Monday, April 12, 2010

The VAT is not a FAIR Tax

The Value-Added Tax is a European idea and it just feeds billions to any government that imposes it. It is not a Fair tax that is an across-the-board tax on consumption whether you are rich or poor. A Fair tax could eliminate the income tax and still fund the government's needs. A VAT just gives government more money to waste.


Desertrat said...

About half the population now pays no income tax, or not enough to notice. So, the VAT is a socially acceptable way for the government to scam the poor folks.

If you look at the demographics of smoking, you find it's more prevalent among the poorer people. The added cigarette taxes merely provide a way to pick their pockets.

Insane and wasteful spending means that TPTB have to lie awake nights figuring who else to scam in order to continue the binge.

But possibly I'm too cynical...

Paul said...

I admit, I haven't done any research to figure out the difference between VAT and Consumption tax. I was guessing the were the same, or at least quite similar. Any pointers?

Alan Caruba said...

Paul: You can pick up a copy of "The Fairtax Solution" by Ken Hoagland ($19.95, Sentinel) or just go over the website of Americans for Fair Taxation.

I favor a Fair Tax over a VAT and the income tax.

As it is, all the income tax revenue collected this year will barely cover Social Security, Medicare and defense. All else must be borrowed.

Guy said...

C'mon ... it's not going to be either/or ... it's going to be all of the above. The income tax will remain, along with all the other taxes, and the VAT will be heaped on top. They've already said that adding the VAT is the only way they have any hope of getting the deficit under control. There has been NO mention of eliminating ANY existing taxes. Of course, there has also been no mention of REDUCING THEIR DAMN SPENDING either.

No nation has ever solved their financial woes by increasing taxes, and anyone with an ounce of sense knows that. That's how we can be sure that this administration has no intention of fixing anything ... destruction is what they have in mind.

Tom said...

Guy, the VAT would replace the income tax. A national sales tax of say 2-3% would probably be on top of the income tax.

The beauty of the VAT is to get taxes from the underground economy.

The underground economy is enormous and is how small business hide paying taxes. Think about the cash transactions for services that are never declared as income. How about small restaurants that pay their workers in cash? There are no 1040's being submitted on these workers.

A flat tax will not capture the underground economy so it is irrelavant as a solution.

The VAT would also be adjusted, typically down, over the years as revenues are generated.

I do agree that this all has to happen with spending cuts on all programs. The bad news is there won't be any political will to accomplish any of this until the system is under the weight of high interest rates and we can't get anyone to buy our t-bills.

Go VAT!!!!