National Sales Tax, Chapter 3

By Jeff Harding.

The “Center for American Progress” is the best example of an oxymoronish name that I can think of. This is a “progressive” (socialist) “think tank” (another misleading term) lead by John Podesta, a former Clinton Chief of Staff and Obama adviser.

They are coming out with a report on Wednesday that will recommend that:

[T]he administration should consider a tax on consumption, such as a value-added tax [VAT] system similar to that in use in the European Union. Mr. Podesta suggested that its impact should be limited to protect lower-income people, who otherwise might be hit particularly hard.

The center’s president and chief executive, 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. Mr. Podesta suggested that its impact should be limited to protect lower-income people, who otherwise might be hit particularly hard.

“As progressives we need to debate the policy merits [of] a range of options, including designing a small and more progressive value-added tax,” Mr. Podesta said in a statement Tuesday.

Apparently even they recognize that you just can’t tax the rich enough to cover the Administration’s vast spending programs:

In order to pay for the national health care plan, the Democrats were already planning to impose a tax surcharge of between 1.0% and 1.5% on those whose income is $350,000 or more. I did the numbers on this and I came up with 300,000 lucky taxpayers who will be burdened with the privilege of paying for our health care (the Dems say it’s more like 1,000,000 taxpayers, but I think I’m closer). Now it looks as if the regressives agree with me.

The report, which will be released on Wednesday, said the administration can’t rely on taxing richer Americans and companies to reduce the deficit to sustainable levels by 2014 because those groups would see 40% tax increases.

Guess what else is happening on Wednesday? Just a coincidence I’m sure, but the Volker Panel on How to Raise Taxes Without Anyone Noticing is meeting as well. The meeting will be streamed live starting at 12:30 EDT if you wish to tune in to their public deliberations.

I predicted in March of this year that the Administration would look to a VAT to raise taxes:

My guess is that it will include non-food retail sales and they will add services (information, professional, technical and scientific, administrative and support, waste management and remediation, but excluding medical services). The services aspect is important because this will skew the tax more to corporations and upper income taxpayers. …[Obama] will structure it so that low income people will get a refund of taxes paid. The refund will be phased out as income increases.

In 2008 retail sales (excluding food) were about $4 trillion. Services in 2007 were another $2 trillion. Let’s say they need to raise $1 trillion over the next 4 fiscal years, or $250 billion a year. That would require a 4.5% national sales tax. In Europe they call this a value added tax (VAT) and the rate in the E.U. is about 15%.

Volker already said he thinks the VAT is a good idea. No surprise there; that’s why Obama chose him.

So, let’s see. They want to stimulate consumer spending to revive the economy. How do we get people to part with their money instead of socking it away in the bank? I know: let’s tax consumption. Brilliant.

 


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2 comments to National Sales Tax, Chapter 3

  • Lloyd G.

    “How do we get people to part with their money instead of socking it away in the bank?”

    Maybe if we taxed savings enough so that people got a negative return on savings, they’d spend more money.

  • Kyril

    If they eliminate the tax on Income this would be all right. But in addition to taxing income, not. They better get spending under control first.