The Value Added Tax: A Hidden New Tax to Finance Much Bigger Government

This Center for Freedom and Prosperity Foundation video explains why a value-added tax would be a dangerous money machine for big government. The evidence from Europe also shows that VATs actually lead to higher income taxes. www.freedomandprosperity.org

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[miamijane]

VAT would raise the effective tax rate of middle class and poor. It's simple, really. Those two groups of people spend a higher percentage of their earnings each year.  Therefore, the VAT is a consumption-based tax that will hurt those who are suffering the most right now.

[pdwheaton]

Enact the FairTax (H.R. 25) plan to REPLACE the current broken tax system with a progressive luxury consumption tax--raise the same amount of revenue as all the replaced taxes, tax both wealth and income at the point of consumption for the lowest possible effective tax rates. Tax imports sold here. Don't tax exports sold there. Don't tax business at all since consumers pay all taxes anyway.

[CasualSoul]

This video is a little ridiculous; just because VAT's have been used in countries that are even less fiscally responsible than the US doesn't mean that there's something wrong with the tax itself. Canada has a VAT (the GST) and we're one of the most fiscally healthy countries in the world. The speaker is correct though in that a VAT should be used to replace income taxing, which is a very inefficient system. A VAT is also the only way to tax the underground economy and the tax evaders.

[asleeperj]

@ajpmathwiz You sir are some what correct. Europe's problem is that they have too high a tax rate on consumers. They have no true investment and savings, too much spending on social programs, too much spending helping America with it's unjustified wars; they have, a central bank in each country that prints money, and a slew of other problems. I believe in a consumer side tax, if it is the only tax, is the best way to go, but not in addition to other taxes.

[raystinsky]

@alcraig I really like that you used an "s" in "realise". I think it's a superior way to spell it.

The breaks are built in because we have an interventionist government. If we went free market (which, admittedly companies often don't really want) taxes would become far simpler. Yes, businesses themselves are a large part of the tax problem through their own avarice and willingness to manipulate government power. If you're saying that we certainly agree there.

[raystinsky]

@alcraig Looking beyond bill titles is the first step to understanding the nature of the State. The government supports and even participates in cartels. The government is notorious for failing to protect property rights. mises.org/daily/331

Are you arguing that taxes will prevent oil spills, or are you just attempting to use the spectre of victimhood to diminish sound economic principles.

[alcraig]

@raystinsky I realise this but the point I am trying to make is that corporations will fight tooth and nail to prevent the introduction of a consumption tax primarily because at the moment the are paying none. Their tax evasion puts an increased and unfair burden on income tax payers. A tax structure that lowers the income tax rate in preference to a consumption tax is a lot fairer and less complicated. Not that this will ever happen as the powerfull are benefiting most from the current system.

[alcraig]

@raystinsky In 1890, Congress enacted the Sherman Antitrust Act, a law designed to restore competition and free enterprise by breaking up monopolies. This was deened necessary because the consolidation of U.S. industry into increasingly powerful corporations spurred government intervention to protect small businesses and consumers. I am presuming you are not one of the 195000 people from Florida who have lost their jobs in the latest devastating oil spill.

[raystinsky]

@alcraig I agree that special treatment is wrong. I don't argue for special treatment, I argue for non-intervention. Favoritism is a form of interventionism.

[alcraig]

@raystinsky Sorry I think your counter argument is poor. I thought the trickle down effect had been discredited long ago. Corporations are supposed to pay tax like every other company otherwise they are receiving special treatment which enables them to eliminate competition. Competition is what keeps companies honest. Giving special deals to Corporations while other business have to pay 35% company tax surely encourages corruption, gives them an unfair advantage and is anti-competitive.