Is Obama planning a VAT surprise for America?

September 28, 2009

So John Podesta, co-chairman of Obama’s presidential transition team, says a value-added tax is “more plausible today” than ever, adding that “there’s going to have to be revenue in this budget.” A few thoughts:

1) Podesta is also president of the George Soros-funded Center for American Progress, a liberal think tank closely allied with the White House.

2)  It’s consensus among centrist economists, like those in the White House, that America will need to raise taxes to cover budget shortfalls and a VAT is the most efficient way of doing this.

3) At the G20, Obama promised more coordinated economic policies, including having the US lower its borrowing and consume less. This could be done via a VAT, which would also let the US have more tax synchronization with other OECD countries.

4) It seems like the WH is staring to redefine its pledge not to raise taxes on those making less than 250k as applying only to income taxes.

Bottom line: These Podesta remarks sure sound like a trial balloon by the White House.

5 comments

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VAT should be good news for US economy that survives on borrowed time and money.

Posted by Mathew Wagner | Report as abusive

I sincerely and seriously doubt that would ever get past the Congress or the American people. I look forward to further comments as I have never yet heard of an American that would welcome a VAT.

Posted by Kelsey | Report as abusive

The U.S. should look to a VAT as the core component towards restructuring the tax system to be more competitive in this era of globalization. All our trading partners and over 100 countries use VATs to level the playing field for international trade. Under GATT rules the VAT is border-adjustable, i.e., added to imports and subtracted from exports. The U.S. is at a competitive disadvantage for not using a VAT.

There are many outspoken proponents of a U.S. VAT, including such politically diverse individuals as (ret.) Sen. Fritz Hollings and Patrick J. Buchanan. Those who think a VAT is regressive are not considering the balance that can be achieved with the structuring of the personal income tax, and might be surprised to learn that some major union heads support the VAT.

The VAT could be used to pay for universal healthcare vouchers that offer the choice of placement with insurance companies or Medicare. The VAT could replace the corporate income tax, doing away with the double-taxation of dividends, and removing the incentive for multi-national corps to park funds abroad.

Posted by Steve Abramson | Report as abusive

Kelsey might be interested to know that there are a number of individuals as well as industry bodies who are in favour of a VAT. The Pharma industry is but one. See David Leonhardt’s “Club Wagner” at the NYTimes economix blog for individuals.
The VAT would also create a level playing field in World Trade which the US needs to do and stop its silly food fights with the WTO.

Posted by PeterD | Report as abusive

Kelsey,

I would be such an American, that is in favor of a VAT tax. The economy of the United States is hemmorraging money and will continue to do so, as baby boomers increase SS, Medicare, etc. obligations. Throw in additional spending measures, and revenues are greatly needed.

I am aware of many other individuals that are in support of a VAT. Perhaps out of necessity, rather than affection, but support nonetheless.

Posted by sddan | Report as abusive