Obama Insiders Buzz over Possible Value-Added Tax

[FastTadpole]

Income tax is going to be harder and harder to collect so we will have tolls, service fees and taxes applied direct to industry and goods & services. A VAT is a vehicle to accomplish this. They may abolish the income tax altogether to present us a fake win. This would be easily implemented if all money was digital by way of credit cards, direct bank payment, online transactions et al.

There is talk about the chip being the ultimate control mechanism. We may not even have to be chipped, everyone with a cell phone essentially is chipped all it needs is a point of sale device and we have can potentially have everything tied to it.

The government will support those who prop them up by way of subsidy and other forms of cronyism so compliance would be mandatory once all of our needs are provided and by corporations that enforce the VAT for them.

The VAT could be applied multiple times before the end user finally receives the product or service. This is not just a retail tax.

Canada has has this in place for years now currently at 5% this is about what it costs to administer, enforce and collect it. More useless bureaucracy that, at the end of the day, accomplishes nothing.

Solution: united strong local and regional governments, business entities and consumers that don't comply with these ridiculous taxes or deal in a different recognized form of trade (local currency, barter, IOUs ..). We need our own system and need to stop feeding theirs with our labour, dollars and attention sooner rather than later.

Quote:Obama insiders buzz over possible Value-Added Tax
By Aleksandra Kulczuga
Published: 04/13/10 at 11:36 AM

The White House distanced itself from comments made last week by one of its top economic advisers in support of a new national consumption tax — yet others close to President Obama have similarly spoken in favor of a Value-Added Tax in recent months.

Paul Volcker, chairman of the President’s Economic Recovery Advisory Board said during a speech last week to the New York Historical Society that a VAT is not a bad idea for raising revenue. Volcker said it might be unpopular, but would have to be considered to cover entitlement spending.

“If at the end of the day we need to raise taxes, we should raise taxes,” he said.

“Mr. Volcker was speaking for himself and not the administration,” said Kenneth Baer, communications director at the Office of Management and Budget (OMB). “The president has not proposed this idea nor is it under consideration. The president has passed historic tax cuts for middle-class families and continues to push for more tax cuts.”

Baer said last year the VAT was politically problematic, but the Washington Post noted that the president was surrounded by VAT enthusiasts, reporting that “[OMB Director Peter] Orszag has hired a prominent VAT advocate to advise him on health care: Ezekiel Emanuel, brother of White House chief of staff Rahm Emanuel.”

Ezekiel Emmanuel, currently working in the OMB, supports a health-care voucher system paid for by a VAT. His 2005 article in Washington Monthly magazine laid out his proposal — he followed up with a book in 2008:

The VAT is efficient, easy to administer, spreads the tax burden broadly and encourages savings … Polls show that many Americans are willing to accept higher taxes in exchange for guaranteed health care.

Despite the administration’s vocal denial that a VAT is under consideration, a string of reports have noted that close presidential advisers want a VAT. From the Wall Street Journal in September:

John Podesta, who is an Obama adviser, said the administration should consider a tax on consumption, such as a Value-Added Tax system similar to that in use in the European Union.

Podesta founded the liberal think-tank Center for American Progress (CAP) in 2003, and in 2008 became the head of Obama’s transition team. He went on the record on Bloomberg TV in September of last year in support of the tax:

A so-called consumption tax would “create a balance” with European and Japanese economies and “could potentially have a substantial effect on competitiveness,” said Podesta.

CAP said Podesta’s comments have been misconstrued.

“John said that it’s something that people have to look into as deficits grow, and CAP has in some of its papers … looked at the VAT as a possible option,” said Anna Soellner, vice president of communication at CAP. “But we’ve never come down and said that the VAT was the way for the administration to go forward.”

“If you look at what Bernanke said even yesterday — it’s something he’s raised, as has Doug Elmendorf. There are many people who say the VAT is one of many options to look at.”

Congressional Budget Office Director Doug Elmendorf said he was fielding many questions from members of Congress about the VAT. As far back as 2007, CAP was on the record touting the VAT:

Unless it was paired with a significant and popular national initiative, such as a revamping of our nation’s health-care system, a VAT is unlikely to be added to our nation’s tax code in the foreseeable future.

