Almost every expert, economists, politicians, business people, every day folk will tell you that a “Value Added Tax” is a bad idea. So how does the Obama Administration respond? About the way I have learned to expect. Paul Volcker was out in front saying it isn’t such a bad idea. Ben Bernanke and Peter Orszag, while not specifically talking about VAT, are pushing for more taxes. Even the Congressional Business Office admits that they have been asked by Congress to take a look at it.
Now the Administration can’t seem to make up their mind. The President says he will explore it. The Vice President says oh no, that’s not what he meant. Well, before they get any further along with another bad idea, they might want to consider what the American people want. A recent poll shows that 73% of the respondents oppose a Value added tax, including 65% of Democrats, 83% of Republicans and 71% of Independents.
Why is opposition so widespread? One reason is that it would be in addition to the income tax, and all the other taxes we already pay. Another reason is that it would hit hardest the group that can least afford it. Most middle class Americans spend much more of their disposable income on consumer goods than the wealthy. So they would pay more of their income on a VAT. Poll after poll indicates that we feel overtaxed – we don’t want another tax of any kind. Those same polls also show that we believe government spending is the problem.
I have read estimates saying that a 5% VAT would generate $250 billion in annual revenues. So, if we want to get rid of the estimated $1 trillion annual deficit that our government expects through 2020, we would need a VAT of 20%. Do the math. Add all the taxes that you are paying now to this.
If Democrats have their way, we will all soon be saying “we work for the government!!”