Skip to comments.The Silent Killer: Obama's VAT Proposal
Posted on 04/24/2010 5:00:06 AM PDT by Kaslin
When conservatives like Neal Boortz proposed the "fair tax" (a levy on consumption, not on income), we should have known that the Barack Obama left would seize on the proposal not as Boortz intended it to be -- a replacement for the income tax -- but as an addition to it. Now Obama has let it be known that the value-added tax, or VAT, is "on the table" as he casts about for taxes to lock in his gigantic levels of federal spending.
At stake, of course, is our free-market system. When Obama took office, federal, state and local spending accounted for 30 percent of gross domestic product. Now it is up to 35 percent, and when health care is fully implemented, it will rise to above 40 percent. But taxes are still below 30 percent. The difference is the deficit, now grown to 10 percent of our GDP.
If our government is to continue spending 40 percent of our GDP, we will morph into the European model of a socialist democracy. But if we can roll the spending back to 30 percent, while holding taxes level, we will retain our free market system.
In 2011, we will have three choices:
-- Raise taxes up to 40 percent.
-- Cut spending down to 30 percent.
-- Or half and half.
Now Obama proposes the ultimate step to convert us into a European nation: the VAT.
The VAT is levied at each stage of a commercial transaction. So the raw material seller charges the manufacturer, who then adds a new tax onto the price when he sells his finished product to a retailer, who then adds on a new levy when he sells it to a customer.
And the customer doesn't know it.
When you buy something for $10 and the clerk asks for "$10.65, please," you know that you are paying a 6.5 percent sales tax. But when $4 of hidden value-added taxes cause the item to cost $14, you pay the $14 without knowing that it includes the extra tax.
A key reason Europeans stay leftist is that they don't realize how much they are paying in taxes since it is hidden in the price of the products they buy.
And, in Europe, as Obama proposes in the U.S., the VAT does not replace the income tax, it just supplements it.
High VATs and high taxes on the top bracket of income exist unhappily side by side in Europe. Value-added taxes average 20 percent on the continent, while top income tax rates are all still in the 40-50 percent range.
The battle over how to pay down the deficit is looming in Washington. Some liberals boldly promise to raise taxes and proclaim their willingness to take the heat for the decision. But now Obama has offered them a more palatable alternative -- raise taxes by increasing the VAT and hide it from the public by burying the tax into the purchase price of the product.
Left in the dust, of course, is Obama's signature pledge not to raise taxes on the "middle class." The VAT, which is levied every time anyone buys anything, falls on every citizen.
Of course, Obama could keep his pledge by the simple expedient of requiring everyone who makes more than $200,000 to be branded on their forehead with a big $ sign so that the clerk will know to charge him the VAT. But, perhaps that might be a bit too much, even for him! 0
...and they don’t even mention the $10 gas in Europe too.
One has to admire Obama and Dems this time around - they WISELY kept the VAT off the table until JUST AFTER health care was passed. Back in Clinton’s day, they talked both at the same time (just for a bit though) - in order to pay for it (back then even Democrats tried, at least somewhat, to pay for their programs), and that talk hurt them with health care. They did learn from that.
This always happens! The ‘FairTax’ is nothing like the VAT. One rewards productivity. The VAT does not. You know the onld saying that which you tax you get less of.
Know the FairTax. Rumor is the left wants to ‘hang this around the neck’ of Republicans as a negative.
Why don’t all those brilliant, all-knowing, wise, really, really smart progressives just declare that all assets, income, buildings, mines, utilities, ships and factories belong to the state?
It would cut down on all the trouble of confiscating everything very slowly.
Since the VAT is levied at all stages of exchange up to the retailer the real percentage of VAT in an item could be three or four times 6.5%. Personally, if the VAT were to be passed millions, including me, would hunt out black market and barter exchanges.
A glimpse of the future: undercover barter police trolling ever yard sale and flea market.
VAT could make cigarettes, booze and ammunition the mediums of exchange and with the nanny state proposals already being aired black market goods could become salt and red meat. Obama wants to turn our economy into Zimbabwe.
Foolish me! I thought Democrats were unalterably opposed to regressive taxes.
Europe has a huge black market. Why? VAT. Anytime you add taxes to each transaction, you inflate prices to the little guy. Unavoidable. VAT is a curse.
Each stage is given a credit for the VAT already paid. For example, if the VAT rate is 10% (inclusive), then $20 of supplies will have a $2 tax included. If I do some work on it and sell it for $30, $3 of that will be the VAT. I will get a credit for the $2 already paid, so I have to send $1 into the government.
If they didn't give a credit for the the previous tax paid it would turn into a transaction tax rather than a value added tax. Transaction taxes put huge pressures on companies to vertically integrate so car companies will own the iron mines, steel refineries, electronics companies, dealerships, etc. to keep from having any financial transaction except for labor and the final sale.
All of those credits require that the VAT is stated explicitly for every business transaction. Otherwise they couldn't do the credit. Hopefully they won't try to hide it from the final consumer. The only VAT country I've been in long to pay attention to the VAT was Germany, and every receipt had a separate line item for MWST on every receipt, so it wasn't hidden.
I would rather have a VAT than our current monstrosity of an income tax system. Having both is unacceptable. Repeal the 16th amendment and we can talk about whether the replacement will be a VAT or a retail sales tax on the final purchase. Consumption taxes equalize foreign and domestic production rather than punish domestic like the income tax does.
