25% national sales tax would pay for universal health care, balance the budget and exempt most Americans from the income tax

[GaryC 7]

Kudlow: The VAT is a sure way to permanently depress economic growth

Everyone should closely read today’s Washington Post story on the value-added tax, or VAT. The cat is now out of the bag. For months I have argued that Team Obama and the Democratic Congress were going to be forced to consider a VAT in order to pay for their extravagant spending.

...

This VAT tax would come on top of existing income, payroll, and business taxes. This is how the European countries and many others do it. And the VAT is a tax imposed throughout the economic food chain, at all levels of production, finally ending up inside the consumer pocketbook.

The VAT is a sure way to permanently depress economic growth. It’s also a sure way to Europeanize the American economy. But at some point, after the economy gains at least some cyclical economic-recovery traction, the Obama Democrats will want to re-label themselves as deficit-reduction fiscal hawks. Hence the VAT, a real bad idea.

If it is in addition to rather than instead of, then it is a colossally bad idea.

[w¡n9Nµ7 §£@¥€r 123]

Indiviglio: VAT has benefits but liberals can't support it

Imagine a VAT of 5% on all goods and services:

Oliver's relatively low gross income provides him with $10,000 in disposable income. That isn't a lot, so he doesn't save. Instead, he needs to spend all of this for his living expenses. That means he pays $500 due to the tax. That's 5% of Oliver's discretionary income.

Todd's relatively high gross income provides him with $100,000 in disposable income. That's enough that he's able to save $50,000 per year. He spends the rest. That means he pays $2,500 due to the tax. That's 2.5% of Todd's discretionary income.

The example is obviously a simplification, but hopefully the point is clear: Oliver, who makes a great deal less money than Todd actually pays a larger percentage of his disposable income based on the VAT. Progressives everywhere just had a heart attack.

The Post offers a rather ridiculous argument that liberals will be okay with this, because the VAT could be used to pay for free healthcare. But even then, you still have a situation where the poor pay a greater portion of their income for that healthcare than the rich. Does anyone really believe that Democrats will be comfortable with that outcome?

...

Don't get me wrong: a VAT has benefits as well -- particularly if you aren't bothered by the poor paying a greater share of their income to taxes. I just find it highly unlikely a congress with strong Democrat majorities and a very progressive president would ever allow it. After all, they could instead rely on a plethora of other options, such as further increasing taxes on the rich or imposing high luxury good taxes, as more liberal-minded alternatives.

[Kar98 0]

Anything to rid ourselves of the IRS would be welcome. Jeez, I am just a middle class nobody with a simple lifestyle and doing my taxes is a royal pain in the azz.

Darn revenooers won't ever go away.

[one...two...tree 2,762]

Kudlow: The VAT is a sure way to permanently depress economic growth

Everyone should closely read today's Washington Post story on the value-added tax, or VAT. The cat is now out of the bag. For months I have argued that Team Obama and the Democratic Congress were going to be forced to consider a VAT in order to pay for their extravagant spending.

...

This VAT tax would come on top of existing income, payroll, and business taxes. This is how the European countries and many others do it. And the VAT is a tax imposed throughout the economic food chain, at all levels of production, finally ending up inside the consumer pocketbook.

The VAT is a sure way to permanently depress economic growth. It's also a sure way to Europeanize the American economy. But at some point, after the economy gains at least some cyclical economic-recovery traction, the Obama Democrats will want to re-label themselves as deficit-reduction fiscal hawks. Hence the VAT, a real bad idea.

The VAT could be made progressive with a standard exemption amount per individual. So if a family of 4 is living at poverty level, they would pay little or no VAT after receiving a refund check from the government.

[mawilson 2,133]

This VAT tax would come on top of existing income, payroll, and business taxes. This is how the European countries and many others do it. And the VAT is a tax imposed throughout the economic food chain, at all levels of production, finally ending up inside the consumer pocketbook.

As they say, assumption is the mother of all...

[mawilson 2,133]

Oliver's relatively low gross income provides him with $10,000 in disposable income. That isn't a lot, so he doesn't save. Instead, he needs to spend all of this for his living expenses. That means he pays $500 due to the tax. That's 5% of Oliver's discretionary income.

Todd's relatively high gross income provides him with $100,000 in disposable income. That's enough that he's able to save $50,000 per year. He spends the rest. That means he pays $2,500 due to the tax. That's 2.5% of Todd's discretionary income.

The example is obviously a simplification, but hopefully the point is clear: Oliver, who makes a great deal less money than Todd actually pays a larger percentage of his disposable income based on the VAT. Progressives everywhere just had a heart attack.

That's why I like it - it doesn't punish success. The poor pay more, the rich - less.

That said, I don't see how they could make it work, considering that most of our tax revenue comes from the top 5%.

[Kar98 0]

In most countries that implement VAT, food is 0 rated not exempt. Effectively for the consumer that means no sales tax on food.

In Germany there's a 19% sales tax, and 7% on food. And guess what? Health care is still extra and costs 15.5% of your gross income.

Are you the foreign spouse?

Yes, why?

[w¡n9Nµ7 §£@¥€r 123]

Americans for Tax Reform: The VAT is a gateway drug to more government spending

VATs are a gateway drug to more government spending. When VATs first came on the scene in Western Europe in the 1960s, they were modest taxes averaging around 5 percent in rate. In the years since, the rates have climbed to an average of 20 percent (with a 15 percent minimum to get into the European Union)

There are two reasons for this. First, politicians are always tempted to hike the rate and exclude preferred items like food, medicine, and housing. Second, because a VAT is embedded in the price of a good (unlike state sales taxes in the United States), most people are unaware of the tax or how high it is. Raising the VAT rate becomes a relatively-painless political maneuver, especially if it’s linked to higher welfare spending or VAT base carve-outs

...

