{"id":216,"date":"2010-04-16T08:01:55","date_gmt":"2010-04-16T13:01:55","guid":{"rendered":"http:\/\/jparnell.com\/blog\/?p=216"},"modified":"2010-04-16T08:01:55","modified_gmt":"2010-04-16T13:01:55","slug":"here-comes-the-vat-again","status":"publish","type":"post","link":"https:\/\/battle4liberty.com\/?p=216","title":{"rendered":"Here comes the VAT (again)"},"content":{"rendered":"

A Value-Added Tax<\/em> (VAT) is a levy that is factored into the prices of goods and services at every stage of production. By the time a product hits the shelf at your local store, its price already includes the tax. The VAT is popular in many other nations, especially those in Europe where the typical rate is around 20%. At such a rate, a $100 product would actually cost $120. While some products (often certain food essentials) might be excluded from the VAT, this varies by country. The cumbersome, arbitrary, and political nature of these exclusions is no small matter, but I will not delve into this topic at the moment (see Irwin Stelzer\u2019s April 5 piece in the Wall Street Journal<\/em> for more on this).<\/p>\n

Ben Bernanke, Paul Volker and others have floated the VAT as part of a long term solution for the left\u2019s current spending spree. Obama created a so-called \u201cbipartisan fiscal commission\u201d to examine the tax-and-spend problem instead of tackling it himself. I believe he favors a VAT but wants the idea to come from this (left-leaning) commission after the midterm elections.<\/p>\n

When it comes to taxes, I favor a national sales tax (i.e., the \u201cfair tax\u201d) IN LIEU OF an income tax. Some view a VAT as a form of sales tax, so I am frequently asked why I so vigorously oppose it. There are many reasons, but I’ll cove the top three here.<\/p>\n

First, the VAT is being suggested as AN ADDITION to the present tax system, not a replacement. During the 2008 elections, some shameless democrats charged that their republican opponents who favored REPLACING the income tax with a national sales tax were \u201csupporting new taxes.\u201d Of course, replacing one tax with another is quite different from adding a new one. We don’t need any new taxes.<\/p>\n

Second, THE VAT IS A HIDDEN TAX. After a VAT is implemented, we would begin to think that things just cost more without realizing we are paying the tax every time we make a purchase. A VAT would be buried deeper than income, sales, and most other taxes because we would pay it indirectly. Even worse, it can (and will) be raised from year to year in a way that is less obvious to consumers than hiking income or sales taxes. It is no surprise that the VAT was introduced in Europe in the 1960s at a rate of around 5% and has risen ever since.<\/p>\n

Finally, adding a VAT, like any tax hike, ignores the real problem\u2014massive government spending. The need for any type of new taxes would be eliminated if Congress refused to feed the beast in the first place. We can address this problem in November.<\/p>\n

I think Obama’s long term plan is to institute massive spending increases under the guise of a stimulus (already done) and then seek a “bipartisan compromise” that keeps most new spending in place while raising taxes, preferably with a VAT. However, adding a VAT to the present tax scheme legitimizes the current level of government spending through taxes that are higher, more complicated, and less visible. The alternative is clear\u2014we should focus on SHARP SPENDING REDUCTIONS while CUTTING AND SIMPLIFYING TAXES.<\/p>\n","protected":false},"excerpt":{"rendered":"

A Value-Added Tax (VAT) is a levy that is factored into the prices of goods and services at every stage of production. By the time a product hits the shelf at your local store, its price already includes the tax. The VAT is popular in many other nations, especially those in Europe where the typical […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/posts\/216"}],"collection":[{"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=216"}],"version-history":[{"count":0,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/posts\/216\/revisions"}],"wp:attachment":[{"href":"https:\/\/battle4liberty.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=216"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=216"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=216"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}