Obama Administration - Value Added Tax (VAT) May be Necessary to Trim Deficit

The Value Added Tax - trickle down effect: image: bulatlat.com

Reuters: White House Advisor, Paul Volker, has acknowledged that a “Value Added” or “energy” tax may be necessary, as the ever increasing deficit becomes unsustainable. Volker , former Federal Reserve Chairman, (Carter Appointee), and White House Economic Advisor. appears to be in sync with the rest of the staff: a series of his lectures include: “The Implication of Globalism is Globalism” and his treatment of Economics vis a vis Foreign Policy: includes the following: “Most egregious to me is our continued failure to pay our dues to the United Nations.” It is no wonder, therefore, that a Value Added Tax, or “other tax” is in our future.

With entitlement programs growing exponentially larger by the day, under the Obama Administration, there has to be a way to bail out of the spend, spend, spend which has taken place in just one year. Although the 82 year old Carter appointee, speaking at a New York Historical Society program: “The Global Financial Crisis: America Making a Comeback”, suggested that the idea of such a tax is becoming more acceptable. That is, of course, if ones point of view is similar to that of Carter and Obama. However, if one is the taxee, the idea of adding a VAT on top of every other Federal tax citizens now pay is abhorrent. If one thinks that the VAT would replace other Federal Taxes think again, The Obama administration has even tied the Health Care Reform Bill to the Internal Revenue Service. Should one fail to be insured, the IRS will be seeking reimbursement.

Also, economists who hold such politically charged views may not be the best advisers when it comes to making sound decisions regarding our economy. A recent article by Curtis Dubay, at the Heritage Foundation speaks to the failure of the VAT in Europe to curb the deficit. (Excerpt)

There is a growing call by backers of bigger government for Congress to impose a value-added tax (VAT) on top of all the other taxes Americans already pay. A VAT is similar to a national retail sales tax but is collected at every stage of business production until its entire burden ultimately falls on the consumer.
Among its suggested advantages, proponents argue a VAT would be an easy fix for the deficit because it would be difficult to evade relative to the income tax.[1] Evidence from countries with VATs suggests otherwise. If Congress implements a VAT as an additional tax, businesses and individuals would try to avoid it through fraud, severely limiting a VAT’s ability to close budget gaps.

The author also suggests that Europe has not improved with the addition of a VAT, rather the opposite is true. Financials straights in Europe have led to rioting in Greece as economies cannot keep up with the entitlement programs and lack of revenue generated by the governments.
It is strongly suggested the Heritage Foundation article be read in its entirety Heritage.org/Research Reports/2010/01/Value-Added-Tax-No-Easy-Fix-for-the-Defici

It is not that a consumption based, or fair tax, is such a bad idea, after all, it crosses all socio and economic lines, but, that is if the IRS is removed, and the Federal Income and other Federal Taxes rescinded. The likelihood of that is about the same as Barak Obama being elected to a second term in office.
At a time when 10% of the American populace is out of work (those that do work, the number that are on entitlements were, as of 2004, at 11%the loss of revenue coupled with increased needs for entitlements and new entitlement programs with historic costs passed by this Administration, the ability to pay (as the government cannot print money indefinitely), will eventually end, and that may be sooner than later. Those left holding the bag, will see an increase of 20% or more in taxes, making the ability to own a home, a car, or save for college, a mere memory of what this Great Nation once was – a land of Opportunity.