Once Considered Unthinkable, U.S. Sales Tax Gets Fresh Look

[RamboLiberal]

Source: Washington Post

With budget deficits soaring and President Obama pushing a trillion-dollar-plus expansion of health coverage, some Washington policymakers are taking a fresh look at a money-making idea long considered politically taboo: a national sales tax.

Common around the world, including in Europe, such a tax -- called a value-added tax, or VAT -- has not been seriously considered in the United States. But advocates say few other options can generate the kind of money the nation will need to avert fiscal calamity.

At a White House conference earlier this year on the government's budget problems, a roomful of tax experts pleaded with Treasury Secretary Timothy F. Geithner to consider a VAT. A recent flurry of books and papers on the subject is attracting genuine, if furtive, interest in Congress. And last month, after wrestling with the White House over the massive deficits projected under Obama's policies, the chairman of the Senate Budget Committee declared that a VAT should be part of the debate.

"There is a growing awareness of the need for fundamental tax reform," Sen. Kent Conrad (D-N.D.) said in an interview. "I think a VAT and a high-end income tax have got to be on the table."

-----

Still, Orszag has hired a prominent VAT advocate to advise him on health care: Ezekiel Emanuel, brother of White House chief of staff Rahm Emanuel and author of the 2008 book "Health Care, Guaranteed." Meanwhile, former Federal Reserve chairman Paul A. Volcker, chairman of a task force Obama assigned to study the tax system, has expressed at least tentative support for a VAT.



Read more: http://www.washingtonpost.com/wp-dyn/content/article/2009/05/26/AR2009052602909_pf.html

[Abq_Sarah]

1. Let's see some

Fundamental spending reform before they impose a highly regressive tax on the nation.

A VAT would be a job killer.

[brendan120678]

2. Exactly...let's cut some spending first, then consider a VAT...

man, that statement makes me sound like a Repuke... :puke:

[Abq_Sarah]

6. No it doesn't.

Since when have we ever campaigned for and supported highly regressive taxes?

A 10% VAT is going to sting and change shopping habits for someone who makes twice the poverty level but it's going to devastate people already living on the edge.

[Tansy_Gold]

63. "...it's going to devastate people already living on the edge."

You nailed it.

My understanding is that a VAT is a cumulative tax taht is ultimately passed on to the end consumer, while all the producers and distributors escape it.

It's a tax placed on consumers in an attempt to replenish the treasury of funds that have been handed out like gifts to the already filthy, disgustingly wealthy. Talk about taxation without representation????!!!!

The only good thing about a VAT/consumer tax is that it might actually cut down on our own wasteful spending -- those of us who still have anything to spend. . . . . .


TG

[GReedDiamond]

21. Cut the "defense" budget...

...by 50-75%. That would be a good place to start.

[SharonAnn]

42. We need to stop calling it the "Defense" budget. It's the "Military" budget. - or even "War" budge

Many things in this budget are neither directly nor indirectly related to "defense".

They are, however, related to the military or to war.

Framing is everything in these discussions.

When we call it the "defense" budget, then cutting it sounds like we're going to reduce our country's defense.

Also, it doesn't seem related to the famed "Military-Industrial" complex that a famous Republican president warned us about.

[GReedDiamond]

43. I agree...

...that's why I put the word "defense" in quotation marks.

How about calling it what it really is: wasted taxpayer money which only benefits the (already) rich at the top.

[pacalo]

81. How about "Corporate Skim-Off-the-Top Budget".

Or "Political Contributers' Payoff Budget".

"Politicians Value Contributors Budget".

The money sure isn't benefiting the troops, I've learned. Just ask the parents who have to buy their body armor & boots -- plus t-shirts, socks, toiletries & luxury items like snacks.

[Lorien]

69. And close down our 700+ bases overseas

there's no reason for us to have bases in Germany and Japan anymore. The whole "Empire" thing just isn't working for us.

[Tim01]

3. It would be more honest to just charge everybody 10% of what they own.

Or how ever much they want to take with this sneaky new tax.

[avaistheone1]

12. Flat taxes hurt the poor.

[Oregone]

27. But, well, a flat tax on *wealth*, now thats an interesting take

We know the poor spend a proportionally higher amount of their wealth to reach sustenance level existence, and hence, a consumption tax is clearly regressive; the poor will always have a higher effective tax rate on disposable income.

But on the other hand, taxing wealth, well, oh my. The poor cannot build wealth essentially, because of their cost of living strips out much of their ability to save. But the rich are not only able to save, but greatly prosper from interest and dividends (as well as their ownership of companies). The rich are wealthier than the aggregate sum of their income, just as the poor are less wealthy than their aggregate income. Therefore, the effective tax rate on *income* would actually be somewhat progressive, and not "flat" at all. If a poor worker makes $30,000 a year, its likely they own little, and hence, would pay little wealth tax (so it would yield a low effective tax rate). If their CEO makes 900X what they do, its likely their wealth is over 900X the poor persons due to savings, inheritance, capital gains, etc, and hence, their effective tax rate would be proportionally higher to their income.

A wealth tax, even with a "flat" percentage, is an idea worth exploring.

[Tim01]

54. I've had a lot of experience with trying to help poor people change.

My own personal first hand experience has been that it is really tough to get poor people to stop doing stuff that makes them poor.
Almost every poor person I know has a car which is much newer and in much better shape than the car I drive. They always have great excuses for why they have to have this or that. Best example was my friend who said she had to have a brand new car because the police would harass her if she didn't. And it wasn't a 4 door sedan either. That car is SHARP. She was applying for food stamps. Good person, but terrible money skills.

[Oregone]

76. Um, yeah, so poor people aren't always the best budgeters

Point being? Even on the most stringent budget, a poor person would spend a higher portion of their disposable income on sustenance products (clothing/food) than an upper class person (making consumption tax regressive). But if people had to pay a wealth tax annually on items they couldn't afford in the first place, they might actually shop more frugally.


I understand that poor people don't always make the best choices. But regardless, they are poor. If a government wants to fund itself, looking at them to provide any sizable portion of revenue is not logical. Just based on necessity to fund a central authority, it simply makes more sense to tap those that can afford more (and receive more from the society). This could be one way to do it.

[gabby garcia]

93. sounds like you don't have much respect for poor folk.

your "own personal first hand experience" obviously colors your opinion.
whatever.
I personally find your post to be condescending bullshit.

gg

[WriteDown]

59. Why not have a wealth tax for people leaving states and/or

the US. If you leave a state for a better tax situation in another state, then you have to pay 50% of your wealth in taxes to the state you are leaving. If you try to leave the US, then you have to pay 90% of your wealth in taxes to the US.

[Oregone]

73. Hehe...

I guess I would have about 5% of my wealth when done with that system. :)

But that doesn't really help in everyday situations when people just stay put. Thats more like an exceptional penalty tax. They now have something similar to those who revoke their citizenship to the US. It sort of sucks for those who marry and are getting citizenship in another country that doesn't allow dual-citizens.

[vadawg]

79. hell know, what if you hae to move states for a job etc, or health etc

this would be a massive burden on peoples freedom of movement and would lose votes like mad.

[Tim01]

51. A value added tax drives up the price of everything poor people buy.

The companies will pass the cost on to the consumer.

[My Good Babushka]

4. Responders sound like they'd be more comfortable

over at Free Republic. That's just knee-jerk opposition 'I'm not paying for it' selfishness. Let's have taxes, and then make sure we actually GET SOMETHING for our taxes.

[Abq_Sarah]

7. Why do you support a tax

That disproportionately punishes lower income people?

Or have you not thought this through?

[Romulox]

25. Support for PROGRESSIVE taxation is a defining trait of the "the Left"

Here's a hint: a sales tax is REGRESSIVE. Now who belongs where? :hi:

[Oregone]

28. But, 'Let's have GOOD taxes' seems like a better approach.

Why not just tax the poor 100% of anything they have left? Its a tax? Spend it right...

[My Good Babushka]

38. Lots of countries already do this

You don't apply it to necessities, and low income people get their taxes reimbursed. That doesn't sound too regressive to me.

