5/27/2009

The push for a national sales tax

I would like an Obama supporter to explain to me how this wouldn't break his campaign promise.

With budget deficits soaring and President Obama pushing a trillion-dollar-plus expansion of health coverage, some Washington policymakers are taking a fresh look at a money-making idea long considered politically taboo: a national sales tax.

Common around the world, including in Europe, such a tax -- called a value-added tax, or VAT -- has not been seriously considered in the United States. But advocates say few other options can generate the kind of money the nation will need to avert fiscal calamity.

At a White House conference earlier this year on the government's budget problems, a roomful of tax experts pleaded with Treasury Secretary Timothy F. Geithner to consider a VAT. A recent flurry of books and papers on the subject is attracting genuine, if furtive, interest in Congress. And last month, after wrestling with the White House over the massive deficits projected under Obama's policies, the chairman of the Senate Budget Committee declared that a VAT should be part of the debate.

"There is a growing awareness of the need for fundamental tax reform," Sen. Kent Conrad (D-N.D.) said in an interview. "I think a VAT and a high-end income tax have got to be on the table." . . . .

A White House official said a VAT is "unlikely to be in the mix" as a means to pay for health-care reform. "While we do not want to rule any credible idea in or out as we discuss the way forward with Congress, the VAT tax, in particular, is popular with academics but highly controversial with policymakers," said Kenneth Baer, a spokesman for White House Budget Director Peter Orszag.

Still, Orszag has hired a prominent VAT advocate to advise him on health care: Ezekiel Emanuel, brother of White House chief of staff Rahm Emanuel and author of the 2008 book "Health Care, Guaranteed." Meanwhile, former Federal Reserve chairman Paul A. Volcker, chairman of a task force Obama assigned to study the tax system, has expressed at least tentative support for a VAT. . . . . .

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3 Comments:

OpenID FormallyDan said...

I'll happily trade a 20% sales tax for the elimination of the entire federal income tax code.

The "Fair Tax" by any other name...is still the "Fair Tax" ;)

5/27/2009 10:48 AM  
Blogger Bill Bulgier said...

I think the idea that FairTax.org is advocating is a great idea. However, a national sales tax AND an income tax would be even more oppressive than what we have now. The income tax and the IRS need to go so jobs can return to this country. This would also remove the ability for the government to use the tax code to punish and reward behavior, and buy votes.

5/27/2009 11:32 AM  
Blogger Bill said...

I would like someone smarter then me to comment on this.

My understanding is that the VAT is not a sales tax, but a tax that is charged on each level of production. For example, A farmer plants a $.01 corn seed that produced $1 worth of corn. The farmer pays tax on $.99 because the farmer added value. General Mills takes the $1 worth of corn and makes cereal worth $3. The GM pays VAT on $2. The grocer buys the $3 cereal and sells it for $5. Tax.

The tax is hidden in the cost of the cereal at each stage of production. (I didn't even cover the value added tax paid by the producer of the seed or the producer of the fertilizer used in growing). Therefore, the consumer has no idea how much he is actually paying in tax, much like our current income tax.

I am uncertain of this because the press often uses VAT in place of a sales tax. Oh, isn't that great? A tax that actually adds value!!!

5/28/2009 12:45 AM  

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