment is repealed.
A VAT will be rationalized as necessary to restore fiscal equilibrium. But without ending the income tax, a VAT would be just a gargantuan instrument for further subjugating Americans to government.
Because the income tax is not broadly based, it radiates moral hazard: Its incentives are for perverse behavior. The top 1% of earners provide 40% of that tax’s receipts; the top 5% provide 61%; the bottom 50% provide 3%. So the tax makes a substantial majority complacent about government’s growth.
Increasingly, the income tax is codified envy. A VAT is the political class’s recourse when the resources of the minority that is targeted by the envious are insufficient to finance ravenous government.
My only quibble is with his use of the word “liberal;” there’s nothing liberal about the dominant wing of the Democratic Party. It’s merely a thin mask covering a progressive-statist face.
(via Dan Mitchell)
March 29, 2010
Dan Mitchell of the Cato Institute and the Center for Freedom and Prosperity has just released a video explaining why he believes a flat tax would be better for the country and fairer overall:
Here’s what he says about the “progressive taxes are more fair” argument favored by the left-liberals:
There are two big hurdles that must be overcome to achieve tax reform. The first obstacle is that the class-warfare crowd wants the tax code to penalize success with high tax rates. That issue is addressed in the video in a couple of ways. I explain that fairness should be defined as treating all people equally, and I also point out that upper-income taxpayers are far more likely to benefit from all the deductions, credits, exemptions, preferences, and other loopholes in the tax code.
You can read the other reason in his article at Big Government.
Personally, I’m drawn to the idea of a national sales tax or VAT as a replacement for the income tax. It makes sense to tax consumption instead of productive work, though I recognize some fear that it would be a hidden tax that fuels government growth.
Regardless, I think we can all* agree that the current tax system is a nightmare that needs to end.
*(Except for Democrats progressive statists and the tax-prep industry.)
LINKS: More at Hot Air.
October 15, 2009
Speaker Nancy Pelosi (D-Limousine Liberal) has proposed imposing a European-style value added tax to fund the health care “reform” plans now lumbering through Congress. Dan Mitchell of the Center for Freedom and Prosperity explains why this is a bad idea: