What is a Value Added Tax, commonly called VAT? These are taxes that we will be facing because of all the spending of our government. It is considered a consumption tax. It is a complicated tax but simply put, each stage or process a tax is added.It starts atthe beginning for example; the ore that is mined is taxed, then as each process is completed and the value increases more tax is added until the final product is sold to the consumer. When you purchase it you pay the complete VAT tax in the purchase price. The poor would pay a larger percentage of their income.
The VAT has been used in Europe since 1954 starting in France and has been adopted by most EU countries. It is a nasty tax as it penalizes the consumer. The lower incomes would pay a larger percent.
The VAT is coming to America. We are now $8 trillion in debt. The CBO estimates $12 trillion in ten years. There is $200 billion unfunded, plus the Doctor fix, the double counting of Medicare cuts. There is also what is called the 10-6. This is counting ten years revenue and only six years outflow. This all adds up to a $2 trillion new entitlement. The $500 billion in Medicare cuts and a $600 million are already used to fund the entitlement insuring the uninsured. To make it more expensive, the Obamacare adds 15 million new people and dependents to Medicaid. The AAA treasury’s rating is in trouble. It is believed this will cause the dollar to fall and hyperinflation. You can bet this will all come out after the November 2010 election. Trimming Social Security by raising retirement dates or making a means test will not even come close to be enough.
This is where the VAT will come to save, not us the consumer, the bloated government. A one percent VAT would raise $900 billion if you do not include food. If you do tax food then it would raise $1 trillion. The VAT’s in Germany is 19%, France, and Italy, 20%, and most Scandinavia countries 25%. This administration has it backwards; they spend first and force more taxes. With Obamacare and the expanded Government we are becoming a full entitlement state.
The VAT is a consumption tax, not a tax on work. There are other consumption tax schemes that would be better, for instance a flat tax. Still the VAT will not be enough. The VAT will be adding to our present tax system. This will provide our Congress with so much cash. What would they do with it? Pay off the national debt? No. Maybe they would balance the budget. I don’t think so. They would spend, spend, spend, and at the tax payers’ expense. Then as they spend, they would raise the percent of the VAT to get more and more. As Obamacare cost increases then will come rationing just as they do in Britain. Somebody said “If you want a European type government then you will pay European high taxes”.
Bob Amstutz
Bluffton, Ohio
