U.S. value-added tax still a pretty toxic idea

April 15, 2010

White House Economic Economic Advisor Paul Volcker stirred up debate over the United States possibly adopting a European-style value added tax to help bring federal deficits under control, saying recently that it “was not as toxic an idea” as it has been in the past.USA-FED/

Well the idea is still pretty toxic in the U.S. Senate.

The Senate on Thursday voted 85-13 to adopt an anti-value-added tax resolution sponsored by Arizona Republican John McCain as part of its consideration of legislation that would restore lapsed jobless benefits.

The resolution has no force of law, but it gives a pretty clear sense that senators don’t like the idea of a value-added  tax.

“It is the sense of the Senate that the value added tax is a massive tax increase that will cripple families on fixed income and only further push back America’s economic recovery,” the resolution stated.

A value-added tax would be added at each stage of production and as such would not be directly seen by the consumer the same way a sales tax is added to the total at the register.  But it would be felt by consumers through higher priced goods and services. Critics say it is a regressive tax that hits hit fixed-income and poor people particularly hard.

But some economists argue a consumption tax is needed to help bring down budget deficits and curb America’s insatiable appetite for imported goods. It also could help U.S. manufacturers compete in the global economy. Some argue U.S. exports are less competitive because the European Union does not apply the value-added tax to its exports but does apply it to imports from the United States.

The debate over the value-added tax is not likely to end any time soon. Tax cuts enacted into law under President George W. Bush expire at the end of the year and lawmakers are likely to take a hard look at the U.S. tax code as they search for ways to generate revenue to cut huge deficits and make good on President Barack Obama’s promise to preserve tax breaks for middle-income taxpayers.

Photo credit: REUTERS/Larry Downing (Volcker testifies before a U.S. House committee)

13 comments

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Maybe it is time the other 47% started to contribute to the national debt?

Posted by The1eyedman | Report as abusive

“The debate over the value-added tax is not likely to end any time soon. Tax cuts enacted into law under President George W. Bush expire at the end of the year and lawmakers are likely to take a hard look at the U.S. tax code as they search for ways to generate revenue to cut huge deficits and make good on President Barack Obama’s promise to preserve tax breaks for middle-income taxpayers.”

If a VAT (National Sales Tax) is our future, there will be no middle-income tax break. Just goes to show, we can’t pay for the radical agenda of this president and this congress.

Health care not adding to the deficit? Most Americans (over 60 percent) don’t believe that at all.

Posted by TyC | Report as abusive

Is there something wrong with just instituting a national sales tax and eliminating income tax? Would it not make more sense to collect taxes where revenue is guaranteed? People buy stuff all the time every day in this country. Billions of dollars change hands every day. Surely a simple consumption based tax system would be more profitable for the government and less invasive to the citizen. Is there some reason this is still not being considered?

Posted by Benny_Acosta | Report as abusive

Now that this administration has spent or committed all our liquid national worth to their utopian programs, its time for consequences:

Entrepreneurs will be taxed punitively and will contract the medium sized businesses that have provided most of US job growth for the past 30 years.

The US Federal government will fund state government budget shortfalls, for a while, borrowing from savers in China and Japan.

The “bipartisan commission” seated by Obama will conclude that a VAT is required to induce China and Japan to roll over and fund our ballooning national debt. The VAT will be introduced in the lame duck session of Congress this fall.

US voters will have a last chance to change the trajectory of Congressional spending in November. If they vote for change, a decade of slow employment growth confronts us. If they vote for continued unfunded spending, the private US economy will founder.

In any outcome, the US middle class is destined to endure massive unemployment and diminished economic prospects for the next generation. They will be taxed to a fare thee well regardless. They are reaping the consequences of their “free lunch” mentality and profligate spending programs they voted for in 2006 and 2008.

The electorate’s naivete will visit enormous financial burdens on their children. The next generation will be required to honor the “full faith and credit” provisions of our national debt. The US will become a third world power.

So it has been…and so it will always be when nations borrow and spend beyond their means.

Posted by Robustus | Report as abusive

Some clown wrote that “the other 47%” needed to contribute to paying down the national debt.

How about the people who ran up that debt in the first place, and here’s a news flash, it wasn’t the “other 47%”.

Tax rates are at their lowest in SIXTY YEARS, and for some people out there, that’s not low enough. These people don’t give a damn about this country.

Posted by Infiltrator | Report as abusive

Benny.

No one is talking about eliminating the “income tax”.

And yes, the VAT or National Sales tax will be just as Robustus says. This administration has deliberately spent us into a debt unsustainable for future generations.

Prepare to pay higher taxes all around.

Someone said tax “rates” are their lowest in sixty years. Well, we got a rebate, but we did not get a tax cut. The only reason taxes are as low as they are is because of President Bush. But they are due to expire at the end of 2010. After that, I hope you say taxes are the highest in sixty years. But I bet you won’t.