[Progressive dog]

77. A VAT raises the price of necessities (DUH)

Will the farmer pay a VAT on his capital equipment? Will he pay it on his fertilizer? Will we have to have a VAT tax code with lots of loopholes or will we just pretend that we can have a VAT that is neither regressive or loaded with loopholes for the people who already own the country? When the top income tax rate goes back to 90%$ or more (like most of the nations that have a VAT), then I'll be willing to discuss regressive taxes.

[My Good Babushka]

86. Con-Agra has deep pockets, they can pay some taxes

not another "hurting the small farmer" canard, please.

[hadrons]

5. VAT "got to be on the table", but not single-payer

WTF!!!

[Oregone]

31. Would you be willing to pay a VAT for single-payer?

Like Canada

[ProudDad]

82. Hell, Yeah!

I'd also be willing to pay $10 per gallon of gas if $7 of it goes for alternatives and to phase out petroleum...and the personal automobile in favor of a new infrastructure that promotes and provides alternative transportation modalities.

I'd also be willing to pay more for food if it were organic, nutritious, grown closer to home and pays the farmers a living wage.

I'd also be happy to quit buying worthless, chinese made crap from Mal-Wart in order to afford my "higher" priced food, etc. -- oh wait, I already am doing that...

Never mind.

[cabluedem]

83. Fact: All nations with VAT have a universal healthcare system. nt

[flamin lib]

8. I looked into the various proposals for taxation back when Huckabee

was advocating the "Fair Tax".

Re-read the post here: http://journals.democraticunderground.com/flamin%20lib/54

[toopers]

46. The Fair Tax is definitely the way to go!

eom

[flamin lib]

65. Ya didn't read the link, did ya'? nt

[toopers]

92. I read the link. What is your point?

[ima_sinnic]

87. so sorry about that brainwashing you got ...

[toopers]

91. No brainwashing, just reality . . .

the fair tax drives all the correct behaviors.

[fasttense]

9. A national sales tax? Let's start charging foreign corporations for access to our markets FIRST.

Why should foreign owned corporations have free use of our markets, infrastructure, legal system and military and police protection while we charge our own citizens even more for buying crap from them? Where else will the world sell their crap if they don't have access to our US markets? Do you think the Communist Chinese might buy all that crap they ship through Wal-Mart over here? Do you think the Indian government will start using their own call centers as much as American citizens do? I think we need to start charging foreign corporations for having access to our US markets BEFORE we charge US citizens for buying their crap.

Why should foreign corporations have a free ride while US citizens pay for their market support and maintenance? We should start charging tariffs at least as high as they charge us.

[Skink]

10. National internet sales tax.

If you go into a store you pay up to 8.85 percent depending on where you live. It is unfair competition to retailers.

[cabluedem]

84. Internet sales tax would kill online sales after shipping charges are added. nt

[lurky]

11. Enough regressive taxation!

For fuck's sake, why are our Dem representatives pushing Reaganomics? Not just nationally, but here in New York too... No matter who you vote for, you get Ronald Reagan. :mad:

[avaistheone1]

13. I agree the Democrats pushing this are wolves in sheep clothing.

[groundloop]

14. Thinking about the knee-jerk opposition to a new tax...

That's exactly what keeps the repugs in business. Face it, at at least a subliminal level we all have an aversion to new/additional taxes. But the fact is that over the long term any entity (federal government included) must take in enough money to pay for it's expenditures. Government must balance the services it provides with the revenues it collects.

Personally I'm neutral on this for the time being. This, coupled with going after tax cheats that use loopholes to avoid paying their fair share, might just make a difference in being able to afford true health-care reform (hopefully some sort of single payer system).

If the Obama administration decides to go for this they need to be very careful how it's sold - this will be easy pickings for the same old worn out 'tax and spend' campaign ads.

[Skink]

15. Here's what the Hertitage foundation says.

What Is a VAT?

