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The big honking tax increase trial balloon

May 29, 2009

Like me, Christopher Bergin of Tax.com sees the Washington Post's article praising the Value Added Tax, or VAT, as a trial balloon floated by the Obama administration:

I think this administration lusts for a VAT. And to get myself in real trouble with my friends, I think Fox News got it right in saying the Post story floats a trial balloon for the VAT.

But Mr. Bergin remains unimpressed by the VAT frenzy:

In parts, the Post story absolutely gushes over the wonders of the VAT, saying it's "one of the world's most popular taxes." Now there's an oxymoron if I've ever heard one; like a welcome poke in the eye with a sharp stick.

Now there's a vivid image.

The VAT has advantages, the Post piece proclaims. It's "hard to dodge." Talk to the Brits about how badly their VAT system leaks. "It punishes spending rather than saving." That's true, and it can punish those who can least afford to spend the most. But the best line goes as follows: "And the threat of the VAT could pull the country out of recession, some economists argue, by hurrying consumers to the mall before the tax hits." Wow, now that's great tax policy: Buy now because soon you won't be able to afford anything.

So if the VAT hits the little guy, why does the administration that said it would never raise taxes on 95% of us lust to do just that?

Most of the folks currently in charge of our government don't just want big government, they want HUGE government. President Obama's proposals currently would add almost $10 trillion to the national debt in ten years. And that buys a lot of government. And it's probably just a start.

That, of course, is just a longer way of saying this: