Thursday, April 22, 2010
As the U.S. is rocked by nearly $13 trillion dollars of debt, President Obama suggested Wednesday that a new European-style value-added tax (VAT) on Americans is still on the table.
In an interview with CNBC, Obama said,
“I want to get a better picture of what our options are.”
Obama’s remarks follow Paul Volcker recent statement of the prospect of a value-added tax. Volcker’s comments led to a 85-13 Senate last week for a nonbinding “sense of the Senate” resolution that calls such a tax “a massive tax increase that will cripple families on fixed income and only further push back America’s economic recovery.”
But various White House spokesmen seemed to be at odds with their boss on the issue of VAT, claiming the president has not proposed and is not considering such a tax.
White House press secretary Robert Gibbs who is well-known for not being able to give a straight answer, told reporters before Obama spoke with CNBC,
“I think I directly answered this the other day by saying that it wasn’t something that the president had under consideration.”
American tourists who travel to Europe are familiar with the VAT tax and the process of submitting a form to receive a refund for the tax collected on hotels, food and souvenirs. But the notion of a VAT tax in the U.S. is new and for many, un-American.
A value added tax is a regressive national tax falling heavily on the poor. But it differs from your standard sales tax in that it’s imposed at every stage of production rather than at the point of final sale to the consumer. In its most common form, the tax is levied on everything except medicine. For the consumer, a VAT tax at a constant rate of 10 percent means that $2.99 loaf of bread becomes $3.29, the $338 airline ticket would cost $371.80 and, that $15,000 car will cost you $16,500. But while businesses can claim a credit for the tax paid by their suppliers of raw materials and unfinished goods, the American consumer will not be able to claim such a credit.
In the CNBC interview, President Obama said he was waiting for recommendations from a bipartisan fiscal advisory commission on ways to tackle the deficit and other problems. When asked if he could see a potential VAT in this nation, the president said,
“I know that there’s been a lot of talk around town lately about the value-added tax. That is something that has worked for some countries. It’s something that would be novel for the United States.”
Novel, perhaps, but such a tax could result in political suicide and all but guarantee massive political upheaval as American voters decide to toss everyone in Washington DC out on their collective rear-ends.
From the Left 
VAT is a terrible idea and you are correct. The poor will be hit the hardest. The upper-middle class and the wealthy can shoulder VAT and they have write offs the rest of us don’t enjoy. If VAT is imposed, I predict a revolution in the U.S. and no elected law maker will survive. How about ending the tax breaks in the rich instead and make corporate America pay their fair share on profits instead?
I will sell my home and move to the Cayman Islands to live out my days. I am on a fixed income and I can’t absorb a VAT tax. This is an awful idea. We’re not Europe or Asia. Americans won’t tolerate such a scheme.
I understand the necessity for taxes.
Without taxes, we wouldn’t have Medicare, Medicaid, Social Security, or a national defense. Road expenses are often shared between states and Washington.
But, to off-set our debt to Communist China and Japan on the backs of the middle and working class, and the poor, elderly and disabled, while Wall Street pays nothing, is patently immoral.
I dare Obama to try this. I dare him. He will be impeached.
Of course the Obama financial team would suggest a VAT tax for the USA.
Geithner, Sumner, and Volcker are Wall Street money boys. They’re millionaires many times over. They can easily afford to pay VAT while the rest of us gets fucked in the ass without lubricant.
You can just imagine hearing the cheers from the so-called Tea Party bosses. A VAT proposal is manna from heaven for their anti-tax platform.
vicodaniel1987@yahoo.com
If they want to slap a VAT on high-end shit that only one-percenters can afford, I’m fine with that. You know, after jacking the top tax rate back above 80%, for starters.
“Read my lips: no new taxes.” George H. W. Bush, on August 18, 1988.
If Obama doesn’t want to serve a second term, just say so. He doesn’t need to destroy his legacy and cement his place in history by implementing a VAT.
In 2009, General Electric paid ZERO income tax.
ZERO. Write offs spurred by reported loses allowed their accountants to use every legal trick in the book to pay absolutely nothing.
Little wonder the Federal government is looking to us poor chumps medicated by NFL scores and porn to accept a VAT tax so corporate America gets a free ride at our expense.
It must stop. What will it take to make people rise up and say “NO MORE?”
Unbelievable.
This idea sounds exactly like some birdbrain scheme Paul Volcker would plant in President Obama’s head as a panacea to fix the national debt.
Washington is getting desperate and with the Chinese economy beginning to slow, they will try anything. I know? How about asking healthy Americans to sell their blood and send the money to the US Treasury?
Quite frankly, a VAT may be the only thing that will fix the tax mess in this country. Right now, the system is so gamed that there’s just about no way to make the rich pay anything. It is regressive, but it is almost impossible to escape.
I would implement variable VATs, with exemptions for food and medicine, and the VAT would go up based on (1.) what the item is, and (2.) where the item came from. Domestically-produced products, as an example, would have a much lower VAT than something Mao-Mart brings in from China.
Oh, and as far as regressive, nothing can be worse than the FICA. A VAT+a reduction in FICA rates for lower earners might work out better for them in the long run.
I caught this blurb yesterday– much hoopla about GM repaying $8 billion to the U.S Government.
