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A National Sales Tax is Coming
By Jeff Harding of The Daily Capitalist
The “Center for American Progress” is the best example of an oxymoronish name that I can think of. This is a “progressive” (socialist) “think tank” (another misleading term) lead by John Podesta, a former Clinton Chief of Staff and Obama adviser.
They are coming out with a report on Wednesday that will recommend that:
[T]he administration should consider a tax on consumption, such as a value-added tax [VAT] system similar to that in use in the European Union. Mr. Podesta suggested that its impact should be limited to protect lower-income people, who otherwise might be hit particularly hard.
The center’s president and chief executive, John Podesta, who is an Obama adviser, said the administration should consider a tax on consumption, such as a value-added tax system similar to that in use in the European Union. Mr. Podesta suggested that its impact should be limited to protect lower-income people, who otherwise might be hit particularly hard.
“As progressives we need to debate the policy merits [of] a range of options, including designing a small and more progressive value-added tax,” Mr. Podesta said in a statement Tuesday.
Apparently even they recognize that you just can’t tax the rich enough to cover the Administration’s vast spending programs:
In order to pay for the national health care plan, the Democrats were already planning to impose a tax surcharge of between 1.0% and 1.5% on those whose income is $350,000 or more. I did the numbers on this and I came up with 300,000 lucky taxpayers who will be burdened with the privilege of paying for our health care (the Democrats say it’s more like 1,000,000 taxpayers, but I think I’m closer). Now it looks as if the regressives agree with me.
The report, which will be released on Wednesday, said the administration can’t rely on taxing richer Americans and companies to reduce the deficit to sustainable levels by 2014 because those groups would see 40% tax increases.
Guess what else is happening on Wednesday? Just a coincidence I’m sure, but the Volker Panel on How to Raise Taxes Without Anyone Noticing is meeting as well. The meeting will be streamed live starting at 12:30 if you wish to tune in to their public deliberations.
I predicted in March of this year that the Administration would look to a VAT to raise taxes:
My guess is that it will include non-food retail sales and they will add services (information, professional, technical and scientific, administrative and support, waste management and remediation, but excluding medical services). The services aspect is important because this will skew the tax more to corporations and upper income taxpayers. …[Obama] will structure it so that low income people will get a refund of taxes paid. The refund will be phased out as income increases.
In 2008 retail sales (excluding food) were about $4 trillion. Services in 2007 were another $2 trillion. Let’s say they need to raise $1 trillion over the next 4 fiscal years, or $250 billion a year. That would require a 4.5% national sales tax. In Europe they call this a value added tax (VAT) and the rate in the E.U. is about 15%.
Volker already said he thinks the VAT is a good idea. No surprise there; that’s why Obama chose him.
So, let’s see. They want to stimulate consumer spending to revive the economy. How do we get people to part with their money instead of socking it away in the bank? I know: let’s tax consumption. Brilliant.
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Let's tax foreign nationals living abroad.
Well, let's then implement a single-payer healthcare system or, at a minimum provide a public option. Either of these will drive down medical costs significantly from the current line-the-pockets-of-insurance-CEOs-while-providing-the-worst-care-outcomes -in-the western-world-system and, voila!, no sales tax needed.
Now wasn't that easy?
Uh, sure - because the Government never overspends their budgets, and has a wonderful track record of controlling costs in medicine (AHEMmedicareisbrokeAHEMmedicaidisbeyondbrokeAHEM), and because political decisions made with an eye toward the next election are always better when your life, or at least health, is on the line.
Yep. Easy.
We could make the Doctors/nurses work OT for no extra pay to care for the millions of new patients too.
Patients can help by sharing beds. They can also commit suicide to make space for healthier patients.
The drug and medical supply companies will have to produce with no extra compensation so that costs can be contained. It'll be tough but we can do it
Because if it's one thing that a government with $12 trillion in debt can afford, it's to provide complete and total healthcare for 310 million people. Uncle Ben just needs to print more--voila, problem solved!
I have a crystal ball. I see a big hole in the ground...and Democrats climbing in.