A VAT is levied on the “value added” to goods and services as they pass through each stage of the production process. There are two ways to impose a VAT, and both require businesses of all types to serve as tax collectors. The most common form, the credit-invoice VAT, operates somewhat like a sales tax. As explained by the Congressional Budget Office:

is typically administered by taxing the total value of sales of all businesses, but allowing businesses to claim a credit for taxes paid on their purchases of raw materials, intermediate materials, and capital goods from other businesses.<1>

By imposing a tax on receipts but then allowing a credit for VAT taxes collected at earlier stages of production, the credit-invoice VAT taxes the “value added” by each business. The total tax, regardless of the stage of production at which it was collected, ends up being added to the final sales price.

No matter how many steps there are in the pro­duction process, a fixed percent of the final price of the product would represent the value-added tax, just as a retail sales tax is a fixed percent of the final product price. However, unlike a sales tax, the cost of the VAT to consumers would be hidden. Unless politicians took the unlikely step of requiring retailers to state explicitly the portion of the sales price that is due to the VAT, consumers would be unaware of the tax.<2>

The other approach is the subtraction-method VAT. Businesses pay a tax on their annual receipts, but only after first deducting the money that they spent on new investments and purchases of inputs. This sounds like the corporate income tax, but there are some very important differences. The sub­traction-method VAT does not allow businesses to deduct the cost of employing workers. It does, however, allow businesses to fully deduct (or expense) the cost of new investments.

The credit-invoice VAT and subtraction-method VAT are both consumption-based tax systems, which is a fancy way of saying that they do not double-tax savings and investment. In this regard, both types of VAT have the same tax base as the flat tax and national retail sales tax. All of these systems tax labor and capital income, but only one time—unlike the current per­sonal and corporate tax systems, which are riddled with different forms of double-taxation. The flat tax is levied one time—at one low rate—when income is earned, while the VAT and national retail sales tax are levied one time—at one low rate— when income

[mbperrin]

16. How about first collecting some tax from the 2/3 of the top 500 companies

who pay none?

How about going after some of the many trillions in tax fraud first?

[sutz12]

19. This would do that....

:shrug:

While I applaud your desire to bring the scofflaws and tax cheats to justice, this would do just what you say, tax the corporations who have been getting off scot free.

[mbperrin]

20. No, I want them to pay the 35% they ought to be paying, and I don't

want to add 10% to myself to do it.

Just like burglar bars - I won't put them on my house, because I don't want to put myself in jail; I want the crooks in jail. Those in charge of enforcing the law need to do their jobs - that's what I pay for.

[ohio_88]

24. NO company pays taxes.

Those who purchase the final product are paying the tax in the
form of higher retail prices.

[mbperrin]

30. If this were true, companies could charge any price they wanted.

But they find sales fall when their prices get too high. So they cannot pass the taxes through unless they are already charging under market prices.

[toopers]

47. You are ignoring one fact . . .

competition keeps the price low. As long as there is no violation of the Sherman Anti Trust Act companies cannot charge "any price they wanted". The company has to run as lean as possible to create a marketing advantage.

[mbperrin]

49. YES! You finally get it. They run as lean as possible, ie, the market

price. They are unable to raise prices when taxes go up. Thank you!

[toopers]

52. If the price to manufacture or to purchase raw materials goes up . . .

then the sales price will go up, across the board. If it does not, then companies will go out of business creating shortage of the product in the market, thereby causing the price to go up. Either way, the price will increase. No company can or will sell at a loss for any length of time.

[mbperrin]

56. Where in the world did you take economics? Do no businesses or industries ever

cease to exist? Of course they do. Businesses frequently lose money, sometimes for years on end; some survive by adapting, some don't.

Raising prices when you're losing money is the surest way to oblivion.

When raw materials go up, use a substitute. Change the design. Change products entirely. Fire employees and speed up those remaining. Other options.

Consumers are only going to pay so much for any particular product; when the price crosses that industry-wide and persists, that industry ceases to exist.

For instance, who gets milk in glass bottles any more? Is it because glass is bad? Nope. Costs of handling exceeded plastic one time use jugs. So - out with glass, in with plastic. You can think of many more, I know.

