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  • Volcker’s Volley: The VAT Battle Begins

    President Obama’s push to enact a massive tax increase in the form of a new value-added tax (VAT) is now clearly underway. Earlier this week, Obama economic adviser and former Chairman of the Federal Reserve, Paul Volcker said a “VAT should be on the table.”

    White House claims that Volcker was speaking as a private citizen simply do not pass the laugh test.  A senior statesman among economists, Volcker is one of the president’s closest economic advisers.  No doubt Volcker let the cat out of the bag prematurely from the White House’s perspective, but it is simply not credible to argue that Volcker was not conveying the contents of White House thinking.  There can be little doubt now that the unspoken policy of the Obama administration is to pass a massive VAT tax hike.

    This conclusion is further reinforced by the intense work being done all around Washington by liberal think tankers in preparation for the grand VAT push.  Even the Director of the Congressional Budget Office was quick to point out that the CBO is about to begin work on issues relating to a VAT.

    It comes as no surprise that attention is now turning toward the VAT as the liberal solution for unsustainable deficits that threaten the stability and very future of our economy.  Having hiked spending dramatically and then doubling down with his Obamacare, the nation now faces unprecedented near-term debts as the clock ticks toward the long-recognized entitlements time bomb.  If there’s one thing conservatives and liberals agree on completely, it’s that deficits of this magnitude cannot persist.  Credit markets won’t allow it.  Some fundamental course correction is certain.  The massive amount of revenue a VAT could raise is the only acceptable solution left for most liberals since they steadfastly refuse to reverse course on their recently enacted spending binge.

    Why is the VAT the darling of the left?  Because it can raise vast new revenues without the taxpayers being really sure who took their money.  Consumers would pay the tax when they purchase goods and services.  Buy a car, pay the tax.  Buy groceries, pay the tax.  Buy chemotherapy drugs, pay the tax. In this way, taxpayers would only be aware of a bit of their tax bite with each purchase.  And unless the tax is printed on the receipt and they look for it, consumers would have no idea how much tax they paid on a particular transaction.

    Today’s deficits, and tomorrow’s, result from too much spending, not too little revenue.  Reverse the massive Obama spending surge (and the Bush surge before that) and the deficits would quickly fall to sustainable levels.  Instead, Paul Volcker has done the nation a great service in telling us what Obama and his congressional allies are planning.   If that is not the case, if the President and the democratic leadership in Congress really are not planning a VAT attack, let them declare their opposition to a VAT plainly.  Every current and would-be member of Congress should say where they stand on the VAT.   And unless they favor a huge government, much higher taxes, and less transparency from government, they will stand against it.

    Posted in Economics [slideshow_deploy]

    16 Responses to Volcker’s Volley: The VAT Battle Begins

    1. John, Rhode Island says:

      One thing this post misses entirely is the whole new world of political buyouts that a VAT would open up. It would be one thing if there were just a 2% VAT on everything, but the second you allow 1 exemption, you've just opened the floodgates. Look at all the exemptions that come into play in Britain's VAT – everything from dog food to confectionery is open to political corruption.

      We can't allow something like this to happen in this country. Our government is corrupt enough.

    2. Dave, Essex VT says:

      This is just ridiculous. A VAT is a Republican's dream come true, not a Democrat's. Democrats would never be behind such a regressive tax, preferring instead to return tax structure to what it was under Clinton, or even go as far back as Reagan.

      A VAT may work for Canada, but I just don't see it happening here, sorry.

    3. Orphe D, United King says:

      A Value Added Tax? good or bad for the middle class? Please weigh in—-

      Wake up and smell the coffee! How do we pay down our national debt? taxing Income or consumption is one thing but both income AND consumption?

      Tough times in America: Who's to blame? Part 2

      Read on at http://wp.me/pPdcm-1P

    4. Doug says:

      This on top of, not in lieu of, all of the taxes that you already are paying!

