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August 17, 2026 • 04:40 PM
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Here Come the VAT, the Mother of All Taxes Print
By CFIF Staff
Wednesday, April 07 2010
Consideration of a VAT here and now has but two purposes: to support the big government that has already been visited upon us and to expand the even bigger government of President Obama’s dreams.

The Value Added Tax (VAT) cat is finally creeping out of its bag.  No longer is it just those hysterical rumor-mongers like columnist Charles Krauthammer speculating on the next national tax to be imposed by the Obama administration.  Now it’s none other than Obama economic adviser Paul Volcker telling the New York Historical Society that a VAT should be considered to get the deficit under control.  For good measure, he threw in taxes on carbon and energy.

According to the Reuters report of the meeting, “Though he acknowledged that both were still unpopular ideas, he said getting entitlement costs and the U.S. budget deficit under control may require such moves.  ‘If at the end of the day we need to raise taxes, we should raise taxes,” he said.”  (Volcker’s personal fondness for a VAT has not been secret.)

Since the president former Federal Reserve Chairman Volcker now serves is likely to go down in history as American champion of both entitlements and deficits, the Volcker pronouncement should come as no surprise to anyone other than those naifs who still cling to Obama’s false promises never to raise taxes on the middle class.

A VAT is the mother of all taxes.  It was born in France (where it accounts for about 50 percent of government revenue) in 1954, with bastard children now running wild, in differing forms, in more than 100 countries around the world, at rates that range from a low of 5 percent up to 25 percent.

Think of it as it is, a national sales tax imposed on virtually everything sold, with collections at every sales point (where value is added) from origin to ultimate consumer.  Like a traditional sales tax, it is relatively efficient and inexpensive to collect, just as easy to increase as desired.  Unlike a traditional sales tax, most of it is hidden in the ultimate cost of the goods.

Were a VAT to be considered as a replacement, and only as a replacement, for all other federal taxes, then it, as a concept, would be worthy of a strenuous national debate.  But that, to the best of our knowledge, has never happened in any country that has imposed a VAT, is not contemplated by those who propound it here now and would be almost impossible to achieve.  In addition, as the imposition of ObamaCare has proven, this has become a country where the majority will of the people is accorded no merit in what passes for national debate.  Of course you don’t want to be taxed more, but you have to be taxed more, because we must spend more and now we’ve got to pay down the deficit for what we’ve already been spending, plus all that more spending, so shut up and go to your room now.

Consideration of a VAT here and now has but two purposes:  to support the big government that has already been visited upon us and to expand the even bigger government of President Obama’s dreams.  Why a VAT?  Because, as Shawn Tully has written for CNNMoney.com, “it’s the only vehicle capable of raising the money to cover the gigantic projected increases in spending and deficits.”

Other than the occasional public utterance by the likes of Paul Volcker (who, without going into detail regarding his previous role as Fed Head, Ronald Reagan had to fire) and a growing number of warnings from seers like Krauthammer, talk about a VAT is going to be downplayed until after the November Midterm elections.

But consider the true VAT nightmare scenario.  If the Democrats lose their majority in one or both sides of the Capitol come November, a VAT could be pushed through a lame duck Congress as a parting gift to their dear leader.  Why the Democrats would do that, considering Obama’s blame in such a loss, is beyond our limited capacity at reasoning, but so was so many who have already clearly walked the plank to vote for ObamaCare, against the wishes of their constituents.

Even if that does not happen, there’s a VAT proposal in your future.  Bank on it.

Notable Quote   
 
"Writing in the Wall Street Journal last week, former Fidelity Investments head Robert Pozen wrote what he always has, and that countless budget and Social Security scolds have written before him. According to Pozen and a Rose Bowl-sized collection of commentators who've come before and who've yet to come, a combination of benefit cuts and 'revenue measures' (yes, tax increases on the richest…[more]
 
 
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Liberty Poll   

Should there be a full-scale investigation of the Alaska Senate race in which a candidate with virtually the same name as the incumbent was recruited into the race to induce voter confusion.