[toopers]

94. You are making a plethora of assumptions that don't always exist . . .

but you bring up a great example. Milk is a relatively inelastic product so I will use your example. The price of milk has fluctuated greatly over the years without significant changes in demand in the US. If the government adds a tax on plastic milk bottles what do you think is going to happen? The milk companies may review the price of using glass or lined cardboard. If the tax is not significant (based on history, the price of milk could just about double without significantly changing demand). However, if there is not a cheaper option then the tax will be incurred by the company, and passed to the end consumer.

[DJ13]

32. Which is precisely why taxes on corporations is better than taxes on income

On income, taxes come directly off your bottom line without you having any say in the matter.

Now its true a corporate tax is paid by the customers of that corporation, but as a customer you have the right to buy from any corporation you choose,in effect you have the right not to pay that tax by refusing to buy their product.

[ohio_88]

36. The customer pays the taxes

"If this were true, companies could charge any price they wanted."

In order to stay in business a company must make a profit, otherwise who would invest in that company? As for paying the taxes, the only way a company can generate the money to pay the taxes is by selling the product. Hence the customer is paying the taxes in the form of higher retail prices. If taxes or the greed of the company push the retail price too high, the customers do not buy, the company cannot pay any taxes or pay its’ expenses and fails.

Competition in the marketplace is what keeps the retail prices in line. Expenses, including taxes, wholesale cost of the product, payroll etc. determine the market retail.

Taxes in any market area are the same for all companies in that market. Therefore, higher taxes are going to produce a higher average price for that market. The customer pays the taxes.

......................................

“Which is precisely why taxes on corporations is better than taxes on income.”


When corporations are taxed, every consumer pays the same taxes because they all pay the same retail price (see above). When taxes are levied on income, those who make more, pay more. Is this not a more equitable way to fund the government?

[DJ13]

39. But prices from one company can be lower than another company

Companies makes pricing decisions all the time related to increasing marketshare.

In effect you would be paying less taxes by shopping wisely.

[ohio_88]

57. The customer pays the taxes.

“But prices from one company can be lower than another
company”


Yes, prices do vary from company to company.  This is based on
how efficient the company is, how good they are at negotiating
with their suppliers and how good they are at keeping their
operating expenses down.  
A company which is able to operate with lower expenses is able
to give the customers for their product the best price in
their market.  However, if their taxes are raised it affects
their expenses and they must raise their price to maintain
their profit.  No company can operate at a loss.


"In effect you would be paying less taxes by shopping
wisely.”

You would be saving money by shopping wisely, but since the
taxes for one company are the same for another, you are still
paying the same in taxes.

[mbperrin]

44. Prices and taxes are unrelated. The company is charging the market

price for what they sell.

Either they can make a living at that price or not. Taxes and all other expenses come out of that market price. If higher taxes made higher prices, or if higher wages made higher prices, then companies would gladly pay any tax or wage because they would just charge more to recover them.

They can't, and so they fight either one. But companies burn up infrastructure, and when they don't pay their share, sooner or later, infrastructure caves in, or the rest of us pay their share.

They need to pay. If they can't survive at market rates, someone better than they are will. No company has the "right" to exist, nor the right to special treatment.

[WriteDown]

58. Uh, you're econ is a little off there....

In this case, prices and taxes(or any other costs) are very much related. Let's take the ipod for example. Let's say the iphone is at 200$ and the zune is at 200$ just to make things simple. If some widget that the iphone needs raises in price by 1$ a unit, they may need to absord that cost due to the competition from the zune which may then steal some of the ipods marketshare.

But in the case of a VAT, both would experience the same tax or cost. Therefore, they would not have to worry about competition stealing marketshare, only about falling demand if prices go too high.

[mbperrin]

60. You're a little off there. You are neglecting income effects. When people are

10% poorer (a new tax on top of their old income), they will have to spend less. Some things they are buying now will go by the wayside. Those products and services will take a hit due to less income. In this case, business not only cannot raise prices if they want to maintain sales, they'll actually have to lower them.

My economics degree is from Texas A&M, class of 1975. My adviser was Robert Ekelund, author of 27 books, including the best selling college text on money and banking. You?

[WriteDown]

62. Not neglecting....

I'm just talking about one variable which you initially did not address. There are so many when it comes to a VAT, that its effects would be impossible to quantify until it actually went into effect and we had some historical data.

