The VAT – Don’t even think about it!
on October 11th, 2009 at 3:07 pmThe following commentary comes from Roanoke Tea Party member Donald Koop, and the advocacy for the FairTax is his. The Roanoke Tea Party takes no official position on that proposal.
The dirty little secret is beginning to seep out. Your federal government, ever watchful for new ways to take your money from you in order to (in part) use it to compel you to adopt certain behaviors, is thinking about the socialist European Value Added Tax (VAT). Even Speaker of the House Pelosi admitted, in a recent PBS interview with Charlie Rose, that some form of VAT will need to be considered as part of the mix. This is frightening news, as it would provide an almost limitless source of money to pay for gross overspending on projects that (in part) we don’t want. And, it would be in addition to the income tax!
The VAT taxes the value added to each step of production of every good or service. For example, the addition of a windshield to a work-in-progress new car would require a tax on the increase in value of the car. Providers of goods and services will, of course, pass these taxes along to consumers as costs of production; i.e., as higher prices. In effect, the VAT is a sales tax imposed on all goods and services deemed to be subject to the tax. Further, the complexity of keeping track of all these mini-taxes is such that the VAT is only cost-effective if the tax is high enough. This could result in the tax rate being set at 10-15% and it is further subject to the whims of Congress when it comes to raising the rate.
The VAT, as a flat-rate tax on most of what we buy or consume, is extremely regressive. Unlike the income tax, which has been twisted and contorted in order to give a break to this group or that person, the VAT hits everyone with the same bat. The poor will pay a greater percentage of their expenditures in tax than those of higher income. Only a further set of contortions can relieve this certainty. Bring on thousands more pages of tax regulations!
Fortunately, many of us in the Roanoke Valley are served by a Congressman, Bob Goodlatte, who can be counted upon to vote against a VAT proposal as often as it comes up. Other Congressmen serving our region are not so certain, nor are our two Senators. We need to contact our wavering representatives often and with a simple message: The VAT – Don’t even think about it!
There is an alternative to the income tax with or without the VAT: the FairTax. It provides for the elimination of the income tax and the IRS leading to a whole bunch of changes. Instead of taxing “earned income,” which seems to include money made from any source whatsoever, it taxes only money spent to make a purchase. Since earned income is not taxed there is no need for payroll and withholding taxes and you go home with your full paycheck. There are some workers who, having had their checks reduced in this way for so long, don’t know what their full wage is! Wait, there’s more! Each legal, resident family will receive a monthly refund for the FairTax that will be paid on expenses up to that family’s poverty level meaning that the poorest among us will, unlike the income tax and especially the VAT, pay no tax at all. The rich, on the other hand, will hardly notice the prebate. Between these extremes, every family will have some of its taxes refunded with the most effect felt at the lower incomes.
The income tax is already included in the costs of goods and services by virtue of hidden taxes collected from providers. The VAT would double down on this at every level of production. On the other hand, the FairTax would eliminate all of these taxes! Consequently, as the costs of new goods and services drop – the average amount is 22% – the FairTax is inserted at the level of 23%. Prices would remain essentially at the income-taxed level and well below the plus-VAT level. In fact, had the FairTax been effect a year or so ago, its full-paycheck property would have provided a strong stimulus on its own.
Act now to stop the tax madness! Tell your federal legislators: income tax…NO; VAT…NO; FairTax…YES. Reach them as follows: Perriello – 202-225-4711; Boucher – 202-225-3861; Warner – 202-224-2023; Webb – 202-224-4024. Let them hear from you.
Donald, while I agree with you that the VAT is horrible, I disagree with you on the Fair Tax. First of all, you need to ask yourself why we even have an income tax. The Grace Commission, under President Reagen, set out to find out what the income tax pays for. Know what the finding of their results were? 100% of our income taxes go to pay interest on the national debt that our government owes to the Federal Reserve. That’s right, 100% of the income tax goes to the private shareholders of the private Federal Reserve. If you get rid of the Federal Reserve, you get rid of the income tax and replace it with NOTHING.
I suggest you watch “America: Freedom to Fascism” for free on Google Video. This will educate you on the matter. Or better yet, read Ron Paul’s current New York Times bestseller “End The Fed.” He lays out the case for how to get rid of the income tax and replace it with nothing.
Remember, if we get rid of the income tax and replace it with NOTHING, the government will still have the same revenues that it did in 2001. Our government can live with that amount of money.
The goal is to get rid of federal government departments, not shrink them. The goal is to make the government Constitutionally limited. We can’t do that unless we abolish entire departments.