I also see Mitt Romney somewhere off in 2012...and the real right-wing nazi agenda put into full mode at that point.
go Ron Paul or anybody or anything else other than a donkey or an elephant.
Great idea. This will fit nicely into the list of Intolerable Acts part deux.
Mr. President, does this sound familiar?
But when a long train of abuses and usurpations, pursuing invariably the same object evinces a design to reduce them under absolute despotism, it is their right, it is their duty, to throw off such government, and to provide new guards for their future security.
"it is their right, it is their duty, to throw off such government"
Ok dude, you go first.
I can't believe no one has mentioned the FairTax yet....or did I miss it?
Obama needs some tips on how to perform this operation for the American people. I hear Roman Polanski is returning, maybe he can give Obama some tips on getting the results with minimal pain (no offense to the victim).
This would just give us a solid push towards where we're already going. More person to person transactions, bartering, and growing some of our own food. Everything that is done to screw the folks playing by the rules will push more and more transactions off the grid.
The best off folk are in a free for all, looting the country for all its worth before they jump ship so to speak. In the old days our economy was almost wiped out many times because one could exchange silver for gold. Now folk exchange crap digital fiatcos for massive chunks of multi-generational wealth.
For those of us who ain't so lucky the most important thing to do is to have friends who have things (skills, perspectives, whatever) that we lack. Get everything to zero and be beholden to no one.
For the folks on teevee its all just a game, they'll get theirs. For the rest of us its a struggle, and its not going to get any easier.
The VAT would be a nice boon to the cash economy, place a deflationary stone around the neck of the national economy, crush state tax troughs as consumption is slashed across the board, and might guarantee Barack Hussein Obama (mmm mmm mmm) will be a one-termer.
Not much of a silver lining, but seeing as I'm fresh out of KY I have to take what little I can get.
mmmmm mmmmm mmmmm
heh heh heh
VATs are so insidious. Government wants to collect taxes in a way voters have a tough time figuring out how much in taxes they are really paying (which is why they tax corporations). We should have no new taxes. But if the choice is VAT or sales tax, sales tax is MUCH better because it is transparent and we have a system in place to calculate and collect it. VATs are very complicated and ripe for abuse and volumes of rules (which is another reason government like it).
We have got to shoot down this idea. But this is what happens when half the people don't (legally) pay any income taxes. It seems we are governed by morons...and I am increasingly afraid they are representative of our population.
Senate Climate Bill Drops ''cap and Trade'' Term
By THE ASSOCIATED PRESS
Published: September 30, 2009
WASHINGTON (AP) -- Senate Democrats tried out a new catch phrase Wednesday to sell their global warming bill: pollution reduction and investment, or PRI.
But it's just another name for cap and trade, a term derided by Republican critics as ''cap and tax'' because it will increase energy prices and which Democratic polls have shown faring poorly with voters.
Link http://www.nytimes.com/aponline/2009/09/30/us/politics/AP-US-Climate-Reb...
I agree with the other posters who suggest this will curtail consumer spending. People, including myself, will do anything and everything to avoid additional tax, even if that means not buying a new(er) car etc.
And they thought there would be a hangover after C4C. Just wait till this comes to fruition.
This is going to make bank robbery a huge industry.
I just want to be left alone. Can't these Nabby Pampy Nanny Staters just leave me alone?
And then an insane idea dawned on them all (voters - 50% of US Citizens that bother): Reduce the size of government Federal, State, County and Municipal by 30% to 40% (for starters)
First in line is all Federal & State service redundancies. Next State & County service redundancies etc. etc. etc. (while we are at it lets privatize the USPS and get rid of all those rude counter clerks protected by some insane union rules)
A shriek went up from all the government workers that could be heard across the ocean: "But what will happen to our jobs? Where will we work?
Right
Maybe Obama had dinner with bad friends days ago...
Zapatero (spain) a week ago or so, told us great news... they are going to increase VAT, and taxes based on salarys, then Obama... amazing.
All scumbags on an empire of dirt.
Makes me feel like Nine Inch Nails today, boys.
http://www.youtube.com/watch?v=iFx2TmQfM-o
The states are in deficit too and plan on raising the sales tax to plug up budget holes. I can't see congress giving the ok to a national VAT tax when the states are doing the same.
