Obama Economic Adviser Pushes National Sales Tax

What was that promise not to raise taxes on people making less that $250,000 per year? From Fox News:

Acknowledging it would be a highly unpopular move, White House economic adviser Paul Volcker said yesterday the United States should consider imposing a "value added tax" similar to those charged in Europe to help get the deficit under control.

A VAT is a national sales tax that, like state and city sales taxes, would be collected by retailers.

Volcker, at the New-York Historical Society, told a panel on the global financial crisis that Congress might also have to consider new taxes on carbon and energy.

The VAT suggestion was immediately met with outrage by Republicans.

"It shouldn't surprise anyone that the Obama White House would advocate a European-style tax to help finance their European-style government health-care plan," said Brian Walsh, a spokesman for the National Republican Senatorial Campaign Committee. . . .

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Blogger Bill said...

The VAT is not a national sales tax, it is much worse. A VAT is imposed on each level of production. For example, to make a wood table, production starts in a forest. The trees are cut and sold to a mill, the increase in value (ie the value added) is taxed. I standing tree may be worth $5, a cut tree may be worth $15, the $10 increase is taxed. The mill takes the tree and mills it into lumber worth $50. The $35 of value added is taxed. The lumber is turned into a table worth $150, the increase of $100 is taxed.

Because it is laid on every level of production, it would create a huge disadvantage to US manufacturers. A purely national sales tax would not create such a disadvantage for goods produced in the US as it would be applied all goods imported or domestically created.

It does sound better then a sales tax. A tax that adds value, how nice?

But funny how increasing taxes is the only solution. The level of spending seems to assumed.

4/08/2010 3:25 PM  

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