My economics degree is from UNC Chapel Hill, class of 1994. We didn't have advisors, just an awesome staff.
My MBA in finance and accounting is from SMU, class of 2000.

[mbperrin]

64. VAT's a tax, like any other. Reduces incomes, like any other.

Reduced income, reduced demand. Very simple, not complicated. Not much support for undergrads there at Chapel Hill, then, with no advisers?

[WriteDown]

66. I meant the addition of VAT on top of income tax

and how much demand would be reduced. Could be disastrous. How bad neither of us can quantify.

Different type of system. You had an adviser, but they just helped you plot what courses you needed and/or wanted to take. I actually had the president of the young democrats as my advisor coincidentally for one year. The teaching staff was always very accessible though, and they call it Blue (progressive) Heaven for a reason.

[mbperrin]

78. Actually, my adviser discussed the philosophy of where I wanted to go

with economics, wrote letters of recommendation for grad school, had us as guests on his radio show, got us jobs (I put together a media list of every radio station, TV station, and newspaper in Texas in 1973 - way before the Internet, involved traveling to many of the counties to list and verify), edited papers for other classes, sought additional scholarships for us, counseled us on geographic diversity of degrees and helped make applications to those places, bought us dinners at the end of the semester when we were too broke to eat out, got me a job writing a weekly economics column in 1974, helped me be selected the president of the A&M Student Civil Liberties Union. And lots more, including reading drafts of his book chapters and listening to our questions.

I cannot understand if you had an adviser or not - first you say no, now you say the head of the young democrats.

[WriteDown]

90. Different kind of adviser.

More like guidance counselors. They were grad students. I should have put it in quotation marks. If we wanted a job, we went to the jobs office and found a job which wasn't any big effort at the time. The econ staff was always willing to help us in any ways that we needed.

Don't think I could have gone to A&M with its rethug and militaristic tendencies. Carolina had an awesome funky vibe and felt like San Francisco at times.

[mbperrin]

97. Militaristic tendencies? Well, okay, if you want to count a group of

3,000 folks out of 50,000 who are actually in the Corps of Cadets as the majority somehow.

I guess I shouldn't mention that Steve Goble only missed being elected Cotton Bowl Queen by 110 votes in 1971. He did look lovely in that evening gown!

Nor will I mention the expose the school paper did on the overruns on the Memorial Student Center that eventually got picked up by the Texas Observer.

No use mentioning the prize-winning research done by Drs. Kagel and Battalio in economics in conjunction with SUNY for their simulations using rats, either.

Or the work done in showing the Protestant Reformation as a marketing campaign to gain market share on the dominant economic force of the day, the Catholic Church.

Well, good day, funky.

[WriteDown]

98. That's the thing about UNC....

We don't need to brag. Just look at our rankings. In academics and in athletics. And we don't have anyone with crew cuts and swords running around. :evilgrin:

[mbperrin]

100. Yes, those replays on fouls (or not) during the season were quite

illuminating!

Rankings? Better take another look - there's only one Land, Sea, and Space Grant college in the world, and it's in College Station.

Crew cuts and swords? Better visit soon, bud. Those stereotypes will kill ya!

[WriteDown]

101. Jealousy is so ugly.

:rofl:

[mbperrin]

102. Yes, it is!

:hi:

[Progressive dog]

74. Did you think before posting this?

If every sale requires a tax, then there will be an increase in prices. Companies are in business to make money, the only ones deliberately selling at a loss are those that are spending capital to create market share. How many retailers do you know of who rebate the sales tax so they can sell more stuff at a lower mark up?
Go back to you economics text book and study what happens to the supply curve when prices go up.

[sutz12]

17. Confusing headline (Blame the Washinton Post)

A VAT would be a good idea. It charges corporations for the goods and services they use, as they use them. A VAT is not a sales tax in the traditional sense, where you pay 10% at the till when you buy your latte.

Most of the replies to this so far would be right at home on Free Republic. "Job Killer?" :wtf:

[Abq_Sarah]

34. A VAT is a tax on the consumer.

Since the poor pay a higher percentage of their income in taxes than the rich, it is regressive.