The fact that he favors a VAT might be a factor, but it'd be nice if Obama listens to Volcker's advice on regulatory reform for the financial system. We can only hope.
The VAT wasn't the reason, or at least the major reason. Volcker is at the very top of the Globalists. Do NOT "listen" to anything he is proposing... except to stop it from happening. I hope people know who he really is, and not just one fact that he hiked interest rates in order to break stagflation and 'save the US.' Below is a summary of his public information (and realize who all is in BO's Administration - they have similar history to this and major plans for doing away with sovereignty):
Volcker was born on September 1927 in Cape May, New Jersey. He earned a bachelor of arts degree, summa cum laude, from Princeton in 1949, and a master of arts degree in political economy and government from the Harvard University Graduate School of Public Administration in 1951. Research assistant in the research department of the New York Fed during the summers of 1949 and 1950. Rockefeller Foundation vice-chair Robert Vincent Roosa was his mentor there, and Paul Volcker became part of his 'Brain trust', or 'Roosa bloc' in the following years. From 1951 to 1952, he was Rotary Foundation Fellow at the London School of Economics (Rotary International and the Lions Clubs are still seen today by some as the most important recruiting centers for the Masonic movement). He returned to the New York Fed as an economist in the research department in 1952, and special assistant in the securities department from 1955 to 1957. Financial economist at Chase Manhattan Bank 1957-1961. Director of the Office of Financial Analysis at the Treasury 1962-1963. Deputy Undersecretary for Monetary Affairs at the Treasury 1963-1965. Rejoined Chase Manhattan as vice president and director of forward planning 1965-1968. Undersecretary of the Treasury for Monetary Affairs 1969-1974. Senior fellow at the Woodrow Wilson School of Public and International Affairs at Princeton University for the 1974-1975 academic year. Director Council on Foreign Relations 1975-1979 & 1988. President Federal Reserve Bank of New York 1975-1979. On July 26, 1979 the New York Times stated: "David Rockefeller, the chairman of Chase, and Mr. Roosa were strong influences in the Mr. Carter decision to name Mr. Volcker for the Reserve Board chairmanship." Chairman Federal Reserve System 1979-1987. Identified by BND officer Hans Langemann as a person who attended the December 1, 1979 meeting of Le Cercle in the Madison Hotel in Washington. Others that attended the meeting were the German Karl-Heinz Narjes (Bundestag; soon went to the ECC), William Colby (the recently retired CIA director at the time), Ed Feulner (president of the Heritage Foundation), Julian Amery (later chairman of Le Cercle; Privy Councillor; father was one of the closest Rothschild allies in building up Israel), and Jean Violet (French intelligence officer; Habsburg employee; Le Cercle co-founder and chairman; Fascist militant before WWII). Volcker became a member of the advisory board of Power Corporation in 1988 and is a friend to Canadian Paul G. Desmarais, Sr., a Privy Councillor and controlling shareholder of Power Corporation since 1968 (Desmarais and the Belgian Albert Frère jointly own about half of the major industries in France and Belgium, including Suez, Société Générale, Total, Imerys, and Groupe Bruxelles Lambert). Director of Prudential Insurance 1988-2000. Chairman of Wolfensohn & Co. in New York 1988-1996. North American chairman of the Trilateral Commission 1991-2001. Chairman of the newly created J. Rothschild, Wolfensohn & Company from March 1992 to 1995, Wolfensohn & Co.'s London-based joint venture. Visited Bilderberg in 1997. Attended meetings of the Ditchley Foundation and has chaired some of them. Advisor to the Japan Society and the International House. Member of the advisory board of Hollinger, together with Henry Kissinger, Richard Perle, and Zbigniew Brzezinski. Director of UAL Corporation, Bankers Trust New York Corporation, and Nestle, S.A. Director United States/Hong Kong Economic Cooperation Committee. Public member of the Board of Governors of the American Stock Exchange American Stock Exchange. Honorary trustee of the Aspen Institute. American Council on Germany, and the American Assembly. Co-chairman of the advisory board of Leadership Forum International and a principal of the Council for Excellence in Government. Member Circle of Presidents RAND Corporation, which