Matt Yglesias, a blogger for CAP, told The Daily Caller, “Dealing with our deficit problem is certainly going to require higher taxes. Most economists think that taxes on consumption, like a Value-Added Tax, are more economically efficient than taxes on labor or investment income.”

“In the short-run, nobody’s going to want to raise taxes until the recession is well behind us. I believe the preference in the White House (and certainly my preference) is to first look at reforming the current individual and corporate income taxes to reduce loopholes and deductions before we start thinking up a brand new tax,” Yglesias said.

House Speaker Nancy Pelosi was direct when she said last year it was “on the table,” during an October appearance on the Charlie Rose show.

“The real issue here is whether we are looking at substituting a VAT for some of the inefficient tax policies we have now, or if we are talking about adding it on top of the existing structure,” said Ted Gayer, Senior Fellow in the Economic Studies program at the Brookings Institution.

“I don’t know how [Obama will] ever square this circle of his campaign promises,” Gayer said.

“The intellectual class, the group of people that would advise him would be supportive of it, sure,” he continued. “If they’re ever going to move forward they need to strategize more than just having Volcker talk about it — they need to make sure they have buy-in from many different groups.”

The VAT requires producers of goods to pay a tax on every stage of production. Currently businesses can buy materials tax-free, and a sales tax comes only at the end of the chain. The VAT would fundamentally change the way taxes are collected in the U.S., putting the burden on businesses to collect fees incrementally.

Critics say it is a way to hide a massive sales tax from consumers and increase the size of government. Supporters say it is a fair and progressive tax on consumption that is more effective than current means of tax collection.

Almost 150 countries in the world have a VAT with rates ranging from 5 to 25 percent.

http://digg.com/politics/Obama_insiders_..._Added_Tax
http://dailycaller.com/2010/04/13/obama-...added-tax/

[h3rm35]

As long as it applied to all wall st. transactions, I'd be OK with this - It would foster barter between those who didn't support the government, re-collect some of the insane amounts of money lost to financial gambles and redistribute it to social programs. Those who spent less would be taxed less, and that just seems fair. The electronic currency situation would be a pretty fucked up scenario, but once again, would foster the concept of barter to those who wouldn't wish to participate. If people started trading goods instead of tickets for the ride of illusory fulfillment, then we'd actually have something of value to trade instead of the imaginary value (that's manipulated by fraud in the commodity and precious metal markets,) of our little paper reminders of oligarchical control that we keep in our wallets and are forced to see every day. I'm all for it - kill the income/payroll tax, and pile on VAT.

I wouldn't be surprised at all to see it, but I wouldn't expect it until a second term, and only if congressional ratios remained approximately the same.

[FastTadpole]

Having an income tax and a VAT is simply overkill. If income tax were replaced by a VAT it would take a progressive tax, at least in theory (lots of tax breaks and shelters for those individuals and businesses with a few extra $), and transform it into a flat percentage on everything it was applied to - hitting everyone, rich and poor, at the same percentage. So fair is a bit simplistic - my inkling is that more would be milked from the average Joe. Is there anywhere that does this now or has abolished income tax with a sales tax?

Personally, at this point, I'm against a national tax altogether since it is being spent irresponsibly and we're borrowing from a private banks to cover the shortfalls and extras. I'd really like to see it allocated to local / regional governments where the money is spent rather than centralized collection, the feds taking their slice, then provinces/states begging for it back. In Canada this tax does not apply to food (except junk food) and some other exceptions but not nearly enough of them - exceptions on basic needs should be in place to prevent it from crippling those in poverty even more than they already are.

A tax like this is much more than it appears to be since the same item can be taxed at every transaction (manufacturer > wholesaler > retailer > consumer) and each phase of the manufacturing process. This can turn a 5% tax into something much larger - the rate needs to be carefully considered.

We're being taxed at every turn as it is. In the US and worldwide there are all kinds of hidden 'taxes' notably the massive one that is paid on gasoline (not only the government one but the hidden middle man payments to the IMF), which essentially taxes everything that moves.

[h3rm35]

I was speaking in a completely simplistic sense - of course there's room for abuse - I'm sure there are think-tanks that have been in place for years specifically to brainstorm ways to do it. They probably hire Emanuel staffers, and helped get Obama elected.