Today is tax day, and as Americans grudgingly pay up most of them have no idea of how much worse it could get if Obama, Nancy Pelosi and Harry Reid have their way.
Taxes are already scheduled to rise sharply as a by product of Obamacare. And on top of that the Administration has already promised to let the Bush tax cuts expire, which will increase the top individual rate in January from 35% to 39.6% the dividend rate from 15% to 39.6% and the capital gains rate from 15% today to 20% next year. But even these sharply higher tax rates aren't going to come close to making up for the vast new spending the Obama Administration has been doing.As a matter of fact, they're going to help repress federal revenues.
The latest bright idea from the folks in DC to get even more of your money to spend is a Value Added Tax, or VAT.
Essentially, a VAT is a national sales tax, and one that is normally adjusted to be a tariff with a higher VAT on imported goods.This is normally sold to the peons by the elites in government as a 'progressive' tax, because it is a tax on consumption.
As we'll see, the only thing 'progressive' about this is the way the rate keeps rising as politicians get addicted to the vast new amounts of your money they now have to spend.
In Denmark, for example, the VAT started out at 9% and is now a whopping 25%...and that's in addition to a top income tax rate of 59.7%. In France, the VAT ws originally 15.6% and is now 19.6%, with a top income tax rate of 45.8%. In the UK, the VAT has gone from 8% to 17.5% while the top tax rate has soared to 50%, while Germany's ballooned from 10% to 19% with a top income tax bite of 47.5%.
The nonpartisan Tax Foundation recently calculated that to balance the U.S. federal budget with a VAT would require a rate of at least 18%. And that's at the new Obama tax rate of 39.6%!
That's fitting ,because none of the people shilling fo ra new American VAT are mentioning anything about eliminating the federal Income tax, or even cutting the rates.
Aside from the bite it takes directly out of your wallet, the VAT is a job killer.
Since it makes goods and services more expensive,businesses pass on the increased costs to the consumer, and ultimately end up simply hiring fewer workers because people simply buy fewer goods. What's mitigated this situation a bit for Europe and Japan so far it that they have been able to export to the US, where there is no VAT acting as a tariff to kill the sales of imported goods. Not only would the US not have the outlet of wealthy non VAT countries to sell to but since the VAT is often used as a tariff on foreign goods, America would likely face retaliation on its exports overseas.
It may be bad for individuals and businesses, but politicians love the VAT.It garners in a great deal of money very quickly and efficiently, which leads to even more government spending and expansion, and ultimately higher VAT and income tax rates to make up the new shortfalls. That's exactly what's happened in Europe.
When the likes of Barack Obama and Nancy Pelosi start touting something like the VAT, you ought to react to it like a vampire to garlic.
No comments:
Post a Comment