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John McLaughlin Predicts National Sales Tax To Be Instituted By Early 2011; Will It Be Catalyst For Next Major Recession?
At 27 minutes into his show, John McLaughlin predicts that Obama "will enact a new national sales tax in January, February or March of 2011." As we pointed out recently, tax withholdings, contrary to what the budget office or flawed groupthink will have you believe, were down in February and March compared to 2009. Alas, Obama will have no choice but to institute some form of VAT unless he has absolute faith that China will buy US debt into perpetuity. Yet what people in D.C. should remember, is that Japan's hike of the VAT in 1997 and increase in out-of-pocket medical expenses is often credited with prompting their 1997 recession.
Here is an update of weekly gross tax withholdings from the TDS: we are currently over $13 billion below 2009 on a cumulative basis.
From IESEinsight:
"By 1996, the economy was strengthening, and so, in 1997, Japan took new steps to reduce its deficit: it removed the income tax reduction, increased the consumption tax and increased out-of-pocket medical expenses. The result? A major recession, the most serious since World War II. It seems Japan reversed its fiscal course too soon."
Will Obama follow Japan into the rabbit hole? Or will the stimulus driven recovery fizzle long before then? Keynesianism has always worked in the past. However, never in the past did developed countries have total debt + off balance sheet entitlement program unfunded liabilities running at 500%+ of GDP. How much longer must we suffer this failed experiment in making bankers rich beyond even their wildest dreams before someone who understands the fatal flaws of John Keynes' theories is put in charge (preferably not a member of either corrupt party).
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VAT is brilliant if it is THE ONLY tax in the tax structure. This claim is easily verifiable if one looks at some post-communist European economies, but it is a self-destructive mechanism if piled on top of other taxes, as it will be in the USA.
Oh, and no, not recession, full blown depression. It's like a tariff, but on a consumer. There is no way in hell a credit-less, job-less, over-taxed-as-it-is consumer can endure that. And companies can not just pass the tax increase on the consumer and keep the same margin levels. No way because it would mean certain death of said company in the period of 1-3 years.
Apparently something has to give; what.... probably everything.
In some ways, a consumer tax would be a good thing. Americans need to be forced back into acting like citizens instead of 'consumers'.
Our profligate, spendthrift consumption, along with offshoring any and all production over the past 30 years has ruined this country.
On the other hand, if we have to raise taxes, we should start with the corporate carpet-baggers and Wall Street land-sharks.
Check this out:
http://www.cbpp.org/cms/index.cfm?fa=view&id=3090
The effective federal income tax rate for the 400 taxpayers with the very highest incomes has declined by nearly half over the past two decades, even as their pre-tax incomes have grown five times larger, new IRS data show.
http://bigthink.com/ideas/19511
Forbes magazine reports that General Electric, for example, won't owe any U.S. taxes for 2009, but will instead receive more than $1 billion dollars of tax benefits. That's in spite of the fact that GE generated more than $10 billion in income last year. GE usually doesn't pay much—in 2008 it paid just 5.3% of its income in taxes. But the basic reason GE has been able to keep its tax bill so low is that it structures its business so that it takes a loss in the U.S. and earns its profits elsewhere. By moving ownership of profitable assets to overseas subsidiaries while incurring expenses in the U.S. companies can avoid being taxed here where tax rates are relatively high. In some cases, corporations simply set up P.O. boxes overseas. According to another GAO study, some 18,000 American companies maintained P.O. boxes in a single building in the Grand Caymans. It makes sense, after all, as Scott Hodge of The Tax Foundation told Forbes, for multinational corporations to "put costs in high-tax countries and profits in low-tax countries."
@ Cheeky
Your analysis is 100% correct. Let's not discount the possibility that the international bankers are trying to intentionally wreck the U.S. economy (deflationary depression) in order for them to consolidate power and assets.
"VAT is brilliant if it is THE ONLY tax in the tax structure."
absolutely agreed, a simply elegant compromise on many different levels. unfortunately, as in everything else in modern America, its original brilliance will be perverted so that its ultimate effect will be the complete opposite of how it should be intended.
a pity, but what can you do, xcept learning the proper protocol to dive dumpsters?
By the time the effects of a VAT loaded on top of our current tax regime kick in, there won't be anything left in those dumpsters to dive for.
Does anyone know if this will negate the Internet no "sales tax" if out of state sales. E.g. Amazon, etc. If so, this will really suck!
Amazon is a big target and individual states are pushing hard. Kentucky caved 2 years ago, and I have been paying 6% sales tax on Amazon purchases ever since. One by one they will all get a piece of this action eventually, with or without VAT.
seventree, man that sucks, it will suck for all of us when this shit takes place. I hope we will soon realize this is shit and do something about it!
We have two American flags always: one for the rich and one for the poor. When the rich fly it means that things are under control; when the poor fly it means danger, revolution, anarchy.
Henry Miller
"If there is to be any peace it will come through being, not having." - HM
Well it looks like we have about 8 months to stock up on ammo before it's taxed to hell.
