Reagan/Obama advisor suggests implementing Value-Added Tax

kavika411

macrumors 6502a
Original poster
Jan 8, 2006
617
3
Alabama
The U.S. should consider using a European-style value added tax to help bring the deficit down, said White House adviser Paul Volcker in response to a question from CBS MoneyWatch.com at a panel discussion in New York City Tuesday night. "We have to think about really revamping the tax system," said Volcker, who's best known for successfully beating down inflation while serving as Ronald Reagan's Federal Reserve chairman. The VAT, a levy on all the goods and services you consume, is not a "toxic idea," he added.

White House adviser Paul Volcker (Credit: AP)
Until recently, discussion of a U.S. VAT had been limited to the back rooms of think tanks and cocktail hours of high-minded conferences. But nearly every other industrialized nation has one, and the idea is beginning to spread. In addition to Volcker, the head of the Senate Budget Committee, Kent Conrad (D-N.D), has mused that a VAT has "got to be on the table," and Speaker of the House Nancy Pelosi (D-Calif.) has murmured sweet nothings about it. In fact, interest in a VAT is cropping up all along the ideological spectrum (albeit more often along the leftish end).

The case for a VAT is simple: The U.S. government's fiscal gap is widening by the hour. The deficit for 2009 alone was a cool $1.4 trillion, and it's projected to hit $1.6 trillion this year. By the end of the year, the Office of Management and Budget says the gross federal debt will stand at $13.8 trillion. As Bruce Bartlett, a former Reagan economic advisor who supports a VAT, puts it, "The U.S. needs a money machine." A VAT, because it touches every transaction, is just that: The Congressional Research Service estimates that each one percent of a value-added tax would raise $50 billion. That's real money.

To be sure, no one expects a VAT to join the tax code this year or next. But what about by 2020? The odds narrow sharply. "There's very little chance in the next few years," says Brian Harris, a senior research associate at Brookings, a left-of-center think tank, "but a substantial chance in the next decade or so." And Ryan Ellis, tax policy director at the right-of-center Americans for Tax Reform, who loathes the idea, says of the VAT, "I think it's coming, in the next five to 10 years certainly."
Full article:

http://www.cbsnews.com/8301-503983_162-20001918-503983.html

I'm interested in what people in other parts of the world that have a VAT tax think.
 

Eraserhead

macrumors G4
Nov 3, 2005
10,300
10,355
UK
Well it has advantages. The Economist thinks it doesn't distort the economy much - whether they are right is a difficult question.

The real win is to get taxes included in the price as happens practically everywhere else in the world.
 

IntheNet

macrumors regular
Oct 6, 2009
190
0
"The U.S. should consider using a European-style value added tax to help bring the deficit down, said White House adviser Paul Volcker in response to a question from CBS MoneyWatch.com at a panel discussion in New York City Tuesday night."
This Volcker-described "VAT" tax cannot be implemented since President Obama personally assured every American he would not impose middle-class tax increases...

:D
 

KingYaba

macrumors 68040
Aug 7, 2005
3,415
12
Up the irons
How about the government promises to cut the budget by 30%, starting with the military, before talking about a VAT? If you want this economy to heal levying more taxes is the wrong thing to do.

so an additional tax ontop of the taxes we already have on goods? or am i missing the concept?
Yes.
 

rdowns

macrumors Penryn
Jul 11, 2003
27,345
12,408
I'm all for America getting her fiscal act together but it needs to be attacked on several fronts.

We will need to raise taxes and from what I've read, the VAT is the most broad based, easiest to collect and has checks and balances built into the system. No one wants higher taxes but we have no choice.

Before we raise any taxes, we need to get people back to work and paying taxes. I'm one of those highly skilled, long term unemployed and there are many like me out there. I went from paying close to $40,000 a year in federal taxes for the past 5 years to zero last year.

Cutting spending. Even though entitlements are the majority of the budget, there are tens, maybe hundreds of billions that can be saved. Our military is out of control. We build weapon systems that the branches of our military don't want, we deploy tens of thousands of troops in foreign countries that are completely unnecessary in this day and age. The list goes on and on.

We need laws to stop Congress from the reckless spending that began under Reagan and has continued since. I'd love a constitutional amendment but I don't think it's possible to pass an amendment in this political climate. We need similar laws at all levels of government.
 

R.Perez

macrumors 6502
Feb 16, 2010
386
2,181
Philadelphia, PA
All we need to do is let the Bush tax cuts expire and bring our boys home. That should fix most of our deficit problems.
This.

But by home, we should mean ALL of them. Iraq, Afghanistan, Korea, Germany the list goes on.

We have troops in something like 150 COUNTRIES :eek:

What a ****ing bloody waste of money.
 

Rodimus Prime

macrumors G4
Oct 9, 2006
10,132
4
A Value added tax is nothing more than a fancy name for a sales tax. Sales tax are very regressive and tax the poor a larger chunk of their income than the rich.

I do not think we should have a VAT. With a VAT the more you make the less you pay.
 

rdowns

macrumors Penryn
Jul 11, 2003
27,345
12,408
It helps to have a part-time legislature. :)
They already are. I shudder to think how ****ed up things would be if they worked full-time.

This.

But by home, we should mean ALL of them. Iraq, Afghanistan, Korea, Germany the list goes on.

We have troops in something like 150 COUNTRIES :eek:

What a ****ing bloody waste of money.

I posted that last week. Many of those 150 are just a handful guarding embassies. That said, we have substantial numbers in S. Korea, Japan, England, Germany and Italy.
 

Zombie Acorn

macrumors 65816
Feb 2, 2009
1,301
9,062
Toronto, Ontario
I find it quite funny that the supposed poor man's party wants to implement a regressive tax... If we are implementing this VAT then we need to get rid of income tax altogether.
 

rdowns

macrumors Penryn
Jul 11, 2003
27,345
12,408
I find it quite funny that the supposed poor man's party wants to implement a regressive tax... If we are implementing this VAT then we need to get rid of income tax altogether.

Who's this we? Aren't you a Canadian? :D
 

NT1440

macrumors G5
May 18, 2008
12,140
13,982
I find it quite funny that the supposed poor man's party wants to implement a regressive tax... If we are implementing this VAT then we need to get rid of income tax altogether.
Reagan's advisor....

This is more than any one party.
 

bobertoq

macrumors 6502a
Feb 29, 2008
599
0
so an additional tax ontop of the taxes we already have on goods? or am i missing the concept?
I'm pretty sure there isn't a federal sales tax right now. Besides, we're going to have to raise taxes unless you want to eliminate Social Security, Medicare, Medicaid, the new public option, defense spending, and maybe a couple of other things.
 

NT1440

macrumors G5
May 18, 2008
12,140
13,982
I'm pretty sure there isn't a federal sales tax right now. Besides, we're going to have to raise taxes unless you want to eliminate Social Security, Medicare, Medicaid, the new public option, defense spending, and maybe a couple of other things.
Whoa, when did the public option happen? :confused:
 

renewed

macrumors 68040
Mar 24, 2009
3,064
5
Bemalte Blumen duften nicht.
I say they should make a new tax...

80% of income on all Dems and Liberals.

20% on all Conservatives. We will supplement by not using the new healthcare plan.

That should make everyone happy. Dems and Liberals think the answer is always tax more and they like the new healthcare... Conservatives like to keep the money we work our butts off for and don't want ObamaCare.
 

NT1440

macrumors G5
May 18, 2008
12,140
13,982
I say they should make a new tax...

80% of income on all Dems and Liberals.

20% on all Conservatives. We will supplement by not using the new healthcare plan.

That should make everyone happy. Dems and Liberals think the answer is always tax more and they like the new healthcare... Conservatives like to keep the money we work out butts off for and don't want ObamaCare.
That would be illegal, I take it you don't care about the laws of the land?
 

IntheNet

macrumors regular
Oct 6, 2009
190
0
I find it quite funny that the supposed poor man's party wants to implement a regressive tax...
Actually Obama already implemented a regressive tax that imposed a greater burden (relative to resources) on the poor than on the rich; this was called the State Children's Health Insurance Program (SCHIP) – one of Barack's first tax (February 4, 2009) imposed on America that is paid for almost exclusively by a cigarette tax that burdens the poor in America far more than the rich.