Free Markets, Free People

Laying the groundwork for new taxes

There is no one out there that won’t agree that government has gotten us into a debt-ridden fiscal mess.  Note I said government, meaning both Republicans and Democrats.  And now, on a spending binge from hell, we’re starting to see how this particular administration plans to address the growing concern over the debt.  Given some choices  -cut spending, cut the size and cost of government or increase taxes – it appears it will choose the taxation route.  And Paul Volker is just one of many who will be making the case.  Reuters reports:

The United States should consider raising taxes to help bring deficits under control and may need to consider a European-style value-added tax, White House adviser Paul Volcker said on Tuesday.

Volcker, answering a question from the audience at a New York Historical Society event, said the value-added tax “was not as toxic an idea” as it has been in the past and also said a carbon or other energy-related tax may become necessary.

Though he acknowledged that both were still unpopular ideas, he said getting entitlement costs and the U.S. budget deficit under control may require such moves. “If at the end of the day we need to raise taxes, we should raise taxes,” he said.

Should we?  Or should we approach it from a different direction – such as the first two choices.  But the expansion of government is an ideological choice of the party in power.  Don’t believe it, check out this article about hiring.  The government is seeking to add 193,000 new jobs in the next two years.  So, uh, it’s up to you to pay off the deficit and get those entitlement costs under control.  And, of course, notice that Volker points to both a VAT and a tax like cap-and-trade as “necessary”.  Note too that neither tax is a direct income tax although both would directly and expensively impact income of all consumers by making virtually everything cost more.  However, the charade of “95% of you won’t see your taxes go up by a dime” will be maintained.

What voters need to do this November is make the Congressional races about the difference between the choices I’ve laid out.  And, unlike Volker’s conjecture, we need to make the VAT and cap-and-trade as electorally toxic as possible to those that support them while rewarding those who take the alternative approach.  There is no reason that increasing taxes should or must be the only solution to the unchecked profligacy of government.  Perhaps, instead, it is time to limit government’s ability to spend us into oblivion and put the people in office who can start that process rolling.



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7 Responses to Laying the groundwork for new taxes

  • Falling into that “don’t stop an enemy when he is making a mistake” category, the talk today of a “VAT tax” is just that .. talk.   But coming from the White House et al, this gives the GOP a jousting partner for the upcoming elections.

  • If (when) the GOP takes over at least 1 house or at least makes enough gains to functionally block the agenda, be very aware of that final lame duck session of congress at the end of the year.  I wouldn’t put it past Reid/Pelosi to give one final F–K  You to America by ramming these items through.  They’ve already shown political consequences mean nothing to them.

    • Rather like the “scorched earth” policies of rejected/defeated tyrants. It fits, Shark!

  • If we ever make the mistake of going with VAT then we are over, done, stick a fork in us.  Don’t think that we will only suffer the fate of Western Europe, with anemic growth and high systemic unemployment rates.

    IT will be much much worse for us, because we will lose our reserve currency status, and we will still have huge defense obligations and utterly enormous unfunded liabilities.  This means we will experience a “permanent” depression.
    The worst part of it is that the government will not use this tax revenue to close the deficit, they never do. They will simply spend more.

  • Why would we need to raise taxes?  The new health care system is supposed to SAVE money, no?

    / sarc