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Is A 6.5% VAT Coming?
Confirming once again that the clueless government would rather risk a populist backlash than actually cutting costs (recall that federal worker compensation has surged in the past 5 years), it appears that the long-stirring debate over a value added tax may be about to materialize into something tangible. Per Bloomberg, "Alice Rivlin, a member of President Barack Obama’s deficit-reduction commission (and former Fed vice chairwoman), is trying to stir a debate over imposing a national sales tax to reduce the deficit. Rivlin, as part of a separate 19-member group sponsored by the Bipartisan Policy Center in Washington, offered a plan for a 6.5 percent national debt-reduction sales tax. Her recommendation comes as the president’s panel prepares a Dec. 1 report of options for Congress to trim the national debt." Coming from a former Fed member, this is not all that surprising - after all, there is nothing to stir inflation expectations like a sudden 6.5% hike in all prices.
More:
Rivlin, a former Federal Reserve vice chairwoman and Democrat, and the co-chairman of the policy center group, former New Mexico Republican Senator Pete Domenici, are offering a more aggressive approach to tax increases and cuts to Medicare.
“It’s very difficult, and they want to go further,” said Alan Simpson, a Republican former Wyoming senator who is co- chairman of the president’s commission.
Jim Horney, director of federal fiscal policy at the Center on Budget and Policy Priorities in Washington, said the Rivlin group may be “somewhat more realistic” about how much revenue is needed to close the deficit.
The more aggressive plan may help the presidential panel sell unpopular remedies by painting an even starker picture of the measures needed to tame the debt.
The presidential panel’s co-chairmen, Simpson and Erskine Bowles, former President Bill Clinton’s chief of staff, drew criticism Nov. 10 when they proposed their $3.8 trillion report.
Luckily, there are at least some people in the administration who are not completely ignorant when it comes to economic issues:
Simpson suggested it isn’t likely his group will take up the sales tax recommendation.
“There’s no need to get into it about their plan versus our plan,” he said. “We’ve pissed enough people off in America to last forever. We don’t need any more people.”
On the other hand, this would be a perfect smokescreen to the tax cut extension smokescreen, and may be used as a trump card should Obama yield on this so critical to the republicans issue. Coming from an administration whose modus operandi is to create adverse shocks for the middle class that benefit the top 0.01% social strata, we will reserve judgment over how stupid this proposal is until it is actually not implemented.
Amusingly, confirming that even the Rivlin-Domenici alternative plan will do absolutely nothing to fix America's spiraling debt level is the following admission:
The nation also cannot grow its way out of the deficit, the
group’s report says. Just to stabilize the debt at 60 percent of
gross domestic product, the economy would have to grow at a
sustained rate of more than 6 percent a year for at least the
next 10 years, it says. The economy hasn’t grown by more than
4.4 percent in any decade since World War II.
In other words, the best America can do is fiddle as the debt fire gets ever bigger.
As for tax hikes, finally someone sees the light:
Finally, the problem also can’t be solved simply by raising
taxes on wealthy Americans, the report says. Reducing deficits
to manageable levels by the end of the decade would require
raising rates on the top two income brackets to 86 percent and
91 percent, the report says.
All this confirms that when an economy is experiencing a meltdown in shadow money to the tune of ~$10 trillion over a few years (and much more coming), there is absolutely nothing that can be done to fix it, and the best remedy is hoping for a delay of the inevitable. For what happens on the other side, see recent social celebrations of the failure of the "spending-austerity" dilemma in Greece, France, London and Ireland.
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I hope this is applied to all new home purchases as well, of course.
VAT =/= Retail Sales Tax
These are two different beasts. We need to be very clear, here. Exactly what are we/they talking about?
They said "sales tax" on NPR this morning. Not sure if that actually tells you anything.
You are correct, in many countries and by law, the VAT is built into the retail price and is not itemized separately. Like inflation, it's a perfect hidden tax.
VAT is most regressive ...good for the UK class structure to get the little people to pay their fair share of the load they create on the way to serve. Free people will invent new ways to avoid that game. The only thing that the 16th Amendment had as the sell was the PROgressive income tax..say 95% after 10 million per year. That works for sustainable republic (thing of the people)
Happy to see someone finally point this out: a VAT is first and foremost a regressive tax because it taxes the one thing that people with low income can't avoid: consumption. If you are spending all the money you make to survive, you'll pay a greater proportion of your income in taxes under a VAT than someone who is earning 20x median income. That is the very definition of a regressive tax system - the poor pay more than the rich - and there is no way to change that.