And yes, it is a job killer. Chicago has a 10.25% sales tax. Add on a 10% nationwide VAT and you have a 20.25% tax. This has the effect of lessening the discretionary income consumer has to spend. This reduces the amount of goods and services they are able to purchase. That has a direct effect on jobs.

[Skink]

40. What if it lowers inflation on cost of living items.

You know like lowers beer prices. Take the 5.99 sixpack. These days if the beer distributer when disributing the beer inside the supermarket just opens the case it's like and extra 3 bucks for the individual six.:beer:

[SoCalNative]

18. I would be in favor of this

but ONLY if it replaced income tax.

Newsflash, the poor already pay sales taxes if they buy things in a state that has sales tax in place.

[w4rma]

23. A VAT will hurt state budgets because their state sales taxes will be stacked on this VAT.

And HELL NO on replacing the income tax. Do you know how high a VAT would have to be to do that? How much additional money do you think we'll be spending on police and enforcement of a VAT to TRY to keep a black market from growing very large?

[Retrograde]

35. So in addition to my 9.25% state and county sales taxes

I'll be paying an additional whatever to the Feds? At least I have some say in what the county tax is.

In Britain the VAT is close to 18%, and they have income taxes. If the US implements a national sales tax it's going to be in addition to other federal taxes, not instead of.

[w4rma]

22. The middle class is being hurt enough and retailers are failing. A VAT would be bad. (nt)

[Romulox]

26. All the countries in the EU that have a VAT have UNIVERSAL HEALTHCARE.

:hi:

[dipsydoodle]

37. Unassociated issues

We had already had univseral health care before we had vat which actually replaced purchase tax - vat is a simpler broad based system. Our universal health care / NHS system is paid for by a seperate tax outside of income tax and vat. In truth its just another form of income tax. For simplicity add normal income tax to NHS payments and you get c. 30% tax paid by the employee and an additional 13% paid by the employer for NHS.

I sometimes wonder if the USA assumes single payer to be free - if so then dream on.

Its untrue to say that vat punishes the poor. It taxes usage - the more you use the more you pay. In fairness I should add that fresh food and childrens clothes are exempt here in the UK.

[Romulox]

61. No, not unassociated in the least.

Does your country (presumably Britain) spend 50-60 % of its revenue on an expansionist military? If not, please don't claim that increasing the tax load on working people while making no cuts whatever to military spending and simultaneously pleading poverty as to a true single payer system are "unassociated". They are intimately associated.

"I sometimes wonder if the USA assumes single payer to be free - if so then dream on. "

This is a bizarre non-sequitur.

"Its untrue to say that vat punishes the poor. It taxes usage - the more you use the more you pay."

The proportion of the income of the poor that is consumed in day to day life as compared to the wealthy is by no means equal--that's what makes a VAT regressive. :hi:

[dipsydoodle]

68. Perhaps we should just leave it

that it must seem odd to you that the whole of Europe, to the best of my knowledge, uses VAT.

I merely pointd out that there is no association between us having universal healthcare and us using VAT.

:hi:

[PassingFair]

29. How about we bring back the estate tax and lower the 3.5 million

exemption.

We have lost billions due to
this give-away to the inheritors
of wealth and stand to lose
MUCH more.

I'll consider a VAT if it
is earmarked totally for a
National Health Program.

[Dappleganger]

33. This is a terrible idea!

And I will fight it tooth and nail. The IRS is broken as it is and needs to be overhauled with all of its loopholes, the rich are getting out of paying taxes and now this stupid idea comes up?

Guess who will pay the most--the poor and middle class, that's who!

[roamer65]

41. I'll swallow a VAT...ONLY when the top income tax rates are at least 75%.

Otherwise I will drastically cut my consumption to avoid paying a GST or VAT.

[dipsydoodle]

45. Now you're getting the point

The amount of vat a private individual lands up paying is only a function of how much they buy or use.

[XemaSab]

55. Then it sounds like the "point" is to cut consumption among the poor

If the poor buy less stuff, then manufacturers and retailers will suffer.

