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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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no problem in NY...we already pay ~8% sales tax.
and an income tax (top rate of 6.85 recently exceeded with new "millionare tax" in 7 and 8 range).
oh, and property taxes...my home is worth 225ish and my property taxes are a bit over 5 grand per year.
Just have payroll taxes.social security tax cover all earned income. That should make that 1.5% tax on the rich look real cheap. Impagine how much money those banks would have to pay on $500,000 plus bonus for running a company into the ground - 15%.
Join the party we are in L.A prop tax 4400$ now how you feel
take care the family tax haters
A sales tax isn't such a bad idea. In California, the sales tax was just raised to a ridiculously high 9.75 percent to help bring the deficit under control. I hate it, but it hasn't changed my consumption one bit. It's just too small to worry about. I have to live my life, regardless.
The same would be true of a 1-2 percent federal tax.
I know all you anti-tax guys hate the idea. Basically, so do so do I. But I hate something else more. These ridiculous deficits are financial suicide and immoral. So the next time you oppose the latest revenue-raising idea, tell me how to solve the deficit. And don't just say cut spending. We have to do more than that to balance the budget, although that would be a great start.
Jetjimbo
Here's an idea! Wake up america and admit to yourselves that our elected officials don't give a S##T about us at all. Democrat or republican they all suck!!!!If you call yourself either one You don't deserve the right to vote.
We need real change in D.C.; all 535 members of Congress need to go! We need unknowns who are outside of the good old boy network.Who know nothing about the special interests and their influence pedaling.
Admit to yourself that congressional leadership behaves badly, RUINS EVERYTHING and blames everyone else but the SUN! Oh that's right, global warming! What a load of excriment! What these morons need is a dose of reality! how does 60 million pissed off constituents standing in the face of 535 lieing millionaires sound??
Re:JetJimbo
The most important thing to really understand is the government in the chairs of the Senate and the House of Representatives is not even capable of passing the healthcare plan from Obama.
As a citizen and taxpayer do you realize that the country
that vote for a tax increase will never see that tax money come back to them. Why do you think our Forefathers started the Boston Tea party? You say yes once then it becomes a given that it will increase behind closed doors without your knowledge.By then it's too late to turn back the clock.
See the E.U. on how the've been forced to come up with their own currency to keep each others monetary systems from collapsing. As Ronald Regan Who was actually brought up in the Democratic Party Mindset once said." There's nothing so permanent as a temporary government Program"!
Greg M
So you are saying, give the keys to your house to the guys that just robbed you though they promise not to do it this time. Do we need to quote Winston Churchill's definition of insanity here? Good plan.
Here's there deal. I dont care what you do, we are not getting out of this with a lot of pain. The could have gotten this thing over in 18 months if they pulled the trigger and but instead greed and stupidity keeps moving us directionally to a much much larger and more protracted mess.
When are we going to stop being a bunch of complaining babies crying to Mommy. We put ourselvels in this position by electing these dopes into office, Clinton, Bush, Obama. One of the posters here is right, When it gets bad enough we will vote them out but until then look for more looting of the american public
Time is the only thing that can heal this. It's time to stop robbing Peter to pay Paul. Raising taxes is not going to change anything. You are taking money out of the very peoples hands that you need top stimlulate the economy. We are chiefly a service based economy and a buying economy. Those service and "lowly" maufacturing jobs that we wanted to kick out of this country because they were "beneath" us are NOT coming back.
Perhaps it hasnt changed your spending a bit but perhaps the fact that consumer savings have jumped to a percentage not seen in 30 years tells me that you are not the norm. And dont tell me that consumer savings is good. While the economists and media spin it as being good because people are getting are becoming averse to debt, the smart people know that taking on debt is what we need because otherwise we are moving into a deflationary model somwehat similar to what Japan had experienced and that scares the crap out of them more than anything.
And I pay over 10% in sales tax in Chicago but its not something to brag about its something to think. Hey wait the reason this happened is because someone was drunk at the wheel and although I wasnt driving I was the one that got the DUI. Look for more and more blame to come around when things get going. When invariably reactionary politicians get scared is usually the only time something happens for the good
Your math is so upside down I could go on here for hours. And what do we do, well we dont roll over like a bitch that wants her belly scratched as you seem to imply. So just give a big Hello to Mr. Deflation our new lord and master and talk to me in 2011 or 2015 depending on the amount of shenannigans our leaders are willing to sacrifice us over.