The muzzie has to pay for all the loot he’s sending to his brother muzzies somehow;
$3.6 billion, matching the request, to expand and improve capabilities of the Afghan security forces
$400 million, as requested, to build the counterinsurgency capabilities of the Pakistani security forces
Afghanistan: $1.52 billion, $86 million above the request
West Bank and Gaza: $665 million in bilateral economic, humanitarian, and security assistance for the West Bank and Gaza
Jordan: $250 million, $250 million above the request, including $100 million for economic and $150 million for security assistance
Egypt: $360 million, $310 million above the request, including $50 million for economic assistance, $50 million for border security, and $260 million for security assistance
Pakistan: $1.9 billion, $591 million above the request
Iraq: $968 million, $336 million above the request
Oversight: $20 million, $13 million above the request, to expand oversight capacity of the State Department, USAID, and the Special Inspector General for Afghanistan to review programs in Afghanistan, Pakistan and Iraq
Lebanon: $74 million
International Food Assistance: $500 million, $200 million above the request, for PL 480 international food assistance to alleviate suffering during the global economic crisis
Refugee Assistance: $343 million, $50 million above the request, including humanitarian assistance for Gaza. Funding for the UN Relief and Works Agency programs in the West Bank and Gaza is limited to $119 million (Note: Gaza = Hamas)
Disaster Assistance: $200 million to avert famines and provide life-saving assistance during natural disasters and for internally displaced people around the world, including Somalia, Zimbabwe, Ethiopia, the Middle East and South Asia
Peacekeeping: $837 million for United Nations peacekeeping operations, including an expanded mission in the Democratic Republic of the Congo and a new mission in Chad and the Central African Republic
Department of Justice: $17 million, matching the request, for counter-terrorism activities and to provide training and assistance for the Iraqi criminal justice system
The mainstream media remains silent on this but the International News http://www.thenews.com.pk/top_story_detail.asp?Id=22164
has now picked up the story — and then there is Obamas $108 billion IMF bailout scheme http://michellemalkin.com/2009/05/13/obamas-100-billion-imf-bailout-scheme/ in addition to the Supplemental.
Obama has asked Congress http://creepingsharia.wordpress.com/2009/04/27/obama-asks-congress-to-allow-us-funds-to-terrorist-hamas-govt/
to let aid to Palestinians continue if Hamas backers are included in a new unity government, observers say.
The proposed change in U.S. law would be necessary because Hamas, which controls the Gaza Strip, is designated as a terrorist organization and therefore cannot receive U.S. aid. But power-sharing negotiations between Hamas and the rival Fatah faction, which controls the West Bank, may result in a unity Palestinian government that includes ministers backed by Hamas, the Los Angeles Times reported.
The White House sought the change as part of a bill authorizing $840 million for the Palestinian Authority as well as for rebuilding Gaza after this years 22-day Israeli military assault.
The Hamas proposal brought criticism from U.S. lawmakers, the Times said — one of whom, U.S. Rep. Mark Steven Kirk, R-Ill., said the move was akin to supporting a government that “only has a few Nazis in it.”
“We dont want to bind our hands in the event that such a (Palestinian unity) agreement is reached, and the government that they are part of agrees to our principles,” U.S. Secretary of State Hillary Clinton reportedly replied.
So as not to confuse, Hamas is the Muslim Brotherhood organization whos sole purpose is the destruction of Israel — anyone who thinks otherwise should read Hamas in their own words via the Hamas Covenant http://creepingsharia.wordpress.com/2009/04/27/obama-asks-congress-to-allow-us-funds-to-terrorist-hamas-govt/
which lays out their purpose, goals, and ideology.
In the midst of what is being called the worst economic crisis since the Great Depression, where our government has created the largest deficit in history, giving a billion to anyone is insane. But giving a billion dollars to a self-proclaimed Islamic jihadist group that has stated the United States as its enemy is beyond insanity, and it needs to stop.
I heard a “pastor” from the same denomination as “Reverend” Wright say on the radio that Christians need to realize that all wealth belongs to God and one shouldn't hold on so selfishly with what has been earned and saved. Since government is the way we regulate and protect ourselves in this world, we must recognize that it is government's duty to be a good shepherd of our money.
In other words, it was a modern spin on the divine right of kings. Everything belongs to God and it's the crown's job to distribute it fairly in its wisdom. It was a doctrine so shocking in its impact and so bold in its audacity that it cannot be overstated. It is nothing less than a complete overthrow of the founding principles of this country.
I truly feel sometimes that I am living in one of those eras in history when the order is overturned. Like the fall of the Roman Empire, or Columbus landing in America, or the end of Western slavery in the 1800’s.
“I truly feel sometimes that I am living in one of those eras in history when the order is overturned.”
If you’re young enough, in the future, you’ll either be listening to a re-write of history by leftists or an account of a thwarted left-wing attempt, to change the face of the United States, by non-leftists.
Given the number of independents out there and people whose self-esteem depends on voting for progressives, you’ll probably be listening to leftist propagandists spew venom about the mean, selfish, capitalist order before the great enlightenment.
That brand on the forehead of the dollar sign will apply to all NObama’s buddies who play basketball & football.
Wonder how they will like him then???
When I am in charge of the Western United states, those kinds of “reverends” and “religions” will not be allowed.
They speak far too harshly of others.
Same for Phelps & his “Baptist” church in Kansas. I would hang that SOB first.
Thank you for the explanation. It still seems so Byzantine that enforcement would require an army of VAT police.
“Across the Board Tax Hike...”
“the GOVERNMENT is Bankrupting this Country...”
“We’re Broke Because of the Government NOT the People...”