Tag Archives: Value Added Tax

Commentary

RINO Mitt Romney now open to European-style VAT tax

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ABC News reports.

Excerpt:

In a December 24 story in the Wall Street Journal, Romney is described not favoring the idea of “layering a VAT onto the current income tax system. But he adds that, philosophically speaking, a VAT might work as a replacement for some part of the tax code, ‘particularly at the corporate level,’ as Paul Ryan proposed several years ago. What he doesn’t do is rule a VAT out.”

A value added tax, or VAT, is a form of the consumption tax in which the tax is levied based on a product’s price, not including the cost of materials, that originated in and is popular in Europe, imposed by the European Commission, and the governments of France and the UK, among others.

Gingrich’s campaign was not the only one to notice. The American Enterprise Institution‘s James Pethokoukis wrote that “(m)any conservatives/libertarians simply hate, hate, hate the idea of a VAT….They view it as a way to fund a massive expansion of government. I would be surprised if those quotes don’t end up in a 30-second, anti-Romney ad in Iowa or New Hampshire”

Anti-tax crusader Grover Norquist once called the VAT “a European-style sales tax. It’s assessed on the profits generated at every stage of production (raw material, manufacturer, wholesaler, retailer, etc.), so there is constant reporting and payment. As such, it’s an extremely efficient money machine for big government. The VAT is embedded inside the price of a good … As such, people forget they pay it, and European governments have found it too easy to raise the tax repeatedly over time.”

People think that Romney should be the candidate because he “is the most electable”. But is that true?

Seven reasons why Romney’s electability is exaggerated

John Hawkins writing for Townhall.com lists the seven reasons. (H/T Right Wing News)

Reasons 2 and 3:

2) He’s a proven political loser: There’s a reason Mitt Romney has been able to say that he’s “not a career politician.” It’s because he’s not very good at politics. He lost to Ted Kennedy in 1994. Although he did win the governorship of Massachusetts in 2002, he did it without cracking 50% of the vote. Worse yet, he left office as the 48th most popular governor in America and would have lost if he had run again in 2006. Then, to top that off, he failed to capture the GOP nomination in 2008. This time around, despite having almost every advantage over what many people consider to be a weak field of candidates, Romney is still desperately struggling. Choosing Romney as the GOP nominee after running up that sort of track record would be like promoting a first baseman hitting .225 in AAA to the majors.

3) Running weak in the southern states: Barack Obama won North Carolina, Virginia, and Florida in 2008 and you can be sure that he will be targeting all three of those states again. This is a problem for Romney because he would be much less likely than either Gingrich or Perry to carry any of those states. Moderate northern Republicans have consistently performed poorly in the south and Romney won’t be any exception. That was certainly the case in 2008 when both McCain and Huckabee dominated Romney in primaries across the south. Mitt didn’t win a single primary in a southern state and although he finished second in Florida, he wasn’t even competitive in North Carolina or Virginia. Since losing any one of those states could be enough to hand the election to Obama in a close race, Mitt’s weakness there is no small matter.

For my own part, I find it surprising that people who are ostensibly pro-life are willing to appoint a Republican candidate who has no pro-life record. Until he started running for the Presidency, Mitt Romney was 100% pro-abortion. That’s 12 years of abortion advocacy. His record is pro-abortion. Many of the other candidates, especially Santorum and Bachmann, have a pro-life record. Newt has a 98% pro-life voting record. So why are we settling for someone who has a question mark on social issues?

Commentary

The VAT as a replacement or add-on to the income tax

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From the Heritage Foundation. (H/T ECM)

Excerpt:

Revenue-neutral tax reform involving a VAT substituting for income tax raises a number of concerns, but its one advantage might be that it would reduce or even eliminate the net bias against saving. Such a reform would quickly begin to raise the level of private savings and the private saving rate.

The same cannot be said of adding a VAT to the current tax system. Adding a VAT would not have the same beneficial effects as substituting a VAT because, obviously enough, the anti-savings biases of the current system would remain intact.

Even more telling, a massive VAT-based tax hike would slash the after-tax purchasing power of individuals and families. As they adjusted to the new tax, an early casualty would be private saving.

[…]VAT proponents who seek massive new sources of revenue—whether in the short run to pay for President Obama’s spending surge or to address the nation’s unsustainable long-term fiscal imbalance—sometimes misapply arguments that have some validity in the context of a revenue-neutral tax reform. A good example is the argument that a VAT would increase private saving.

However, as an add-on tax, the VAT would not improve saving incentives as some suggest but would instead hammer private savings for an extended period as individuals and families slash their saving rates to sustain current consumption in light of the VAT’s higher prices.

I am pro-VAT, but only if it is revenue-neutral and is coupled with a cap on federal spending, indexed to inflation. A freeze would be better still!

What’s your view of taxation? Do you like a flat tax or the FAIR tax? Which taxes would you cut and which ones would you raise? What effect would it have on working families and their employers?

News

Understanding the real effects of the Democrat health care reform bill

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Story from the Wall Street Journal. (H/T ECM)

Excerpt:

The Congressional Budget Office figures the House program will cost $1.055 trillion over a decade, which while far above the $829 billion net cost that

[…]All this is particularly reckless given the unfunded liabilities of Medicare—now north of $37 trillion over 75 years.

[…]As for Medicaid, the House will expand eligibility to everyone below 150% of the poverty level, meaning that some 15 million new people will be added to the rolls as private insurance gets crowded out at a cost of $425 billion. A decade from now more than a quarter of the population will be on a program originally intended for poor women, children and the disabled.

[…]All told, the House favors $572 billion in new taxes, mostly by imposing a 5.4-percentage-point “surcharge” on joint filers earning over $1 million, $500,000 for singles. This tax will raise the top marginal rate to 45% in 2011 from 39.6% when the Bush tax cuts expire—not counting state income taxes and the phase-out of certain deductions and exemptions. The burden will mostly fall on the small businesses that have organized as Subchapter S or limited liability corporations, since the truly wealthy won’t have any difficulty sheltering their incomes.

This surtax could hit ever more earners because, like the alternative minimum tax, it isn’t indexed for inflation. Yet it still won’t be nearly enough. Even if Congress had confiscated 100% of the taxable income of people earning over $500,000 in the boom year of 2006, it would have only raised $1.3 trillion. When Democrats end up soaking the middle class, perhaps via the European-style value-added tax that Mrs. Pelosi has endorsed, they’ll claim the deficits that they created made them do it.

Under another new tax, businesses would have to surrender 8% of their payroll to government if they don’t offer insurance or pay at least 72.5% of their workers’ premiums, which eat into wages. Such “play or pay” taxes always become “pay or pay” and will rise over time, with severe consequences for hiring, job creation and ultimately growth. While the U.S. already has one of the highest corporate income tax rates in the world, Democrats are on the way to creating a high structural unemployment rate, much as Europe has done by expanding its welfare states.

Meanwhile, a tax equal to 2.5% of adjusted gross income will also be imposed on some 18 million people who CBO expects still won’t buy insurance in 2019. Democrats could make this penalty even higher, but that is politically unacceptable, or they could make the subsidies even higher, but that would expose the (already ludicrous) illusion that ObamaCare will reduce the deficit.

Click here to read the rest of the article. It’s quite comprehensive and yet concise.