For this reason it won't make it out of the House. No politician will touch this if people say it as it is: a regressive tax.
It's hard to see this happening because it doesn't give the politicians the social engineering component an income tax affords them.
Lot's of talk... it is all non-binding and at best just meat for academic discussion. NOTHING this "commission" is proposing will get any traction in the next half dozen years.
and will that 6.5% be added to existing sales tax, (9.5% in my area)
It will end up being 15% to 20% on top of your local sales tax.
They have to start at 6.5% and raise it over a period of time so the bread lines will only be a mile long instead of 10 miles long.
VAT: Who Wants Black Market & Barter?
"I do! I do!"
Lookin' like Greece more every day!
If they implement such insanity this will be the straw that breaks the camel's back for many producers in the U.S. leading to many of the cattle walking off the farm. When that process is finally complete, the control freaks will be left only with a bunch of whining, decrepit useless people laying around demanding the thieves steal something from someone and give it to "the people."
The people who are worth a damn aren't going to tolerate this shit forever.
But how much of those federal employees are Xe? They get paid hundreds of thousands, and our gov't is ultimately paying for it, after of course Xe gets it's own cut.
What about DHS?
How many of these high priced federal employees aren't the lady handing out the welfare check, but the crazy neocon shooting children in Iraq while liping bible verses?
Which of course would mean they added 1000 outliers to a sample of 100. I wonder why the income numbers are so skewed??
VAT tax is bs. Hurts the poor, hurts the middle class, and of course its a pittance to anyone getting a Wall Street bonus for continuing to dig deeper the grave of an already dead bank, 100x over.
The nation CAN grow it's way out of this mess. What tossers. They just can't do it with all the illegitamate fraudulent debt and bailouts that have been foisted upon them, along with and already heavily tilted game against the American PEOPLE.
So they're right, they can't screw us AND survive. So fuck 'em. Let their fraudulent shit destroy them. Glass/Steagall
But yes, the answer always is, suck more from the bottom, to fix the figures at the top. Won't work this time.
The catfood commission strikes again.
Everyone poo-pooed what this commission was. Not me. I've been screaming at exactly what this fascist anti-american commission was doing a year ago. LaRouche has been on it, pointing out who the fascists are, where they worked or associated with prior, etc, etc. Their hitler ideologies...like Rand Paul, Barack Obama, and just about every Tea Partier (nuts and cum in your face and up your nose party) that was elected. Rick 'fascist scumbag loser' Perry is going to FUCK Texas over. Maybe this time voting dumbass will have consequences.
Rand Paul and Barack Obama and everyone on their side, FASICST CORPORATE WHORES. Traitors to the U.S.
Not in theory, or opinion. But by FACT. Based on law, precedent, history, and something called Nuremberg.
Great idea! With the VAT tax replacing the income tax I'll be paying the same as Warren buffet. He'll be paying the same as me. One slight difference, he has just a little more income than I do.
If they do this, I expect you'll see a good pop in retail sales numbers as people run to beat the tax, then a collapse as the new tax does what they always do: stifle activity.
But there is no way to ever get out of debt. Our money is debt. The only way to get out of debt is to change how our money is created and what our money is.
If you have money it's because you own someone elses' debt which it all must be paid back to the bankers that created it out of thin air to begin with.
Why exactly are we all paying interest on money that never existed to begin with?
They just don't get it (or they get all too well, only time will tell). The debts are too large to pay. The only way out is a default on all debts and a new currency backed by metals. However, because that would a minimum of a few weeks of mild street protests to a maximum of the government being replaced and lynched by angry mobs, so they lie to us.
I am the last person to endorse class warfare.
There is a fact here, however, that no one who admits facts can deny (that's a completely redundant and circular statement, but I digress):
Tax on capital is relatively low compared to tax on labor and consumption (as consumption is necessary and often done by those of modest means, even if the absolute percentage of that tax is low - I'd argue it's not once you pull back the curtain, but....).
Because tax on capital is relatively low, and taxes on labor and consumption are high, the only way to squeeze additional revenue out of the populace at times of keen economic distress is to hike labor and consumption taxes (who will stop buying things they NEED to live because the tax on purchase has gone up?).