A VAT is a good way to pay for bigger government, which is why the Europeans are so enamored with them.

[Mr. Big Dog 10,747]

Kudlow: The VAT is a sure way to permanently depress economic growth

Everyone should closely read today's Washington Post story on the value-added tax, or VAT. The cat is now out of the bag. For months I have argued that Team Obama and the Democratic Congress were going to be forced to consider a VAT in order to pay for their extravagant spending.

...

This VAT tax would come on top of existing income, payroll, and business taxes. This is how the European countries and many others do it. And the VAT is a tax imposed throughout the economic food chain, at all levels of production, finally ending up inside the consumer pocketbook.

The VAT is a sure way to permanently depress economic growth. It's also a sure way to Europeanize the American economy. But at some point, after the economy gains at least some cyclical economic-recovery traction, the Obama Democrats will want to re-label themselves as deficit-reduction fiscal hawks. Hence the VAT, a real bad idea.

The VAT could be made progressive with a standard exemption amount per individual. So if a family of 4 is living at poverty level, they would pay little or no VAT after receiving a refund check from the government.

Thanks for looking out for the IRS, Steven. You just put them back in business.

[I AM NOT THAT GUY 5,715]

If there was an exemption amount per person (say $12,000), I think it could be workable.

How do you work an excemption with a consumption tax? I suppose you could send everyone a check once a year, but that means collecting more tax to pay for the refunds, and keeping something like the IRS around.

[Peikko 1,575]

Americans for Tax Reform: The VAT is a gateway drug to more government spending

VATs are a gateway drug to more government spending. When VATs first came on the scene in Western Europe in the 1960s, they were modest taxes averaging around 5 percent in rate. In the years since, the rates have climbed to an average of 20 percent (with a 15 percent minimum to get into the European Union)

There are two reasons for this. First, politicians are always tempted to hike the rate and exclude preferred items like food, medicine, and housing. Second, because a VAT is embedded in the price of a good (unlike state sales taxes in the United States), most people are unaware of the tax or how high it is. Raising the VAT rate becomes a relatively-painless political maneuver, especially if it's linked to higher welfare spending or VAT base carve-outs

...

A VAT is a good way to pay for bigger government, which is why the Europeans are so enamored with them.

Taxes or big gov? I don't think any of our Euro govs are as big, empirically as yours. Not in size and not in waste, and yet ours gets called 'big'. The mind boggles.

Our politicians are pathetic. Talk about an expenses scandal, what's the biggest cheat they can come up with? A floating island for ducks at a cool $2,000. It's embarrassing how pathetic we are at embezzlement.

[Ban Hammer 13,345]

Kudlow: The VAT is a sure way to permanently depress economic growth

Everyone should closely read today's Washington Post story on the value-added tax, or VAT. The cat is now out of the bag. For months I have argued that Team Obama and the Democratic Congress were going to be forced to consider a VAT in order to pay for their extravagant spending.

...

This VAT tax would come on top of existing income, payroll, and business taxes. This is how the European countries and many others do it. And the VAT is a tax imposed throughout the economic food chain, at all levels of production, finally ending up inside the consumer pocketbook.

The VAT is a sure way to permanently depress economic growth. It's also a sure way to Europeanize the American economy. But at some point, after the economy gains at least some cyclical economic-recovery traction, the Obama Democrats will want to re-label themselves as deficit-reduction fiscal hawks. Hence the VAT, a real bad idea.

The VAT could be made progressive with a standard exemption amount per individual. So if a family of 4 is living at poverty level, they would pay little or no VAT after receiving a refund check from the government.

Thanks for looking out for the IRS, Steven. You just put them back in business.

yeah, thanks steven

[one...two...tree 2,762]

If there was an exemption amount per person (say $12,000), I think it could be workable.

How do you work an excemption with a consumption tax? I suppose you could send everyone a check once a year, but that means collecting more tax to pay for the refunds, and keeping something like the IRS around.

That's essentially what Mike Huckabee was proposing. I listened to him on radio interview back during the campaign and he explained there would be some kind of refund check given to everyone.

[Saddle Bronc 124]

Americans for Tax Reform: The VAT is a gateway drug to more government spending

VATs are a gateway drug to more government spending. When VATs first came on the scene in Western Europe in the 1960s, they were modest taxes averaging around 5 percent in rate. In the years since, the rates have climbed to an average of 20 percent (with a 15 percent minimum to get into the European Union)

There are two reasons for this. First, politicians are always tempted to hike the rate and exclude preferred items like food, medicine, and housing. Second, because a VAT is embedded in the price of a good (unlike state sales taxes in the United States), most people are unaware of the tax or how high it is. Raising the VAT rate becomes a relatively-painless political maneuver, especially if it’s linked to higher welfare spending or VAT base carve-outs

...

A VAT is a good way to pay for bigger government, which is why the Europeans are so enamored with them.

Canucks have ample evidence of the above fact, in the form of the Gouge-and-Scr#w-Tax which was railroaded on the country by Mulroney (and OPPOSED by Liberal Party Senators--not exactly regular endorsers of fiscal responsibility) in 1990--at least in part by actually expanding government's most useless chamber (in Canuckese, "appointing more Senators so as to have majority over Liberals"). Edited May 27, 2009 by CherryXS

[w¡n9Nµ7 §£@¥€r 123]

This is an actual title from a Fox News story on the VAT.

Be Afraid, Be Very Afraid of the Obama Administration’s Scary Trial Balloon