Free Markets, Free People

Democrats: How do we game CBO so VAT doesn’t look so bad?

Mary Katherine Ham reports that the CBO is being hit with a lot of questions about the Value Added Tax (VAT) by Congress.  Taking Paul Volker at his word, they’re obviously in the beginning stages of trying to make the VAT “not as toxic an idea” as it has been in the past. As the title implies, the masters at gaming the CBO are probably already hard at work.

Said CBO chief, Douglass Elmendorf:

“Many people in Congress are interested in it,” he said of the VAT, a national sales tax that adds between 10 and 20 percent to purchases in European countries where it’s been implemented. “We’ve had conversations with a number of members and their staffs.”

You don’t say?!  I know, dear reader, you’re as shocked as I am, aren’t you?

A couple of points – this is going to be constantly misrepresented as a “national sales tax”.  It’s not a national sales tax.  VAT is a tax levied against every step in the production process rendering any retail good 10 to 20% higher than it would have been without the tax.  No one is going to add 10 or 20% at the register – instead everything you purchase will have that additional cost of taxation already added to its final purchase price.  It’s a nicely hidden tax (thus very attractive for the looters in DC) that saves you being reminded of it at the register everytime you buy something.  You’ll just see your overall purchasing power erodeded by whatever the VAT percentage is.

Oh, and that will be in addition to the income tax.   You didn’t think the IRS was going away, did you?  Finally, it certainly isn’t a progressive tax as it will lower the purchasing power of the poor much more than that of the rich.  And we all know what that means – somewhere there’s going to be a subsidy or a kick-back to consumers  of certain levels of income.  And yes, you’ll pay for that as well. Trust me, this will only end up being fully levied on the despised “rich”, as usual in t.

Revenue, folks, revenue – the beast is hungry and insatiable.  And it has a very serious problem looming the future.  It wants no part of lean and mean.  Instead, it wants to be fat, happy and expanding – and VAT would do that.  And you, dear wage earner, are the means to its dreams.

~McQ

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25 Responses to Democrats: How do we game CBO so VAT doesn’t look so bad?

  • As Don Surber said the other day … Cut YOUR spending, not mine.

    • On CNBC this morning, there was some discussion of the flat tax.  One “expert” scoffed at the idea because it won’t raise as much money as the current income tax system.  Left unstated is the assumption that the government should continue to spend at current (or even higher) levels.  Heaven forbid Uncle Sugar reduce spending!!!  Why, the world would end, with women, children, and minorities hardest hit!

      • Left unsaid is that the VAT and income taxes are not mutually exclusive.
        Congress and the White House will keep the income tax and add the VAT.  The blood suckers.

  • Trust me, this will only end up being fully levied on the despised “rich”

    I note your use of the word “fully.”  I think you’re right, the poor are going to pay their share, but they’ll be blaming the corporations and industries and not the politicians who are finding more ways to tax those corporations and industries.

  • Concerning VAT vs. Sales, I don’t really see the difference, other than some accounting headache for the entire supply chain vs. just the retailer.  A purely ‘point of sale’ tax can be hidden from consumers too by requiring retailers to bake it into their floor price.  And in today’s electronic age, the VAT could be estimated and broken out on your receipt (unlikely politicians would want to impliment it though). 

  • Do they really need the new revenue stream?  After all, ObamaCare cuts the deficit.  They shouldn’t need a VAT.
     
    Unless that “cutting the deficit” meme was just to get the bill passed, but I can’t imagine that.  After all, Pelosi promised transparency, right?

  • Of course, when prices jump the associated percentage, it’ll be blames on the big corporate types  gouging us with higher prices, just like the blame will be dumped when inflation kicks in late this year or so.

  • The best analogy I can equate this to is dealing with a growing Cancer.
    As anyone who has had Cancer, and lived, we know the surest way of dealing with the beast is to attack it aggressively, the minimal goal of halting it’s grown, ideally, eliminating it completely. But the government, like Cancer, is insidious.

  • I see that you have spotted the opportunity for a subsidy for the “poor” (those making less than $100,000).  Now, let’s see…where is it written that all goods must be VA taxed at the same rate?  Say Mercedes’ taxed at 25% and Volkswagens at 15%.  Oh, and GM and Chrysler (all products) at 1%.  Larger contributions to pension plan and pay- for- when- not- working will be needed after unions negotiate with themselves at GM and Chrysler.  To be paid from increased sales due to large price advantage over private competition.

  • Why don’t we quit f*cking around???  Let’s all just send in every nickle we make to Washington.  They can then spend it as they see fit, including doling out money to the states and to individuals.  After all, Congress is soooooo much smarter than any of us and knows sooooooo much better how to spend our money than we do.

    / sarc

    If Congress passes this tax, then I’d say that it’s time to stop holding tea parties and start holding necktie parties.

    • Telling you right now, if they lose full control of congress they’ll move to force it through in that lame duck sesson.

    • Perhaps we all should “retire”

  • If this ever takes place it will absolutely finish us. With our debt, obligations, and present tax structure, if you added an additional 15-20% to every transaction, then we will be looking at the great depression like numbers.
     
    My father believes that Obama and his crew are out to actually destroy our nation so that they can do a full Marxist takeover.  Right now, it is real hard for  me to refute that.

    • “Never attributed to malice what can adequately be explained by stupidity.”  There’s only so much ‘adequate’ can withstand, though.

  • I would support a VAT of say 1% on all goods and services, with no exemptions and no tax credit for “the poor”. But, it would have to be instituted by constitutional amendment worded
    “Congress shall have the power to lay a tax of no more than 1% on the value of all goods and services in interstate commerce. If such a tax is laid, all goods and services in interstate commerce shall be subject to the tax with no exception. If such a tax is laid, any adjustments or credits adopted by Congress must apply equally to at least 3/5ths of the population.”
    The biggest flaw in the VAT (for conservatives and other rightists) is that once you adopt one, it gets escalated by a majority vote of Congress. That’s what happened in Europe. VATs started out at relatively low levels and then became the go to tax for European statists. Plus, under WTO rules governments can award a tax credit equal to the value of the tax paid on all exports. So, in effect, European consumers subsidize exports by paying higher domestic prices. Personally, I favor a flat tax and something like a gross receipts tax of 5% as opposed to corporate income taxes but if VAT is the way to go I could accept one that was mandated by constitutional amendment so they couldn’t just arbitrarily raise it. I think the Republicans could do well with something like this because it’s a clear restriction and they could argue that it is fiscally responsible but controls the government. They could even say “Time for talk is over, pass the amendment!”
     
     
     

  • We have cut taxes before. Its not impossible, and its actually politically popular.
    So, I don’t see it all so gloomy. Cutting programs, now that’s hard.

  • I wouldn’t mind a VAT on its own, replacing all present federal taxes, but like you say its so well hidden a sales tax – while annoying – would be more useful in illustrating the effects of taxation on the public.

    It would just have to be really hard to change and not be possible for states to add to.

  • Also, they had better find a way to let people who saved money get rebates for that amount. I save a lot of money, post-tax, instead of consuming it. Now I will get punished when I want to spend it.

  • p.s. VAT tax will start in 2013….anyone wanna bet? LOL.