Speeding tickets, toll road fees, permit fees, etc., are all also good ways to wring extra coin from the masses during weak economic times - the more inflexible the service, the better.
I am in constant denial of facts, so your argument falls flat on my little Coon ears.
But you did a good job putting forth your argument.
Every plumber, electrician, barber and other self-employed tradesperson I buy services from is able to hide substantial portions of their income from taxation. Many make more NET income than me, because 100% of my income (from a Fortune 500 co.) is taxed.
A consumption tax (VAT) is long overdue in the USA. To offset the cost and regressive nature of the VAT, the FICA (Social Security) payroll tax could be gradually reduced for those below a specified income threshold and eliminated for minimum wage workers.
digital currency cant be far behind
A consumption tax (VAT) is long overdue in the USA. To offset the cost and regressive nature of the VAT, the FICA (Social Security) payroll tax could be gradually reduced for those below a specified income threshold and eliminated for minimum wage workers.
Right. And because I was robbed last week it's long overdue for you to also be robbed. Way to side with the oppressors.
How about a 6.5% reduction in government. Not the social security that everyone paid into and is being stiffed, but everything from medicare to military to dept of education to EPA to OSHA to DOJ to everything.
Cheese, what a lack of management capability. These are all career public employees with a sense of entitlement that leaves the rest of us stunned. Private employers know how to fire. No one in government has any notion of the concept.
+1.
The government solution always to take more from the citizens to make up for government's lack of restraint.
When the income tax began, it was never supposed to go over 1/2% to 2% (depending on what source is cited).
How about a 50% tax on anyone who draws a government paycheck? That and a wage freeze. Because the good folks in government just want to help and they know that it's important to give something back. Ought to be an easy sell.
VAT just means 6.5% more money for the crooks in DC to give to their crooked cronies, bankers, wall street, major corps, etc.
The solution to the gov't leviathan is to deprive it of money.
Anyone who believes the 6.5% will go to deficit reduction is a fucking MORON and a fool. But, go have the argument with some rah rah party friends. They'll INSIST that the money is going to that just as they INSISTED that the extra "1 cent" of state sales tax was really going to roads or schools and the lottery too.
Yes, despite a 100% track record of having been PROVEN bullshit, these idiots will just get in line behind whatever idiotic shit is advocated by their party.
If you argue against this tax, you will be told "we have to pay down the deficit." And when the deficit doesn't go down, the government will come back for a higher tax and these SAME IDIOTS will tell you that is necessary too.
I think average people actually LIKE being abused and shat upon. It gives their miserable lives some righteousness in being a fucking worthless victim. I don't know who the hell EVER thought being a victim or a loser was somehow virtuous.
Come on Trav, we're only going to use the VAT for gov. stimulus THIS year...time of emergency, you know...
ha!
Yep. Look at how many sunset laws have actually sunset.
I'll support a 6.5% VAT if and only if the Income Tax is eliminated for everyone. Next up, deep cuts across every government agency.
If you don't like working for a company and having your taxes withdrawn from your pay check. Try being self employed. Oh yeah, were all skimming loads of the top. You cannot get unemployment insurance, you pay through the nose for health insurance. You run the highest risk of being audited. I already have to file state sales taxes every month now instead of quarterly because they can't wait to get there hands on the money. Oh, just more work for me, so lets add a VAT tax to boot. Looks to me that the bankers are where all the screwing is coming from.
Hog, I will give you a clue. The 6.5% is not about saving the bankers, it is about saving the public employees that give to the unions, that give to the politicians. Those public employees also stuff more into the hands of the bankers than the bankers can ever take out.
It is the government debt generation and its huge volume that the bankers crave. If they can fig leaf a little tax increase to increase debt even more, the bankers are happy. But again, the big money goes to the government employees. Are any of them stepping up to offer a salary reduction to make them more comparable to the private sector?
The Deficit Commission committed mass suicide on Day One. They never had the gravity or personalities for the job.
It's DOA or DTF. (designed to fail).
Looks like a favor to Pete Peterson - let him run the bases in an empty ballpark.
It is amazing how fucking stupid the people we have elected really are. Effectively increasing prices will do nothing except curtail demand (except for the velben goods that the elete wall street banksters purchase). But what the fuck, its our money they are spending not theirs.
Revolution time.
Erskine Bowles and Alan Simpson on Charlie Rose last night.
Well worth the watch.
They tore Paul Krugman a new one.
http://www.charlierose.com/