Another Misguided Plan to Burden America with a Value-Added Tax

December 5, 2013

Phineas Fahrquar:

File this under: “Bad Idea” The only way we should have a VAT or national sales tax is if the amendment authorizing an income tax is repealed. Otherwise, Washington will greedily raise both. For the public good, of course.

Originally posted on International Liberty:

It’s no secret that I dislike the value-added tax.

But this isn’t because of its design. The VAT, after all, would be (presumably) a single-rate, consumption-based system, just like the flat tax and national sales tax. And that’s a much less destructive way of raising revenue compared to America’s corrupt and punitive internal revenue code.

But not all roads lead to Rome. Proponents of the flat tax and sales tax want to replace the income tax. That would be a very positive step.

Advocates of the VAT, by contrast, want to keep the income tax and give politicians another big source of revenue. That’s a catastrophically bad idea.

To understand what I mean, let’s look at a Bloomberg column by Al Hunt. He starts with a look at the political appetite for reform.

There is broad consensus that the U.S. tax system is inefficient, inequitable and hopelessly complex…

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August 10, 2012

Phineas Fahrquar:

It’s like that great scene from Key Largo. What does Johnny Rocco want? He wants more: http://goo.gl/ax9Ei

(Shoot. Video linking doesn’t work on a reblog. Pooh.)

Originally posted on International Liberty:

While I disagree with statists, I sometimes admire their discipline. They are very good at staying “on message.”

I am 100 percent confident, for instance, that they intend big tax hikes on the middle class, even though they would piously swear an oath to the contrary. Indeed, I suspect more than 90 percent of them secretly would like a value-added tax.

It’s not that they necessarily dislike ordinary people, but privately they understand that you can’t finance big government by taxing rich people.

Simply stated, there aren’t enough of the “1 percent.” Moreover, rich people have significant control over the timing, composition, and level of their income, so class-warfare tax hikes inevitably will fail to generate much revenue (yes, the Laffer Curve exists).

So it makes sense that they want to screw the middle class, but it’s also obvious that they don’t want to admit this is their…

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April 13, 2012

Phineas Fahrquar:

Dan shows why we need to fight any VAT tooth and nail, unless the income tax is repealed altogether.

Originally posted on International Liberty:

Why are taxes so much higher in Europe, consuming 46 percent of economic output compared to 32 percent of GDP in America? Is it because nations such as France, Greece, and Sweden have adopted the kind of class-warfare policies that Obama wants for the United States?

Surprisingly, the answer is no.

As explained by Veronique de Rugy, the United States actually has a more “progressive” tax code than European nations. The corporate tax rate is higher in the United States than in any European country, and the double taxation of dividends and capital gains also is far above the European average. Western European nations tend to impose higher tax rates on personal income, so the overall tax burden on the “rich” is roughly comparable on both sides of the Atlantic.

Since the United States and European nations impose somewhat similar tax burdens on upper-income taxpayers, what accounts…

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So, you want a value-added tax?

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. Idea

RELATED: Reasons why a VAT won’t work.

(via dmataconis on Twitter)


Will: a VAT only if you get rid of the income tax

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)


The Flat Tax: Good for America, Bad for Washington

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.


No VAT in the USA

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:


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