Ghostdog
So you are saying, give the keys to your house to the guys that just robbed you though they promise not to do it this time. Do we need to quote Winston Churchill's definition of insanity here? Good plan.
Here's there deal. I dont care what you do, we are not getting out of this with a lot of pain. The could have gotten this thing over in 18 months if they pulled the trigger and but instead greed and stupidity keeps moving us directionally to a much much larger and more protracted mess.
When are we going to stop being a bunch of complaining babies crying to Mommy. We put ourselvels in this position by electing these dopes into office, Clinton, Bush, Obama. One of the posters here is right, When it gets bad enough we will vote them out but until then look for more looting of the american public
Time is the only thing that can heal this. It's time to stop robbing Peter to pay Paul. Raising taxes is not going to change anything. You are taking money out of the very peoples hands that you need top stimlulate the economy. We are chiefly a service based economy and a buying economy. Those service and "lowly" maufacturing jobs that we wanted to kick out of this country because they were "beneath" us are NOT coming back.
Perhaps it hasnt changed your spending a bit but perhaps the fact that consumer savings have jumped to a percentage not seen in 30 years tells me that you are not the norm. And dont tell me that consumer savings is good. While the economists and media spin it as being good because people are getting are becoming averse to debt, the smart people know that taking on debt is what we need because otherwise we are moving into a deflationary model somwehat similar to what Japan had experienced and that scares the crap out of them more than anything.
And I pay over 10% in sales tax in Chicago but its not something to brag about its something to think. Hey wait the reason this happened is because someone was drunk at the wheel and although I wasnt driving I was the one that got the DUI. Look for more and more blame to come around when things get going. When invariably reactionary politicians get scared is usually the only time something happens for the good
Your math is so upside down I could go on here for hours. And what do we do, well we dont roll over like a bitch that wants her belly scratched as you seem to imply. So just give a big Hello to Mr. Deflation our new lord and master and talk to me in 2011 or 2015 depending on the amount of shenannigans our leaders are willing to sacrifice us over.
Ghostdog
This will start a tax revolt.
California State income tax rate up to 9.3% of income.
9.75% sales tax in Los Angeles County, California.
1.5% per annum property tax on homes. Higher on industrial/retail property.
19.2 cents per gallon of gas tax.
Commiefornia, thanks to Prop13, has 1% property tax with increases limited to 2% of prior year amount added...the increase must be voted in or it never happens.
Almost as much fun as NJ.
But SNL can have much more fun with your Governor.
So it balances out.
Anyone living in China/Europe/Hong Kong/Russia/UK knows the different economic productivity outcomes between flat taxes, sales taxes and VAT, increasingly lethal in that order.
Russia went to a 13% flat tax after collapse and is now a surplus nation with billionaire oligapolists, to use PM's oligarchy monopoly word.
Hong Kong always had low taxes and became a powerhouse until China took over. China has 26 types of taxes including VAT, which because of corruption were not always as deadly as they might be. In fact, China is now cutting VAT corporate taxes.
The USA, especially NYC as noted, basically destroyed its economic base with unproductive overlapping inflated regressive taxes like FICA and red tape since the Kennedy and Reagan economic tax cut miracles.
Nobel Laureate James Tobin touted a minor transaction tax as the most productive form of fair uniform Constitutional tax, which neither the Income Tax, FICA, property, sales, sin taxes or other tickets and DMV fees are.
At various times, Nobel Laureate Joseph Stiglitz and even CEA Chair Larry Summers (1989) advocated the transaction tax for its productivity multiplier - encouraging saving and economic transactions generating more than the minor threshold transaction tax, while replacing less productive taxes on assets, creativity, income and property.
With a quadrillion derivative and other financial transactions a year, and the technology to transparently levy it, a 1% transaction tax generating $10 T a year could quickly balance the budget and pay off the Federal Debt before being reduced from 1% to one mil with spending freezes as part of the original legislative language.
With politics as they are, dominated by big derivative trading banks, corps and IRS unions, it may take a quick electoral revolution for Constitutional Independents or a glacial cleansing by deflationary depression to implement.
JubileeProsperity.com
This follows a white paper that I wrote in 2000 that placed a 1/2 percent tax on electronic transaction to be paid by the sender and receiver (1% total). Driving this closing loopholes involving international funds transfers to fund off-shore R&D, Corporate sheltering, and the like.
