Never one to consider spending to be the problem, there are rumors the federal government is considering a 10 percent consumption tax, or value added tax, to help pay for all the spending and possibly the federal takeover of health care. The Washington Post writes:
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.”
First of all, this would not be “tax reform,” Sen. Conrad. This would simply be adding more taxes. A lot more taxes:
A VAT is a tax on the transfer of goods and services that ultimately is borne by the consumer. Highly visible, it would increase the cost of just about everything, from a carton of eggs to a visit with a lawyer. It is also hugely regressive, falling heavily on the poor. But VAT advocates say those negatives could be offset by using the proceeds to pay for health care for every American — a tangible benefit that would be highly valuable to low-income families.
So, in another way, to pay for everything the government wants, we have to do with less. Honestly, if the price of everything goes up, it only stands to reason that you will be able to afford less of it. But you get really great access to a health care waiting list, so just because you are eating beans and rice for every meal because that’s all that you can afford now is no reason not to be a patriot.
Also, consider the fact that they have no idea how much their new “free” health care system is going to cost. They are modeling it off of the Massachusetts plan, and their costs are through the roof. In two years, the cost for the program has doubled, “from $630 million in 2007 to an estimated $1.3 billion for 2009, which is not sustainable.”
You know, it reminds me of the type of stuff I used to do. When I would get a windfall, rather than pay the bills I knew I had, I would go get a new Playstation game or a pile of DVDs. It’s the same thing here. They want to add this HUGE tax to pay for a new program, when the country is already $11 trillion in debt! Next year, the budget deficit is projected to be over a trillion. In one year!
The White House is saying the VAT is “unlikely to be in the mix” to pay for health care, but there are a lot of leftist advocates out there pushing for it. Is it really unlikely to see it instituted, then later used to help pay for the ballooning costs of government run health care?
I have written before that I think a consumption tax, aka the Fair Tax, is a great way to stimulate the economy, but the Fair Tax eliminates all other taxes. This idea just piles more burden on the American taxpayer.
