Value Added Tax

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The Democrats are beating the drum for a Value Added Tax (VAT) to pay for the deficit (that in fairness, all administrations have been running up). The new national healthcare system in the US will be enormously expensive and we need to pay for it somehow. $2,000,000,000,000.00 over the next ten years will be expended to pay for the healthcare of roughly 10 million Americans who are currently uninsured – and about the same number of illegal aliens, who will also benefit. 

Since roughly 40% of Americans don’t pay income tax, those who do simply don’t make enough money to cover the two trillion dollars in healthcare costs or the twelve trillion dollars in other spending we’re in the hole on. The current administration can’t conceive of spending less, so we must tax more. And they seem to like VAT.

VAT will act more or less like a super-national sales tax. No more free ride for internet purchasers trying to avoid paying state sales tax. If you’re buying something at the point of sale, in California, for example, you’ll pay your 10% sales tax (in Los Angeles) and then another X% VAT that goes to the federal government. “Witness the experience of the European Union. When the 12 largest nations of Europe first began using the VAT in the late 1960s, it averaged a bit over 13%. Today, it averages 20.5% across those same European Union nations — a 54% increase.” (source: IBD)

So, let’s say I wanted to buy a hamburger & drink in Los Angeles and presume it costs $3.00. Presuming that the US goes the way of Europe in terms of the amount of VAT, I’d pay $3.00 for the hamburger & drink and $1.00 in VAT and sales tax. Or if I bought a car for $30,000, I’d pay $10,000 in VAT and sales tax.  Sound like change you can believe in?

The net effect is to produce a cash-and-carry underground economy to avoid paying VAST taxes. A black market if you will, of tax free goods. Good for America?

America does not have a revenue problem, it has a SPENDING PROBLEM. We need to spend within our means — whatever that means. If it means we spend less on entitlements, Americas will simply have to get used to paying for their own services and saving for retirement rather than hoping “other people’s money” will carry them through.

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