    5. Pingback: » Financial News Update – 04/09/10 NoisyRoom.net: There are two ways to conquer and enslave a nation. One is by the sword, the other is by debt. John Adams

    6. Sean, Los Angeles says:

      Great article. Just wanted to note that the former Fed Chairman's name is spelled "Volcker."

    7. Timothy warren Lucas says:

      It appears nothing is off the table to support their high profile spending both overseas and a limited amount to no avail in this country that has created no jobs as of yet that I know of. They have all but thrown a easy recovery by take over conservatives that now must make a few decisions in the Democrat arena in order to try and recover some balance in numbers making them unpopular because of it. November and a complete take over is the only answer putting Obama into a lame duck position to do no further damage his remaining years but we now know he follows no legal guidelines and with a pen, can continue more damage to the recovery if one could be had. Conservatives need to put forth a winning ticket with no complications that allowed Bill Clinton a open door. We all have an interest in freedom and the continued way we have proceeded in the past but need education made competitive and history taught correctly as we have nothing to be ashamed of, much. Education made competitive makes for better schools and the Gov. out of education is a must.

    8. Pingback: Canterbury Blues

    9. Evan, Cincinnati says:

      And let's not forget that, not only will you spend more because of the new tax on top of your normal local sales tax, but the cost of goods will sky rocket as the VAT affects each step along the path of manufacturing to the consumer. Every step of the way that added tax will be passed on to the next step along the supply chain until the consumer at the end is paying for all of it.

    10. Sly from Michigan says:

      Why would we ever need a VAT?

      The president and congress must have forgotten the new 'health care' law, how It is going to save the United States, and is going to reduce the deficit/national debt…

    11. Jill, California says:

      Under Obama's administration, the cost of EVERYTHING will "necessarily skyrocket." That was clear to anyone who listened to his actions during the campaign.

    12. ROBERT COLORADO says:

      The VAT teach will control the deficit in precisely the same way that giving an alcoholic the keys to a liquor store will control his alcoholism. Does anyone really believe that Demorcracts, and sadly, Republicans too,will use the VAT tax to pay down the deficit.

      The Democrats in particular, like thieves in the night, took the monies paid in to social security to spend it on pork and a thousand other obscenities. What to you think they will do with the money collected from a VAT tax.

      Federal and State governments have increased income taxes, sales taxes and property taxes, how are their deficits doing?

      Will the stark and dangerous nature of deficits cause the federal government to finally and at last come to their senses. Look at the stimulus, the health care bill, Medicaire and the Republicans unfunded Medical Supplement act. Now what do you think they will do with the proceeds of a VAT tax.

      Then of course, where is the limit to taxation. With all of this every American not on welfare or an illegal alien, will pay well over fifty, probably closed to sixty or sixty five percent of his gross income to taxes. After all don't forget inflation, FICA, parole taxes, Medicare taxes, did I say fees? Colorado just got a billion bucks worth of them from Ritter.


    13. Larry says:

      To Dave in Essex. You will be sorry when this administration shoves this down our throats too. Isn't this exactly why the Boston Tea party happened, in addition to a fight against a federal banking system. Wake UP people!!

    14. Charles Sainte Clair says:

      My father once told me that a VAT tax was a good idea because it taxed everyone from the producers to middlemen to consumers. This is a dog and pony show. Producers, middlemen and storeowners simply pass this tax onto the consumers, who ultimately pay for everything.
      You cannot tax a corporation. The tax is eventually passed on to you. You paid for the windfall profit tax on "big oil". You pay for bolth havles of Social Security. You as the person who must live pays everything.
      Don't be an idiot.

    15. Charles Sainte Clair says:


      Obama is either a Socialist or a Communist. Either way he does not fit into the Constitution of the United States.

      He wants to rob you.

    16. NH says:

      This man is purely crazy. I mean it. He's fully out of his MIND!!!!!!!!!!!!!!!!!!!!!!!!!!!

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