VAT Attack! Greenspan: Raise taxes with a value-added tax
At the Atlantic magazine symposium I am attending, former Federal Reserve chairman again said he thinks taxes are going up and that a value-added tax would be the “least worst” way of doing it.Â This dovetails nicely with what I wrote yesterday:
Does President Obama have a secret plan to raise taxes on middle-class Americans â€” and,well, pretty much everybody else â€” with a European-style, value-added tax? Actually, itâ€™s not such a big secret. Connect the dots:
1) The joint statement from the just-concluded G20 Summit in Pittsburgh called for balanced global growth â€” which means Americans must spend less and save more and reduce its budget deficit.
2) That same weekend, John Podesta, co-chairman of Obamaâ€™s presidential transition team and an outside White House adviser, tells a Bloomberg reporter that a value-added tax is â€śmore plausible todayâ€ť than ever, adding that â€śthereâ€™s going to have to be revenue in this budget.â€ť A VAT is a kind of consumption tax.
3) Yesterday, the Center for American Progress, the liberal think tank with close White House ties, holds a conference on the rising national debt. While speaker after speaker â€” Paul Krugman, Roger Altman, CAP President Podesta (again), Laura Tyson â€” admits entitlement spending must be reduced, they also agree that taxes must be raised. Altman suggests $400 billion in new tax revenue is needed almost immediately to calm financial market fears, and a VAT would be a great way of doing it. Thatâ€™s $400 billion a year, by the way, not over ten years.
4) Also, yesterday was the first meeting of President Obamaâ€™s tax reform panel led by former Federal Reserve Chairman Paul Volcker. In a two-part interview with Charlie Rose airing yesterday and today, Volcker says that if Washington canâ€™t get spending under control, either a VAT or a carbon tax would be effective revenue raisers. â€śThose are two big ones,â€ť he says.
5) As they used to say in the Soviet Union, â€śItâ€™s no coincidence.â€ť This is also the conclusion of one Washington insider with ties to the White House economic team: â€śDoes this all add up to a trial balloon? Of course, itâ€™s a trial balloon. And I expect the administration will propose major tax reform, including a VAT.â€ť