So, you want a value-added tax?

Posted by: Phineas on July 30, 2010 at 7:15 pm

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:

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)

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  • 18 Responses to “So, you want a value-added tax?”

    Comments

    1. I could see a VAT instead of the income tax. Not my preference, but I might be able to resign myself to it. The proposals being floated out there, however are for a VAT in addition to the income tax.

      The real solution, however, is to reduce government spending. Can’t be done overnight, but Rep. Paul Ryan came up with a road map to solvency that makes realistic spending cuts over a realistic period of time — if the Dems have a better proposal than Congressman Ryan’s, I’d love to hear about it.

    2. Coastal Eddie says:

      The only way to raise revenue is to DECREASE taxes!

      Raising taxes never brings in the revenue forecast, the only “solution”,
      “ALL TOGETHER NOW”, another tax increase! Repeat cycle as often as needed.

      Now you know why they are called Dumbocretins!

      Eddie 87)

    3. swift boater says:

      And how long would the ZERO percent income tax hold with these politicians? Even if they repealed the 16th Amendment I still wouldn’t trust them.

      Besides, how high can they keep running that VAT up, a lot higher than an income tax I am guessing.

      Also, it is so regressive even I, a good lil conservative, find it heartless.

    4. Carlos says:

      The jackasses are heartless, swift boater, right up to the time they need a vote, then they are all heart until the election’s over.

      Personally, if they got rid of the income tax I think it’s a decent way to go, provided any increase in the rate has to be passed by a vote of the people. That, and stop the “refunds” to people who don’t pay taxes to begin with (apparently, that’s about 50% of the folks now.)

      That way, all of a sudden you’ve got millions more paying taxes. Heartless? Yeah, but a great incentive to get back to looking for a job, any job, even the ones Americans supposedly won’t do.

    5. daniel noe says:

      Perhaps a flat tax will do.

    6. rhonda says:

      Is this not the same as Luxury tax, except this time it’s for single item you might have to purchase? Luxury tax on essentials. I’m tired.

    7. mike says:

      ST,

      How about we fire all of them and sell D.C. to the china.

    8. nina says:

      When these idiots cut spending,pork barrel projects and all their fraudulent schemes tell them to call me about this brilliant idea.

    9. Carlos says:

      As always, brilliance (in spite of the occasional presence of Duh-1) is not in great supply in D.C. Bottom line is that if it makes sense, Congress won’t touch it with a pole as long as the Health bill.

      And there’s quite a difference between a flat tax and a luxury tax, Rhonda. A luxury tax hits only “rich folks’ playthings,” while a value-added tax adds a tax every time an item is sold, through the entire collection, processing, manufacturing, distribution and sales cycle.

      In other words, that little $.25 item you picked up yesterday at the convenience store will all-of-a-sudden cost $.47, because it went through four steps to get to you. The bozos in D.C. can’t figure out that the consumer is the one who pays all the taxes, not everyone involved in the process of getting the product to you.

    10. Lorica says:

      Lets save all sorts of money, all congressional positions are now volunteer, no pay whatsoever. See how long the likes of Rangel would stay in a no pay position. – Lorica

    11. William Teach says:

      Problem is, the Dems will want a VAT on top of an increased tax rate.

    12. Phineas says:

      William:

      Yep, that’s the problem. I can see the logic behind a national sales tax *if* the income tax is eliminated (thus taxing consumption, rather than productivity), but that’s nowhere near what the statists have in mind.

    13. Dana says:

      We already have this; we just don’t call it that. We put all sorts of taxes on corporations — we can’t tax the people that much, you know! — and the corporations simply pass the taxes they pay on to the end user of their products.

    14. Nathan says:

      I did not see any Republican support for the VAT in the links you posted. Which Republicans are on board with this?

      I also think that it is crucial that we distinguish between the Fair Tax, which is a national sales tax that would REPLACE the income tax and which a lot of conservatives like myself support and a VAT which I have never seen mentioned as a replacement for the income tax, but rather as something that would supposedly garner additional “income” for the government in ADDITION to the income tax. A VAT plus income tax regime would closely mirror most of Western Europe’s tax systems. This also explains Democrats’ love of the VAT because Western Europe has never had any bad ideas.

    15. Carlos says:

      We here in the back country of Oregon don’t have a sales tax yet, but it’s been voted on (and down) numerous times. I don’t support it for exactly the reason William points out, it will be in addition to the income tax.

      No matter what the initial rate would be, it would be a simple matter for Congress to increase it at will. That is unacceptable.

      If the income tax were to be constitutionally eliminated, and the tax rate of a value-added tax be constitutionally put in place, then MAYBE I would support it since it would get taxes from those who just take and don’t pay, but it would have to look mighty good before I did.

    16. J4140 says:

      How about cutting spending. Increasing taxes won’t help. Trading the income tax for the VAT just creates more areas for politicians to rob us blind and spend on stuff we don’t need or want.

    17. Nathan says:

      Carlos,

      I believe that it would be far more difficult, at least politically, for congress to raise a national sales tax rate than the endless machinations that they can now employ to use the tax code to punish disfavored parties and to help their buddies. Besides the boost to the economy, I believe that a national sales tax INSTEAD of the income tax would greatly reduce Congress’ ability to manipulate the tax code in the manner that I described above.