I tax, you tax, everybody taxes
doesn't "catalyst for next major recession" imply that this "great one" has ended?
waiting for someone (in addition to rosenberg) to call this what it is: a depression (for anyone not a member of the kleptocratic/plutocratic class).
Well, if it's ended, why the need for the VAT?
There searching for ways to set off the double dip that hit in 33. The fed always thinks they got the army and the government and the states all ready to go facist on everyones ass but then when the reality hits it's just too much to take.
yeah, but just think of the boom in retail sales ahead of the tax implementation! That will keep the ponzi going at least a couple of more quarters. Retailers and mall REITs to the moon!
Oh please. McLaughlin is the biggest douchebag on TV. He is the same asshole who predicted the inauguration of President John McCain.
We used to call that show "The McLaughin Group" down at the pool hall, but then we were a bunch of smart alecs.
Damn, I missed that one too ... that, that means Sara is VP!
Wondering where all those FairTax advocates are now.
FairTax advocates support the change only with a constitutional prohibition on income tax. They are well aware of the coming bait-and-switch.
Besides FairTax is at the retail level (the only one that counts) and not a VAT which is hidden.
Obama's Debt Reduction Commission for Amerika is supposed to report back to him after the midterm elections in November. It's going to take a while for them to come up with a comprehensive plan.
I have total confidence that with the number of people on the board that would like to reduce the size of government that they will certainly come up with the best possible solution for the USSA.
(you can clean the puke off your keyboard now)
I still say that all Obama's massive spending increases are to create a crisis where a VAT will be "necessary". If it is the only thing to maintain US access to bond market, there will be a bi-partisan "compromise" (meaning Dems + Olympia Snowe, Susan Collins, John McCain, and his sidekick Lindsay Graham) initiating a VAT.
The GOP "moderates" will say it was unfortunate, but the only option left, and the crisis was too great to delay passage. In exchange, they will get some token change like delaying AMT middle-class impact for a year or two, or a blue-ribbon commission to study alternatives after the crisis abates.
That done, the overall tax burden will continue (stealthily) to increase to over 50%.
Here is my view:
We have spent multiple trillions (some say as many as $9T) over the last 2 years and have very little to show for it.
BB wrote a paper that said the cause of the GD1 was the banks were allowed to fail and there was no one left to lend $$. So he decided to tryout his theory on all of us and bought huge quantities of MBS, bailed out a few others (like AIG and GM) and who knows what else (and we truly do not know) with our $$. So the banks are now sitting on massive reserves, not lending to anyone and the Fed (us) is sitting on $1.2T worth of MBS of dubious value. The banksters are getting billions in bonuses; and the people are looking at a VAT/ Sales Tax tax.
Yea, that will be real popular with Joe mainstreet. Talk about a formula for revolution ….
sschu
A new tax in 2011? I'm thinking that will all depend on the state of the stock market.
Have we sunk so low that we have to dredge up this 120-year-old corpse who has always been completely ignorant of economics? This is what we now have as analysis on this site? What's next: Stock forecasts from Joan Rivers' psychic? Sheesh!
Yeah, kind of have to agree. What could be less relevant than an economic prediction pulled out of McLaughlin's backside? How the hell would he know?
It may come and you will take it like good little peasants.
Yep. The trouble won't start until the government checks stop arriving in the mailboxes.
the vat is another regressive tax that puts burdens on those who can least aford it. those who have to spend the highest portion of their earnings to survive pay the highest tax.
At the same time a transaction tax moves nowhere because of geithner.
Just another way for Obama to buy off the wealthy.
The issue at hand is a higher tax take.
This is very simple to resolve.
Firstly one has to decide where one wants to be in 10 years.
Which economy would be 10X as large in 10 years ?
An economy whereby the cumulative tax composition of prices exceeds 50% ?
Or an economy whereby the cumulative tax composition of prices is no higher than 15% ?
Obviously the US govt. wants its economy to be much smaller in 10 years....
And the tax take would be much higher, if taxes were restricted at 15%.
One does not cut down the orchard hoping for more fruit.
Just as Jesus on the road to Jerusalem smote the false prophecy of the baren fig tree, The False Prophecy of the New Messiah, shall destroy America in his quest for immortal adulation.
All other visions are chimera. Invest wisely, for the paradigms of the past shall remain those of dreams.
hot legs in pink
It's getting harder and harder to talk myself out of the position that says:
Fuck it, let's just do this thing whole hog and get it over with.
We have Liberal Jesus in the White House, we'll soon have at least the expenses of socialized medicine, more entitlements coming on top of that - all available to anyone who cha-chas over the border, pretend money, unicorn and rainbow foreign policy (plus endless expensive wars), expanding public and shrinking private sectors...
National VAT? bring it on! (and even if you don't care for McLaughlin, it's coming). The sooner this fantasy league government collapses of it's own steroid-starting-line-up weight the better. It's going to blow no matter what, you don't even need a calculator to do the math. Would you rather it blow in 10+ years when there will be less people left walking around who knew what it was like beforehand? Something is going to have to come afterwards and the longer that 'afterwards' is from now the worse it will be.