[toopers]

48. That would be great . . .

you would decrease your spending and increase your savings. That is the behavior the government should be driving. I am not in favor of a VAT on top of income tax, but I am in favor of the Fair Tax.

[Lone_Star_Dem]

50. Currently consumer spending accounts for right at 70% of our economy

So, how is it a good idea to curb consumer spending? Is there some plan to completely restructure the US economic system attached to this plan?

Wouldn't the loss of service/retail jobs caused by a downturn in US consumption be an added burden on the shoulders of the lower/middle class population?

[toopers]

53. But if you got rid of the income tax at the same time . . .

then consumer spending would not drop substantially. People would have more disposable income to spend.

[Lone_Star_Dem]

105. That would require a VAT of at least 25% per the linked article

If there's a VAT of 25% on all goods and services how would that give lower/middle income people more disposable income? Or did you mean it would dispose of more of their income?

Consider how more than 40 million families (out of approx. 116 million total) that file income taxes in the US already do not pay a federal income tax due to their income levels. Then consider the added city and state sales taxes on top of that 25%. The example given in the article of a gallon of milk costing $3.69 being raised to $4.61 is at the 25% rate. The reality would be somewhere between $4.90 to $4.99 for the American consumer since there's no consideration taken for state/city sales tax in the example cited.

[Zynx]

67. A VAT is different that a general sales tax. This was a badly written article.

[bemildred]

70. Let's have a "value subtracted" tax for the filthy rich.

[DebbieCDC]

71. Sure let's hammer the poor and middle class some more why don't we?

Talk about regressive

[Endangered Specie]

72. Oh I bet the desperatly struggling retail industry just LOVES this idea

:sarcasm:

[KakistocracyHater]

75. tax the masses protect the wealthy

cutting the military's budget IS a very good idea, I agree with the posters above. That billion dollar hole sdi/star wars will NEVER happen except as Missile Command, a video game. The 'black budget' especially should be halved.

[mwooldri]

80. I'd prefer a National Luxury Goods & Services Tax.

Codify what's considered luxury.

Food generally is NOT a luxury. Individual clothing items under $100 are not luxury. Road fuel (gas/diesel/etc), heating fuel are not luxuries. Electrical appliances under $1,000 are not luxury. Vehicles under $40,000 new are not luxury. A house is not a luxury.

Exempt at least the above, and then some... the rest would be luxury (that Aston Martin is definitely luxury...)

[depakid]

85. How about a financial transactions and a Tobin tax?

Nope- can't have that- Wall Street Banksters and Hedge Funds would scream and the Democrats would run scared.

[ima_sinnic]

88. when the #%&*( are the stuffed-pig rich people & corpos going to pay their fair share?

why must we always tip-toe around the edges proposing this or that sneaky way to raise money for the common good while the wealthy greed-head assholes stuff their money in tax havens and enjoy all kinds of loopholes, "bonuses" at taxpayer expense, and tax cuts? Tax the shit out of the greedy: PROBLEM SOLVED.

[alarimer]

89. Fucking Democrats, worse than Republicans.

Soak the poor while their rich asshole friends get away with stealing from the US Treasury and ruining our economy. Soak the rich.

[Hugin]

95. It's still pretty much unthinkable from my POV.

These guys really don't want to keep a majority, do they?

[Doctor_J]

96. Ravi Batra, Hartmann's econ guru, seemed OK with this yesterday

It seems very regressive to me, but he is pretty trustworthy

[redqueen]

99. I love how so many form opinions before reading.

So predictable.

[Politicub]

103. This is where the stupid fair tax talk is leading

You have folks on the right clamoring for a national sales tax and abolishing the IRS -- when in reality, we'll end up getting a national sales tax and a stronger IRS to enforce it.

Everything I read about the VAT is that it hurts those on the lowest rungs of the income ladder the most.

[KamaAina]

104. Misleading headline. A VAT is not a "sales tax".

Bad WaPo! :spank:

A sales tax is regressive: you and I pay the same rate on, say, a box of envelopes as Richie Rich does on his 100-foot yacht. The VAT works like the progressive income tax: we pay a penny or two of VAT on the envelopes, and Messr. Rich pays ten grand or so of VAT on the yacht.