means he has donated at least tens of thousands of dollars if not millions. Trustee International Accounting Standards Committee. Honorary chairman Financial Services Volunteer Corps, a firm founded by Cyrus Vance and John C. Whitehead in 1990. Honorary chairman Committee to Encourage Corporate Philanthropy. Chairman Independent Inquiry Committee into the Oil-For-Food program, which also employed Rockefeller’s granddaughter, attorney Miranda Duncan. Chairman board of trustees Group of Thirty (2005). Paul Volcker is a visitor of the Bohemian Grove camp Mandalay. Director of the United Nations Association of the United States of America 2000-2004. Director of the Fund for Independence in Journalism. Wrote the foreword of George Soros' 2003 book 'The Alchemy of Finance'. Director of the Institute for International Economics, Washington, headed by Peter G. Peterson. Other directors of the institute are Maurice R. Greenberg and David Rockefeller. Trustee of the American Assembly anno 2005, together with Admiral Bobby Ray Inman (former NSA head; director SAIC; Bohemian Grove; CFR; Trilateral Commission), David Gergen (Bohemian Grove; CFR; Trilateral Commission), and Frank A. Weil (governor Atlantic Institute; CFR). The American Assembly is sponsored by the Carnegie Corporation.
California gets creative with new taxes...the Feds race to compete.
http://sanfrancisco.bizjournals.com/sanfrancisco/stories/2009/07/27/stor...
'Bout fookin time you showed up, dude. Donny, let's go get us a lane.
"MARK IT ZERO, DUDE"
Shut the fuck up Spekulatn, you're out of your element here. The Chinaman is not the issue.
A VAT (or whatever they call it) is also a sneaky way to tax those pesky interstate internet/mail order purchases. The Beltway mob has been drooling over that potential revenue source for years.
National Sales tax should replace the current tax system, not be added on top of it!
These tam accountants would never let it happen!!!!!!
On the positive side...perhaps this will trigger the much needed revolution (I always advocate non violent but I am far from in control).
Pete
Sure Pete. Will you fire the first shot or are you waiting for someone else to go first?
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Didn't think so....
What part of not advocating violence did you not understand?
So, I guess you are correct in that I will not be firing the first gunshot, but neither am I waiting for anyone else too either.
Now, as for figuratively firing a shot - again not the first to do so for sure - but through actions and activism and not just words in a blog I am well set.
Now if the real shooting were to start well let's just say I'll be fine and could probably protect you too as well.
Pray tell - what are you doing? I am sincerely interested Anon 84545.
Pete
The one thing I know for sure is that the vast majority will continue to vote like a bunch of lemmings until taxes get bad enough. Though with the degree of slothfulness this country has taken on, they may need to raise taxes to 100% to get peoples attention. (Though some may enjoy it on the Kremlin Lot) But throughout history high taxes have been the only thing that has "eventually" created actual and sustainable change. (until lethargy sets in again)
Ok, I am chaning my opinion... I say, let them raise taxes, the higher the better. Then there will finally be some blood on the street and some real change with every pr*ck being voted out of office. It would have been the same context when oil was at 147.00. You wanted oil to come down. I would have lifted every regulation as to what they could charge at the pump and watch the bastards bring gas to 20.00 a gallon and watch everyone one say forget it.. F.U., Im not driving... Im done! and then watch the oil reserves mount up really really fast and they start choking on it and watch how fast gas prices would drop as they try to knee-cap every one of their competitors with lower prices.
To ptoemmes, I dont know if someone has to fire the first shot because you would be suprised what a nice dose of Knee-capping will do for a persons attitude.. :)
Ghostdog
I just publish a post named USA - Land of the free? just click on the american flag so it can be translated.
Hurray zero hedge. Keep the awesome work.
www.liberdadedescolha.com
Wouldn't this require a constitutional amendment, in which case it's unlikely to happen?
Constitution? What the hell is that?
+100.
It's some document in a museum somewhere I think?
No, I think it's the paper in the Congressional bathroom stalls.