So vote as far left, as pro-government and for as many straws on the camel's back as you possibly can. It's too late for any of that Tea Party shit, that will just prolong the agony. If you give them enough time they might start just confiscating property before the end. You can't back peddle over the tipping point. The gate is straight, deep and wide.
Break on through to the other side!
Hooray! Someone gets it!
And while you're at it, do everything you can to minimize your taxes paid, including buying as little as possible beyond the necessities, and quit your day job if you can afford it.
I've always gotten it, it's like the spanking from your dad, would you like it now or after dinner? I always say take the medicine now and get it over with, which is what should have been done in '08 with the financial institutions.
The pain will come, the only choice is whether we take it now, or prolong and take a worse pain later, there's no avoiding it. I say take it now and be done with it.
All this mickey mousing around just makes the situation that much worse.
1. Voting doesn't matter. You change the puppet not the puppeteer. All voting accomplishes is swapping them out, and maybe buying time if enough incumbents are rolled out. Corruption training must take at least a few days, or a weekend debauchery at some DC whorehouse.
2. Kick the can! I'm young without many assets, but I have an income. I want this can kicked a few more years so I can save up! Besides you do know what waits on the other side don't you? Those in power will not give up the reigns easily and if so will use force to squeeze and control. USSA and police state America. the closer we get to the end the harder they will squeeze so I'm all for them kicking the can a few more days. Also when the ponzi is revealed the standard of living in USSA will nose dive. Imports will be almost impossible, goodbye goods and energy! I may not like the ponzi system but we are past the event horizon. The realization of the ponzi is death at this point. There is no way out. I happen to want the agony a little further out, but then I'm also eyeing the door.
Though a VAT kills us. As a consumer economy a nice VAT ends that noise. And I expect they will start with a 2-5% VAT and it will quickly ramp to the 20% range. So you may get your wish and this system may end in a year or two.
I just saw on Drudge that OK lawmakers and teapartiers want to start a militia. This ain't going to end well for us morts.
Yep, nothing makes me feel more secure than 300,000 assholes with 76 IQs and and a million rounds. Canada is north, right?
That's why I got a govt. job... pack it on. Ayn Rand had it wrong with Atlas Shrugged.. having her characters take low paying menial jobs... nope, take high paying .gov jobs. If the feds wanna leech off me, they'll be leeching off themselves into a self destructive
black hole!
Your elected reps (or at least mine) working hard on doing just that. I just Infiltrated, I mean attended my local union congressional night. There I got to hear Chuck Schumer brag about a new 2500$ tax credit for everyone making under 200k on there kids collage tuition. I had to fight hard to keep from laughing (and exposing myself as someone not pluged into the matrix) about where we're going to get the money for this but then I remembered BB's Ronco magic printing press!
Here is my shocking prediction of what will come out of the Deficit Reduction Commission. Guarateed to be 100% accurate. You can trade on this folks:
We will have to... wait for it... cut spending, AND... wait for it... raise revenues in order to reduce the deficit!
Booya! A real mindbender, I know. You have to be a real reader of the tea leaves like myself to see this coming.
Pfft. He'll be impeached by then.
Pfft. He'll be impeached by then.
or he will have enacted the bankstas' world-wide carbon tax by then.
Well, if we get to the point where the POTUS can "enact a new national sales tax" it's unlikely he would stand for a pesky thing like an impeachment conviction.
The US cannot have a long-term unemployment/food stamps social safety net and expanding entitlements without a VAT. There are not enough of those of us who still report our income to pay for the US Govt. If the VAT is introduced simultaneously with cuts in Social Security and Medicare, then it will have political support. If the VAT gets 80-90% of Americans out of the income tax, all the better.
John McLaughlin is full of shit, as usual. Even the Dims won't raise taxes in an election year and after the mid-term elections, they won't have the votes to do anything. 2010 will be 1994 redux. The Dims are gonna get their heads handed to them and starting on 1/1/2011 we have gridlock. You can forget about a VAT tax or any other tax after 2010 because there is no way in hell it's gonna get through Congress.
Help me out here, the banker bailout was bi-partisan wasn't it? Seems to me that when it comes to screwing the public most ever politician is willing to cross party lines and stand united against the public.
We'll have two years of whining and accusations. Kinda like 24 months of Thanksgiving with the in-laws. There won't be a country left to save after 2012
Did someone say maybe actually attempt to fix the country and restore the Republic? two words ... Ron Paul
Otherwise it will be the same shit until the country is seized from us.
If they institute another tax without eliminating the income tax.. I will
increase my withholdings (again) and stop filing. This is straight up robbery to support
a bunch of bloated spoiled bansters. fuck'em!
I used to watch the McLaughlin Group and endured the endless cacophony because I found Monica Crowley to be irresistibly sexy (even if she is a die hard conservative):
And those shapely legs of hers are superb: