The spending pace of President Barack Obama and the 111th Congress simply cannot be sustained. There will either have to be spending cuts or higher taxes. The left prefers higher taxes, including the imposition of a value-added tax (VAT). How would a VAT work. Heritage scholar Curtis Dubay explains: The VAT is a consumption tax that taxes the value added by businesses at each point in the production chain. It can apply to both manufactured goods and services. This contrasts with the more familiar income tax, which taxes salaries, wages, …
In the ongoing discussion on how best to address the nation’s out-of-control deficit spending, one proposal would increase taxes by adding a value-added tax (VAT) on top of the current tax system. Proponents argue that a new tax on consumption would raise the needed revenues to close the deficit gap without the negative economic effects of raising the income tax. However, rather than putting Washington’s fiscal house back in order, a VAT is more likely to grow the size of government and encourage growth in spending—effects that would be counterproductive …
Washington think tanks and commentators continue to spin out impressive reams attempting to explain the necessity and virtues of adding a value-added tax (VAT) on top of all the taxes the federal government already collects. The fiscal policy problem is real enough—thanks to the Obama spending surge, federal budget deficits are unsustainable and a course correction is inevitable. What most VAT-istas refuse to acknowledge is that the problem is due to new spending, not a sudden collapse in the ability of the federal tax system to raise revenues. Even so, …
Today, 154 Republicans joined me on a letter to the President’s debt commission asking them to stand against a new value-added tax, or VAT. I’m proud to see our Conference unite against a tax that’s being pushed by Paul Volcker, John Podesta, and Nancy Pelosi. The VAT is clearly a job killer. While in the last 20 years American businesses created 45 million jobs, the European economy only created 10 million. The healthcare bill moved us toward European levels of government, but now liberals want European taxes to pay for …
Recently in the Wall Street Journal, David Ranson pointed out what tax economists have known for a long time: no matter what changes Congress makes to the existing tax code, it will continue to raise the same amount of revenue as a percentage of GDP year-after-year. Ranson writes: Despite big changes in marginal tax rates in both directions,”Hauser’s Law,” as I call this formula, reveals a kind of capacity ceiling for federal tax receipts at about 19% of GDP. The income tax is the predominant revenue raiser for the federal …
The threat of a value added tax (VAT) in the United States is growing steadily. Despite protesting that it is not something he is considering, President Obama refused to rule out a VAT completely, much as David Cameron and Nick Klegg, the new leaders of the U.K. refused to rule out an increase in the UK VAT during the campaign. Of course, one day after taking office they were laying the groundwork for an increase in the UK VAT to 20 percent. That would be a 5 percentage point increase …
The proposed €110 billion ($140 billion) Greek rescue package announced on Sunday may well not survive the week. Watching public sector workers storming the Acropolis in protest at proposed government spending cuts and tax increases, raises the question of whether the Greek Government itself can survive. Eurozone countries have agreed to provide €80 billion in emergency loans over the next three years for Greece, with the rest coming from the IMF. In exchange for avoiding bankruptcy (at least for the next couple of months), Greece has agreed to pass a …
A big reason Europeans adopted a value-added tax (VAT) was to raise enormous sums to underwrite their social welfare state, but another was that the VAT was supposed to be much more difficult to evade than most other taxes. Europeans have a well-deserved reputation for tax evasion and so their governments need a tight, reliable, auditable, mighty revenue source and the VAT seemed to fit the bill. Well, maybe not. According to a recent study commissioned by the European Union, Member States lose more than $150 billion annually to fraud. …
According to Paul Volcker, former Chairman of the Federal Reserve and a senior economic advisor to President Obama, an European-style Value Added Tax (VAT) would be a good idea for the United States but is too unpopular to be under consideration “now or for the indefinite future.” On the one hand, Mr. Volcker’s public acknowledgment of the VAT’s unpopularity shows he is a MOTO – a master of the obvious. Even this early in the debate, 85 United States Senators stood up on April 15 to oppose a VAT. On …
The presidential Commission on Fiscal Responsibility and Reform convened Tuesday at the White House to address what leaders of both parties agree is one of the greatest threats to the country’s economic future: the rising national debt. Recently President Obama and members of his economic team voiced their support for a European-style value-added tax, or VAT, as one solution to our ever-growing 13 trillion dollar federal debt. I flatly reject this suggestion. A tax-and-spend economic policy that includes a value-added tax is precisely the wrong medicine for our ailing economy …