In addition, over $3 trillion in commerce transactions reside on the Federal Reserve's network each working day. By having the Fed's network collect the transaction fee via downstream e-trancations at the banking account level, the IRS could be eliminated.
I agree, this is the only fair tax and is something that is not passed on to consumers but works on the basis of moving money to make money rather than sweat worker-based creation or agrarian producer base taxing system as we have now.
But the whole problem is that this "fair" transactional tax (not a sales tax) requires a capitalistic economic base of free enterprise. Also, it takes power away from politicians who would rather enslave the population through taxation.
Also interesting is that, based on today's value of money, this fair tax would pay down the national debt in six years allowing a balanced budget (based upon 2006 analysis).
R. Ellington Smith
This follows a white paper that I wrote in 2000 that placed a 1/2 percent tax on electronic transaction to be paid by the sender and receiver (1% total). Driving this closing loopholes involving international funds transfers to fund off-shore R&D, Corporate sheltering, and the like.
In addition, over $3 trillion in commerce transactions reside on the Federal Reserve's network each working day. By having the Fed's network collect the transaction fee via downstream e-trancations at the banking account level, the IRS could be eliminated.
I agree, this is the only fair tax and is something that is not passed on to consumers but works on the basis of "moving money to make money" rather than "sweat worker-based creation of value."
But the whole problem is that this "fair" transactional tax (not a sales tax) requires a capitalistic economic base of free enterprise. Also, it takes power away from politicians who would rather enslave the population through taxation.
Also interesting is that, based on today's value of money, this fair tax would pay down the national debt in six years allowing a balanced budget (based upon 2006 analysis.
Yeah, but you get to live in New York with all the Goldman and JPMorgan "swells". That is a "privilege", not a "right".
In Penna. there is an Occupational Privilege Tax and here in Tennessee the sales tax is 9.5%.
A VAT makes a bunch of sense to folks that are doing everything they can to get American's spending and taking on more debt again to reinflate the economy. A VAT might actually hasten the process of deleveraging by the household sector, but it will kill small businesses of all sorts.
I remember living in Germany and their VAT of 14% then, I think it is 19% now. No wonder they export & save.
If your entire plan is to consolidate ownership into a few "too big to fail" institutions, killing small businesses (and local and regional banks who back them), this proposal would make perfect sense. Compound this with C's failure ("the champion of small business lending" har har har) and I think we'll all be hearing a little more about credit contraction dwarfing all efforts of central banks to stabilize and or prop up the problem.
I'm also curious about the constitutionality of such a federal proposal, given sales tax is primarily a state and local government sphere of influence. They could accomplish the same thing by forcing states to raise taxes if the federal government cut funding (presuming states also don't have the stomach to fix the problem). But, sometimes it is necessary for the judiciary to get caught up in the form of a law.
This is going to be a lame duck propsal I'm thinking. Why wouldn't Obama lose an incredible amount of political capital (that precious thing he's losing at a rate equal to credit contraction) for increasing taxes as he said he wouldn't? Seems like his proposals to help the economy are going to give an incredible amount of ammunition to his opponents. Of course, I guess "it was all George Bush's fault; Obama was handed all these problems!" *olberman voice*
The Neo Cons will have a field day with this.
Even the Obamacons will come out of hiding to play as well. Leo Strauss would be pleased. What will it be tonight, Gunsmoke or Perry Mason?
But DH,
The VAT is on top of all those taxes and (the best part for the gov) is that it is invisible! It doesn't show on the sales receipt because it is collected at each step of the manufacturing process and shows up as an increase in the item's price. It may start at 4.5% but it will quickly rise because it is a stealth tax that can't be easily seen (like when you fill out your 1040 or look at the sales reciept "sales tax" line). Also, it hits even on-line purchases so there is NO avoiding it. It will be 15% (or higher) in just a few years. So your cost of living just goes up by 4.5% overnight and keeps rising (even if inflation is 0%).
To make the long story short
the ultimate vat payer is
the consumer.Will reinforce
the: buy made in China,
ultimately cheaper.
And because of this stealth, it will be slowly creeping up and up... Denmark used to be the only EU nation with a 25% sales tax, now others are starting to follow suit.
There is no more freedom on this planet, every nation is turning into a tax slavery nightmare. We are all being enslaved by the bureaucrats, slowly but steadily.