Posted by TyC | Report as abusive

There’s that reverse logic again. Tax rates are low because of President Bush. So have you been “Taxed Enough Aready?”
Another clown.
Some people don’t know the difference between Tax and Spend and Borrow and Spend. Guess which crowd the “Taxed Enough Already” people belong to-

Posted by Infiltrator | Report as abusive

infiltrator.

Interesting how everything is bad because of President Bush. I hear that reverse logic all the time.

Well, he is the one who gave us low taxes. Real tax cuts, not just a temporary rebate.

After 2010, taxes will go up significantly, so talk to us again after 2010 and I bet you won’t be saying anything, because taxes will be higher.

I am glad you want higher taxes, but the majority of Americans don’t want higher taxes, or the new health care fiasco, or cap and tax…I mean trade, or anything else this administration and this congress are shoving on us.

Geez. Obama…45 percent approval, congress 18 percent approval, Pelosi 11 percent approval, Reid 8 percent approval. They clearly don’t represent the majority…Doesn’t matter to them and apparently you.

Extend the Bush tax cuts because we are taxed enough already.

Posted by TyC | Report as abusive

Tea-y-C.

Infiltrator is exactly right and you are wrong, as usual. Everything IS bad because of Bush, and we all know you supported the Bush agenda from day one. From the tax cuts that created this deficit in the first place, to the unfunded wars and corporate welfare programs that pushed this country into the Great Recession, you have been the Bush administration’s loudest cheerleader.

You really don’t give a damn about this country. If you did, you would have been opposed to the policy that “Reagan proved deficits don’t matter” when it really did matter, not when it became politically convenient.

Posted by Yellow105 | Report as abusive

Hear that Robustus? That Yellow troll says you are wrong.

Don’t worry though, he follows me everywhere and personally attacks rather than speak to the issues. You won’t be bothered even though you feel the same way as the majority of Americans.

We love this country and are concerned with the direction of this radical government. As a matter of fact, a new poll put out by the Pew Research Center says the following:

“Three out of four Americans are either “frustrated” or “angry” with the federal government – and nearly a third of the public views government as a “threat to their personal freedom,” according to a new survey by the non-partisan Pew Research Center.”

“The poll, which dissected the issues fueling the public’s growing discontent, showed a majority of Americans oppose larger, more activist government. “The public now wants government reformed, and a growing number want to see its power curtailed,” said Kohut. “With the exception of regulating Wall Street, there is less of an appetite for government solutions to the nation’s problems – including greater government control over the economy – than there was when Barack Obama first took office.”

Americans who care about this country are very concerned with the direction this congress and this president are taking us.

So, talking about the past is a diversion because it is the current policy and future direction of this country people are concerned about.

Read more: http://www.politico.com/news/stories/041 0/36007.html#ixzz0lYs6Zetw

Posted by TyC | Report as abusive

Tea-y-C.

Your emotional rants just prove my point. You won’t discuss the tax issue, preferring to call me a troll and change the subject to polls.

I ask you again. Where were you when the Bush administration ran the country into the red?

I’ll answer for you, since you will probably go another tangent about polls and trolls. You were sitting in front of your TV watching Fox News Sunday.

Just to give you food for thought(not that you are the thinking sort), the Bush tax cuts were intended by the Bush administration and the Republican congress that passed them to expire. They knew then as we all know now that they were not sustainable. The current administration will preserve them for the 95% of the country that actually needs them.

Are you in this 95%? Probably. Do you care? No.

Posted by Yellow105 | Report as abusive

Actually, I already explained my point and Robustus explained his point about this article clearly in previous posts.

As for your constant nit picking, have fun talking about the past.

As stated by Pew, the American people do not agree with you on the direction of this country.

Our case was stated clearly and now you can be the typical progressive and avoid talking about the good (hint there is none) Obama and the congress are doing for this country. Obama 45 percent approval, congress 11 percent approval, Pelosi 12 percent approval, Reid 8 percent approval. They clearly don’t represent the majority view in this country.

The VAT is a mistake they will live to regret if forced on the American people. I gave my opinion and others gave their opinion on the issues.

Time to move on. It is tiring having you follow me all around nit picking everything. Others have given the same view point, but I am your favorite.

Have fun with the last word. I am sure it will avoid the issues and instead be a personal diatribe against me.

Too bad Reuters doesn’t implement what you want…an ignore user button. It would come in handy for me to use on you.

Posted by TyC | Report as abusive

Interesting exchanges of opinions on this blog.
The debate on economic policy usually revolves around two philosophies. Tax and Spend and Borrow and Spend.
The thing that really makes me laugh is that the Folding Chair Patriots who all vote Republican are griping about the deficit they created. And they ignore the fact that their Republican representatives all just voted against PAYGO. Makes you wonder what those astroturf organizers are putting on their donuts.

The Folding Chair Patriots who supported the policies that created this massive deficit have no standing when it comes to discussions of how we work it off. None.

Posted by Infiltrator | Report as abusive