James Pethokoukis

Politics and policy from inside Washington

Insta-analysis

Feb 11, 2010 19:21 UTC

What I think about what the blogosphere is thinking about.

No Pain Here: At the Enterprise blog, Mark Perry rounds up some great factoids about the boom in public sector wages. (“The number of federal workers making $150,000 or more has more than doubled since the recession started.”) As it happens, just read a great City Journal article on the role of the public employee unions on California’s economic problem. This is an issue with momentum.

Dubious Defender: The fabulous Fausta takes issue with the POTUS claiming he is a fierce advocate of free markets.

Growth Solution: Larry Kudlow has a great thought on the EU debt crisis: “Look, the problem here isn’t just debt. The problem also lies underneath the debt. In other words, there are no tax-rate incentives to promote economic growth. That, of course, would help dissolve the debt.”  American doesn’t need a Deficit Commission. It needs a Growth Commission.

VAT Valentine: Another MSM story singing the praises of value-added tax. Key bit: “The smart money says the VAT is America’s destiny, a destiny that comes closer with each passing budget.”

Credit Crisis: Like me, my pal John Tamny doesn’t think it would be such a bad thing for US debt to get a downgrade. This why Geithner should not have been so dismissive of the AAA rating threat.

White House Woes: Mike Barone gets its exactly right. The WH misread the election and electorate. And it started with the wrong-track stimulus plan.

COMMENT

Louis Vuitton Speedy 35FOLouis Vuitton OutletDOLouis Vuitton PursesETLouis Vuitton BagsBOLouis Vuitton Outlet OnlineFPLouis Vuitton OutletDTLouis Vuitton BagsASLouis Vuitton Outlet OnlineGPLouis Vuitton HandbagsDQLouis Vuitton OutletDOMichael Kors OutletGTMichael Kors Outlet OnlineFRMichael Kors BagEPMichael Kors Handbags OutletAUMichael Kors CouponGTMichael Kors BagsEOMichael Kors Outlet StoreDQMichael Kors BagsCQMichael Kors Outlet StoreCUMichael Kors BagsARbabyliss pro nano titaniumGTBabyliss ProEQbabyliss hair dryerAQBabyliss Pro Nano TitaniumBPBabyliss ProEOBabylissATBabyliss ProFPbabyliss miracurlEUbabyliss flat ironEQBabyliss Flat IronAOKate Spade HandbagsEQKate Spade BagsFTKate Spade OutletCRKate Spade PursesAUKate Spade HandbagsCTKate Spade New YorkGUKate Spade OutletCTKate Spade OutletFUKate Spade OutletBPKate Spade saleCQOakley OutletCTCheap Oakley SunglassesBSOakley Prescription SunglassesCSOakley SunglassesCTOakley Sunglasses CheapAOOakley SunglassesCSCheap Oakley SunglassesBRCheap OakleysBTOakley OutletAOCheap Oakley SunglassesGOJordan 11 Space JamDRSpace Jam 11sBRSpace Jam Low 11sGUJordan Retro 11DOSpace Jam 11sATSpace Jam Low 11sFOSpace Jam Low 11sAOJordan 11 Low Space JamGPJordan Retro 11ESJordan 11 Low Space JamFTKate Spade HandbagsERKate Spade OutletFSKate Spade New YorkBTkate spade pursesASKate Spade New YorkEOKate Spade OutletCPKate Spade Outlet OnlineCOKate Spade New YorkASKate Spade saleFPKate Spade Diaper BagERoakley outletBPoakley sunglasses cheapCQcheap oakley sunglassesFPoakley sunglasses cheapAOoakley sunglasses cheapCToakley outletDPoakley outletDUoakley outletFUcheap oakley sunglassesEPoakley outletDTray ban wayfarerFUcheap ray ban sunglassesDTray ban sunglassesGUray ban sunglassesDRray ban sunglasses saleFOray ban sunglasses saleGTray ban outletFTray ban sunglasses saleATcheap ray bansEOray ban sunglassesCOray ban sunglasses saleAScheap ray ban sunglassesFUray ban sunglassesCUray ban sunglasses saleDOray ban sunglasses saleFQray ban prescription sunglassesAOray ban sunglassesBPJordan Retro 9 BaronsDOJordan Retro 9 BaronsBOJordan Retro 9 BaronsBRBarons 9sBSJordan Retro 9 BaronsETJordan Retro 9 BaronsDOBarons 9sCPJordan 9 BaronsBTJordan Barons 9sBPJordan 9 Barons 2014CRSac a main Michael KorsFTSac Michael KorsCPMichael Kors FranceCQSac Michael KorsDQMichael Kors SacARSac Michael KorsERMichael Kors SacGSMichael Kors SacFS

VAT Attack! Obama and middle-class tax hikes

Feb 11, 2010 18:12 UTC

As long-time readers know, I am convinced that the Obama administration is itching to slap the US economy with a value-added tax. Team Obama just needs to figure out how to do it politically. Listen to the POTUS in this BBW interview:

The whole point of it is to make sure that all ideas are on the table. So what I want to do is to be completely agnostic, in terms of solutions. What I can’t do is to set the thing up where a whole bunch of things are off the table. Some would say we can’t look at entitlements. There are going to be some that say we can’t look at taxes, and pretty soon, you just can’t solve the problem.

In short, how I read this is that Obama is willing to consider a broad-based tax hike on the middle class. Smells like a VAT. But I don’t see how the WH gets there absent a financial crisis that puts Washington into a panic, just as happened with TARP. Maybe if Congress rejects the proposals of the new deficit commission, a bad market reaction would be a catalyst to action.

Of course, Obama could suggest the Hall-Rabushka flat consumption tax, a favorite with conservatives. It is like a VAT with part of the tax paid directly by individuals. This makes the tax more transparent, which politicians don’t like. To them, transparency is a bug not a feature. But the concern on the right is that an invisible VAT would make it too easy to raise taxes and finance a vast expansion of government. But even with an H-B tax, conservatives have no interest in a tax that would raise the tax burden as a way of increasing revenue as a portion of GDP from around 18 percent.

COMMENT

VAT is the worst idea that has come out of the conservative think tanks like Cato Inst. and others. It is regressive, will impoverish the middle class of America even more and will be a nightmare to administer.

However, the US must increase its tax revenues. How? Pass an intangibles tax (tax on net worth) on all individuals, corporations, trusts, PICs, etc. with a net worth over $10 million. Just 1% intangibles tax on the super wealthy would more than balance the budget and not disturb one bit the life styles of over 99% of Americans.

Already states like NH and Fla have an intangibles tax instead of an income tax. The Federal Government should do the same thing.

Posted by Acetracy | Report as abusive
  •