The Value-Added Tax Should Be Political Poison for Advocates of Limited Government

January 15, 2016

Tweeted this last night, but it’s worth its own post. There’s a lot to like about Ted Cruz, but his insistence that his new tax plan doesn’t contain a VAT, thus giving advocates of big government another revenue stream, is an annoying dodge. I wish he’d drop it, and the VAT.

International Liberty

It’s not my role to pick sides in political fights, but I am very interested in trying to make bad ideas radioactive so that politicians won’t be tempted to do the wrong thing.

This is why I’m a big fan of the no-tax-hike pledge. The folks in Washington salivate at the prospect of getting more of our money, but they are less likely to act on their desires if they’re scared that breaking their promises means they’ll lose the next election.

It’s also why I want the value-added tax (VAT) to become a third-rail issue. Simply stated, it would be a catastrophic mistake to give Washington an additional source of tax revenue. Especially since the European evidence shows that it’s a money machine to expand the welfare state.

Given my concerns, I was understandably distressed that two lawmakers (and presidential candidates) who normally support smaller government, Rand Paul

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The Value-Added Tax: A Nixonian Scheme to Fund Bigger Government

November 21, 2015

The VAT is to me an obviously bad idea, especially as long as there is also an income tax. But why Senators Cruz and Paul would support one is way beyond me.

International Liberty

In early 2013, a reader asked me the best place to go if America suffered a Greek-style economic collapse.

I suggested Australia might be the best option, even if I would be too stubborn to take my own advice.

Perhaps because of an irrational form of patriotism, I’m fairly certain that I will always live in the United States and I will be fighting to preserve (or restore) liberty until my last breath.

But while I intend to stay in America, there is one thing that would make me very pessimistic about my country’s future.

Simply stated, if politicians ever manage to impose a value-added tax on the United States, the statists will have won a giant victory and it will be much harder to restrain big government.

But you don’t have to believe me. Folks on the left openly admit that a VAT is necessary to…

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

December 5, 2013

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.

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

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.)

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

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

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)


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