“And in a paper published last month in the Virginia Tax Review, Burman suggests that a 25 percent VAT could do it all: Pay for health-care reform, balance the federal budget and exempt millions of families from the income tax while slashing the top rate to 25 percent. A gallon of milk would jump from $3.69 to $4.61, and a $5,000 bathroom renovation would suddenly cost $6,250, but the nation’s debt would stabilize and everybody could see a doctor.”
Interesting, but you would be looking at a jump of the grocery bill alone probably a good 50 bucks or more.
Quite a punch, even without an income tax or a decreased rate, and this proposal (at least as quoted by Emmanuel in the article) would NOT eliminate the income tax. Another person in the article said it could be removed, but not him and he is the one who would really have any say at all on the matter.
I honestly can’t see how they would say this would stimulate the economy. The FairTax, yes. Not this VAT.
“this proposal (at least as quoted by Emmanuel in the article) would NOT eliminate the income tax.”
Right. Emanuel wants a VAT dedicated exclusively to health care: it’s not designed to replace anything. It’s designed to accomodate a massive expansion of the welfare state using a financing mechanism that will be less visible than the payroll tax. A VAT as replacement for income/payroll taxes has much to recommend it. A dedicated VAT to finance health care would be a singularly bad idea (since we would have foregone the opportunity to reform our current tax code and insulated health care from competing against government expenditures for defense, criminal justice, education etc.).
Therefore, I hope Obama pursues this, as I think it will greatly amplify opposition to his health plan.
You see, that is because you aren't looking at the big picture. (/sarc, sorta)
This will cause the price of everything to rise, at every level. That means that 'money' will be worth less, and people will need more.
This will cause pressure to increase prices, wages, and decrease the value of the dollar (can you say "inflation"? I knew you could.)
Now, in the long run, what that inflation does in balloon the GDP numbers (instant recovery!), inflate the stock market (more recovery!), increase wages (even more recovery!), and help people who are currently borderline on fixed debts to make the payment.
It is all a numbers game, but the bottom line is that it will take more money to buy less, and the government just keeps living off our largesse while sitting on its own.