Let's raise taxes...I still have a fe bucks left the azzholes haven't taken otherwise...then they can fine me the $25,000 and year in jail cuz I can't buy my Ubamacare Insurance.
Geeebus Aitch Rice....an American Administration that makes France look like a Libertarian Paradise.
Excellent! So, let me see if I have this straight:
Wonderful <sigh> - do I move overseas or find a government job and work 4 days a week and improve my quality of life? Seriously, what is the point?
The "70% consumer-driven economy" is dead, buried and not coming back.
It's about time we started to see some government policy that recognizes that fact.
Exactly--and the the secondary problem with this proposal is that it assumes a rate of consumer spending that either doesn't drop all that much or remains at the 70% mark. Increasing taxes on consumer goods when people are deleveraging their debt and saving more is like putting iodine on a bad scrape when you have a sucking chest would.
Look, the Government now understands that REAL personal incomes are in a state of permanent decline. That is the reason that the income tax has got to go.
Instead, your consumption will be taxed.
Think of the Government like the old bank robber Willie Sutton. They know "where the money is" and that's where they go.
No problem. If consumer spending drops to 35%, we just double the VAT, and in addition increase it proportionally to the extra pork needed. Duh!
All of these idiotic policies, in one form or another, have already been implemented in the 1930's. For those unfamiliar with the Great Depression and/or those who 'learned' about the Great Depression in American high schools, if you want to know where this is all heading, just look at California.
Having lived in another nation that went from an embedded federal sales tax to an explicit federal sales tax, the message from the feds was a "promise" that the implementation would be revenue neutral.
The premise (actually we received a premise, not a promise) was that a refrigerator, for example, would have its embedded federal sales tax reduced and the retail cost would be minus the old embedded sales but plus the new federal sales tax (a VAT) and a provincial sales tax. Here's the numbers (using round numbers)...
Premise: Old wholesale fridge price = $1000
Old embedded federal sales tax = $100
Total retail price = $1100
Provincial sales tax = $100
Total cost = $1200
Premise after the VAT:
Premise wholesale fridge price = $900 (and total retail price)
Provincial sales tax = $100
Federal sales tax (VAT) = $100
Premise total cost = $1100 (roughly cheaper)
This is what happened instead:
Actual wholesale fridge price = $1000 (unchanged because wholesalers just swapped tax for margin)
Provincial sales tax = $100
Federal sales tax = $200 (higher since based on higher wholesale price)
Actual total cost = $1300
Since retailers & wholesalers just swapped tax for margin wherever they could, consumers just ended up getting an inflationary boost to their costs of 7%, the amount of the VAT. Not revenue-neutral. At best, politicians or administrators who seek a revenue-neutral plan will end up with an increase in costs to all consumers. At worst, politicians or administrators driven by some need to re-distribute discretionary income will achieve their goals through this and other means.
VAT tax = more savings and less spending. VAT Tax + People accepting less money to do the same job + real unemployment rate of 18% + consumers paying off debt and therefore not spending the money= Deflationary.
Anyone see a flaw in this logic? Even without the VAT I still see deflation with these prospects for the next two years. Yes we could have some hyperinflation after that but I dont see that unless its brought on by a currency crisis.
"...we could have some hyperinflation after that but I dont see that unless its brought on by a currency crisis"
I think we are set up for a currency crisis.
Im betting strongly against a currency crisis at least in the near term (2 years) after that all best are off. but even the dopes in washington know the break point of the dollar and the will continue to try their reflation joke until the dollar is about to call uncle or maybe even beyond it a little because they dont know the right stop to get off of because they left the train schedule at home. AT that point look for the crunge and everything to rollover and the dollar to get a nice pump above 90 as the equally crappy Euro and Pound start getting their brains beat in. After that we can take a look at hyperinflation which indeed is a possibilty at the end but as much as I fully believe our government heads would lose to most children is a test of intelligence I cant even fathom them screwing that up now... Later, yes, for sure, definietly, you know it, holy crap i cant believe they did that,,,, but now... right now... No..
Ghostdog
No flaw in your logic.
The US VAT makes perfect sense within the context of trillion dollar deficits and the need for "global re-balancing".