How America might get a VAT of its own

Via Wizbang:

Is the Value Added Tax coming?Posted by Kim Priestap
Published: March 30, 2010 - 11:19 PM

Brit Hume thinks a value added tax or VAT may be around the corner. He suspects the Democrats might pass a value added tax after the November elections when Congress is in a lame duck session, assuming the Democrats lose one or both houses (If the Democrats lose control of both houses, trust me, the Democrats will pass far more than just a value added tax.). Here's Brit offering his analysis (via NewsBusters):

VIDEO AT LINK

A VAT is kind of like a national sales tax, except it isn't applied when a consumer purchases an item. Instead, a VAT applies to an item every time value is added as it moves up the chain of production, which means the producer, the wholesaler, and the retailer each pay the tax on the amount of the value added. Liberals all think the VAT is wonderful because they say the consumer does not see the tax. Well, that is totally false. Any time a tax is imposed on a producer or service provider, it is passed on to the consumer. It appears to be invisible, but it really isn't.

If you're dealing with something inexpensive like socks, the price increase that comes as a result of the VAT doesn't have such a negative impact. If you're dealing with much larger, more expensive items, like automobiles, the tax will significantly increase the price of the car. There simply is no way around it. Try to think about all the individual parts that are required to manufacture a car. Let's start with the most visible parts: wheels, steel, plastics, paint, textiles, glass, gauges, pedals, and lights are only a few. There are significantly more parts that we don't see: switches, bolts, screws, wires, chains, belts, hoses, mufflers, pipes, catalytic converters, and it goes on and on.

Here, let me make it easier. Take a good long look at this image of this car with all its parts laid out:

You see all those individual pieces and parts? There are, what, maybe a few thousand of them altogether? You might want to grab a magnifying glass to see teeny-tiny ones. Each and every one of those parts that is made in America will be hit with a value added tax at every stage of its production, which I'm guessing is at least two stages - raw materials and then manufacturer. I'm assuming large automobile companies buy directly from the manufacturer, but maybe not, in which case, there would be three layers, possibly more, of value added taxes. And the taxes on every single one of those parts will be reflected in the final price of the car. Which means you can expect to pay a lot more for a new automobile. Suddenly, used cars look a bit more attractive, huh?

In Europe the VAT takes the place of a sales tax. If a VAT is imposed here in America it will be on top of the sales tax and since sales taxes are imposed by state and local governments and they won't let go of those revenue streams any time soon. Not only that, but since the VAT will be reflected in the retail price of the product, you'll pay sales taxes on the value added taxes. Isn't big government fun?

Update: Charles Krauthammer, one of the Right's most brilliant minds, wrote his latest column on the value added tax called The VAT Cometh. He writes of the significance the VAT plays in Obama's presidency:

Obama set out to be a consequential president, one on the order of Ronald Reagan. With the VAT, Obama's triumph will be complete. He will have succeeded in reversing Reaganism. Liberals have long complained that Reagan's strategy was to starve the (governmental) beast in order to shrink it: First, cut taxes; then, ultimately, you have to reduce government spending.
Obama's strategy is exactly the opposite: Expand the beast, and then feed it. Spend first -- which then forces taxation. Now that, with the institution of universal health care, we are becoming the full entitlement state, the beast will have to be fed.

Krauthammer is right. That is exactly the strategy and Obama and his government-loving leftists are absolutely determined to succeed no matter what the political consequences. ObamaCare is only the beginning of what they hope to accomplish and the VAT is key to providing the revenue stream.

Cross posted at KimPriestap

Permalink | Comments (32)

"Obama really has brought "Hope and Change" to America.
It's just not the exact "hope and change" he thought he was bringing."

Turns out, last May, Obama and the dems floated this exact idea.

http://www.washingtonpost.com/wp-dyn/content/article/2009/05/26/AR2009052602909.html

Excerpt: "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."

I agree we need a vat on MSM advertising, legal services, Red Zinger Tea, Berkenstocks, tie dyed shirts and volvos. The powuer to tax is the poiuwer to destroy and we should use it. Since lib’s are the ones favoring taxes it is only fair and right tomake them pay them.

“Politicians and economists I chat with from the White House to Capitol Hill to the Federal Reserve think a VAT inevitable.”

Hey sport, next time you “chat” with them, tell them we the people are coming for them. Starting in November, we are going to clean them out hard,,, and thats just the beginning, the Kenyan will be next on the list.

Hey, you're onto something. Since Leftists are such consummate bullshit artists when it comes to imposing their wills upon that and those whom they view as their biggest gremlins, it shouldn't be too much of a task to selectively slap a VAT on their most sacred cows. It'll take a while to untangle the legal mess they're created with their KevorkianCare piracy; maybe we can offset (or minimize) the effects on Joe Sixpack by squeezing some blood out of their rock for a change, and pass it along in the form of incentives and tax cuts. They've willingly used the Constitution as toilet paper again - with great fanfare this time - so if the SCOTUS finds that Americans did get forced to buy a pig in a poke, so be it - it'll be declared null and void before all the liberal ranting about discriminatory taxes reaches their bench, so that can die a quiet death, too. But if it's upheld, then what's good for the goose is good for the gander. Make the SOB's squirm.

That picture is priceless! Priceless, I tell you!!!!!!!

we need a VAT on all of liberalism except that, alas, there is no “value added” -—— so only productive elements of the economy and populace get hit hard

If I were an activist in California or any other state with Initiative or Referendum. I would be passing out petitions right now giving the liberal new taxes on themselves! They always said to the “chicken hawks” that if you believe in war so much why don't you fight them yourselves. So if they believe in taxes so much why not make them pay for them. I cant believe that I am the only one seeing this.

Yeah - when and where was it that there was some move to put a 'tax me more' option on the income tax return, so all these magnanimous bleeding hearts could walk the walk and write in extra out-of-pocket funds they'd be willing to pay?

The problem with this idea is that the liberals don’t want to substitute the VAT for the income tax, they want to add it to the income tax. There is no way that the Democrats would ever vote to repeal the income tax but it is very likely that they would vote to impose this onerous VAT on the American public, while keeping the present tax code, regardless of the disastrous effects it would have on the economy.

A VAT will just about double the price of cars and other high end goods. Take a look at some UK versions of vehicle manufacturer websites-and think about who would be willing to pay roughly $30K for an average car. That’s going to be tough even in Obama/Weimar Reichmarks.

Quite to the contrary, I believe the stage is being set for the biggest backlash and slashing of government power and government employment our nation has seen since the 18th Century. If I were a government worker, I’d start training for a new line of work now.

Ummm ... is the federal government constitutionally authorized to impose a national sales tax?

I know that such things aren’t a concern to our government, but the federal government is authorized to apportion tax to the states AND to progressively tax income. There is nothing in there about a national sales tax as far as I know ....

Unfortunately, the power to tax is one which the Constitution does explicitly give to Congress.

Section 8 - Powers of Congress

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;