Long Shunned in U.S., Support Grows for National Sales Tax
Levy Viewed as Way to Reduce Deficits, Fund Health Reform

http://www.washingtonpost.com/wp-dyn/content/article/2009/05/26/AR2009052602909.html?hpid=topnews


There's talk on the Hill about introducing a VAT to pay down the projected $1.8 trillion budget deficit and fund a health care program.

"O" wants both. So much for looking out for Main Street Americans.

Anyone who thinks you can run a war for 8 years...stimulate an economy out of a recession...fix a broken health care system without increasing taxes...is a dreamer.

I'm not a big proponent of taxing consumption. I think any gains you would make with a VAT would be offset by declines in other areas of taxable income because of reduced economic activity.

What Obama should do is follow through on raising the cap on income that pays into Social Security. Right now I believe that any income above about $100K is not subject to Social Security tax. I think that ceiling should be raised to $150K, or whatever reasonable level is required to make Social Security solvent.

A convenient way for him to continue his no new income taxes facade.

I'm not an economist and I'm probably totally way off base, but if you went to a VAT type system, everyone would have to pay - including the illegals and other deadbeats that avoid income taxes, since everyone has to consume something, somewhere. It's damn hard to dodge. Plus it encourages saving, which this country does not do.

But you can't do that and still continue to take out payroll taxes - because you'd be essentially double taxing the vast majority of law abiding citizens. Increase the social security cap, go to a balanced VAT system, do away with income taxes and then maybe it'd work. So instead of losing 27% of your pay to taxes every two weeks, maybe you lose 5% for social security, leaving you more money in your pocket to spend or save as you choose.

Just don't do what Canada does - provincial taxes on your purchase and then a federal tax applied to the total of the purchase plus the provincial tax. I bought some hockey jerseys in Montreal in 2006 and paid about $60 in taxes alone, negating the savings I'd get with a weaker Canadian dollar

One of the purported upsides to a VAT is that it is meant to be much more difficult for consumers, retailers, and producers alike to dodge taxes since each pays a bit at every stage of production and distribution.

The huge downside is that sooo many different types of goods and services each need thier own VAT rate set by politicians, magnifying the problems of influence peddling, corruption, and trying to shape societal norms through taxation.

Don't give politicians more power through VAT rate-setting to erode our freedoms any further.

If you had a VAT tax here and no income tax, all the people with the means would buy their shit offshore. The only people paying the VAT would be the poor and middle class.

In just about every European country there is a VAT (Value Added Tax) in place. It is a regressive tax in that those making less pay more juxtaposed against those making more. For example, say you make 50,000 vs 100,000 and buy a TV at $1,000 w a 15% VAT = $115. The portion of income for the the 50k'er = .0023% for the 100k'er = .0012%. Hence the regressive nature of the tax.

The upside as someone earlier pointed out is that everyone pays - it is a great equaliser.

I imagine if a VAT were instituted it would be in conjunction with an income tax (again as is the case in Europe) but like someone also pointed out - the Republicans have waged two very expensive wars + Democratic stimulus = > taxes or bankrupt nation.

britdrnva Wrote:
-------------------------------------------------------
> In just about every European country there is a
> VAT (Value Added Tax) in place. It is a
> regressive tax in that those making less pay more
> juxtaposed against those making more. For
> example, say you make 50,000 vs 100,000 and buy a
> TV at $1,000 w a 15% VAT = $115. The portion of
> income for the the 50k'er = .0023% for the 100k'er
> = .0012%. Hence the regressive nature of the
> tax.
>
15% of 1,000 = $150.

I think a flat tax as proposed by Forbes back in the nineties would be the best route...everyone pays taxes, no loopholes, and the administrative/accounting costs are but a fraction of today's system.

If you have to raise taxes to pay for all the bullshit that's happened from 2001 until today, then do it. Just do it so everybody gets hammered - from Donald Trump to the lowly Jose who just stole across the border. You got these rich assholes with their loopholes and a bunch of deadbeats/illegals just blowing off the system, while the rest of us (the "middle class") continually take it in the ass. If you could reign the rest of them back in, we could add hundreds of millions of dollars to the coffers.

But in the end, all of the taxes in the world can't ensure solvency if spending is out of control - which is a major portion of the problem. I'm sure that the government would treat increased taxes like walking around money and spend it on some bullshit pork programs.

Furfur Wrote:
-------------------------------------------------------
> I think a flat tax as proposed by Forbes back in
> the nineties would be the best route...everyone
> pays taxes, no loopholes, and the
> administrative/accounting costs are but a fraction
> of today's system.


While good in theory, the government only has two real weapons to fight recession or inflation. That's monetary policy (the Fed) and fiscal policy (the tax code). If Congress institutes a flat tax, it would only be a matter of time before that flat tax looked as fucked up as our current tax structure. The only way to prevent that would be to pass a Constitutional Amendment, which could be catastrophic for the country in time of war, depression, inflation, etc.

I don't know what the answer is. But this idea that a "flat tax" is a simple solution doesn't really fly when you start looking at the implications.

WashingTone Locian Wrote:
-------------------------------------------------------
> I'm not a big proponent of taxing consumption. I
> think any gains you would make with a VAT would be
> offset by declines in other areas of taxable
> income because of reduced economic activity.
>

That's getting dangerously close to 'supply-side economics!'


britdrnva Wrote:
--------------------------------------------------------
>In just about every European country there is a VAT (Value Added Tax) in place. >It is a regressive tax in that those making less pay more juxtaposed against >those making more. For example, say you make 50,000 vs 100,000 and buy a TV at >$1,000 w a 15% VAT = $115. The portion of income for the the 50k'er = .0023% for >the 100k'er = .0012%. Hence the regressive nature of the tax.

That would be true, except the higher-income guy probably buys more stuff. His total tax burden would be on all of it, not just the TV.


WashingTone Locian Wrote:
-------------------------------------------------------
>While good in theory, the government only has two real weapons to fight >recession or inflation. That's monetary policy (the Fed) and fiscal policy (the >tax code). If Congress institutes a flat tax, it would only be a matter of time >before that flat tax looked as fucked up as our current tax structure. The only >way to prevent that would be to pass a Constitutional Amendment, which could be >catastrophic for the country in time of war, depression, inflation, etc.

>I don't know what the answer is. But this idea that a "flat tax" is a simple >solution doesn't really fly when you start looking at the implications.

They could mess with the rates to implement fiscal policy. It could even be made 'progressive.' The important thing is to do away with deductions. That's where all of the corruption and distortion of the economy comes in.