They still OWE $45 billion to the US & $8 Billion to Canada. We own 61% of GM, and Canada owns 12%.
Chrysler had a $14 billion slice of the pie, and has only paid back $1.8 billion– $12.2 billion still owed.
Of the 9 banks that took major loans, all have repaid in full, except for Citi, and they still owe $25 billion.
Insurance giant AIG has not repaid a dime of the $70 billion they took.
My point– I don’t want to hear about any new taxes, until these too big to fail companies repay their loans.
There is $152.2 BILLION dollars in debt owed (plus interest) right off the bat.
That is a big chunk of change.
Why should we the people pay more taxes to make up for this bailout ?
Let them sell their summer homes in the Hamptons & give up big bonus $ & take some pay cuts & freezes like the rest of us.
That’s my .02 cents.
My grandmother is 83 years old. Her sole source of income is her Social Security, roughly $1,000 a month or $12,000 a year. Luckily, she lives in a retirement apartment partially subsidized by the state. Still, she pays a third of her income, $350 a month for rent. Not a bad deal but her budget is tight. If VAT is imposed, she will instantly lose 10% of her income, lowering her disposable income to $900 a month. I fail to see how this is a good thing or how a regressive tax doesn’t hurt the poorest Americans. Sure, I will help her, as will my father, her son, but what if she didn’t have us to help? I guess an 83 year old woman will be bailing out the Federal bureaucracy until she drops dead. Is this a great country or what?
VAT? Hell no! VAT is not the way to go!
President Obama to emulate Franklin D. Roosevelt more and German industrialist Dr. Wilhelm von Siemens less. VAT will cost Obama the presidency.
The Kossacks are chatting up this shitty idea up as the great fix for what ails the economy. A few have even said VAT is eco-friendly and will help heal the earth. I guess I didn’t drink the koolaid before reading their gibberish.
A VAT tax is bullshit. Need the money? Then why in the fuck didn’t they roll back the Bush tax cuts on Jan 22, 2009? Honestly to god, it’s not fucking difficult. Raise the top marginal level to 45%. There. No fucking VAT needed. I swear, Obama is worse than awful. At least W didn’t pretend to be an intellect or a nice guy. You knew what you were getting. But Mr. Hope and Change? Hope and change, my ass.
Not good Obama. Anybody who has taken Macroeconomics would know how devastating that would be to middle class Americans. I’m praying there are enough economists advising the President to suade him to look elsewhere for monies. How about taking away the Bush tax cuts for big business? Or, how about making China come clean with the value of their currency? Better steps, that take a bolder pen.
I already spend half my take home pay on rent. If I have to deal with a VAT tax, I hope he likes it when I tell him to screw himself when he needs money to get re-elected.
Last time I checked, there was something called the Iraq war underway costing the American taxpayer $12 billion a month.
Last time I checked, there was something called the Afghanistan war underway costing the American taxpayer $8 billion a month.
All told, the war in Iraq has cost us $700 billion dollars and the war in Afghanistan has cost is $300 billion dollars.
Instead of VAT, how about reigning in the shadow government called the Pentagon and US military adventurism?
a VAT is a terrible idea – talk about making this a country of haves and have-nots (where we almost are anyway).
our tax system is stacked and it sucks – since the RICH either make the tax laws or pay to get people in congress to make the tax laws – you can continue to expect a regressive, stacked and completely unfair tax system.
i am actually for a flat tax with some steps as income goes up (especially after $250K – if you cannot live on $250K then there is something seriously wrong with you) – with some deductions (esp for health care) – i also would chuck the mortgage deduction (but that is just me) – again the poor get hurt big time since they overwhelmingly rent vs buy.
the problem is corporations – they just dont pay a “fair share” – NOT even close. and now that corporations are persons – you can only imagine the ads that are coming “tax us more and we will have to lay off people” – i can see them already.
problem not ONE politician in this countyr has any balls.
The mortgage deduction is all the middle class have left to deduct. If you want to kill the housing market forever, remove this and see what happens.
I read an article on the ramifications of the VAT tax in Mexico was chilling. The cost of Tortillas — a time honored stable of Mexican food and enjoyed daily by millions of Mexicans, tripled when VAT was added, leading the writer to argue dissatisfaction with the government laid the groundwork for Mexicans to join the drug cartels currently wrecking havoc on the country.
The answer to America’s woes isn’t more taxation but a simple concept: we must start to live within our means and with a budget. Money isn’t free and it doesn’t grow on trees.
A VAT tax would result in 15% and 20% increases in the consumer prices of everything from food, to clothes, to airline tickets and home improvement items.
VAT may start at 10%, but how long until 10% isn’t sufficient and it goes up to 14%? 18%? or 21%?
I’m with feminazi. If they pass VAT, I’ll move to El Salvador or Costa Rica.
Good comments from those opposed to the VAT tax. They get it. But I especially like what distributorcap said about corporations. That they are not paying their fair share (Bush tax cuts for them), and how they will scream they can’t afford more taxes…while they give theirselves millions upon millions of dollars in bonuses while asking us, the taxpayer to continue to bail them out, while paying themselves more millions of dollars on bailout money….and so the cycle seems to continue.