Freedom Line Blog

With the Obama Administration and congressional leadership scrambling to find new revenue to pay for their big government agenda, there is increasing speculation about the imposition of a new Value Added Tax (VAT).  In his latest cartoon, Pulitzer Prize-winner Michael Ramirez illustrates what a VAT would mean for the average American.

View more of Michael Ramirez’s cartoons on CFIF’s website here.

Maybe White House Chief of Staff Rahm Emanuel isn’t the only senior administration official who’s on uncertain terms with President Obama.  In the span of a few minutes, White House Press Secretary Robert Gibbs reminded reporters that imposing a national value added tax (VAT) “wasn’t something that the president had under consideration,” and a deputy of his reiterated that point after Obama appeared on CNBC.

The problem is the president himself told CNBC that the VAT is still on the table.  What to make of the press office’s bookend statements denying the substance of the chief’s own words?  Exactly what it is: denying the truth that one of the most destructive taxes available is being considered to pay for the explosion in government spending.  We were warned – sort of.

In a recent interview with Charlie Rose, Speaker Pelosi not only hinted at a Value-Added Tax (VAT) to pay for health care “reform,” she practically endorsed the idea as a way to equalize tax treatment between the U.S. and Europe.

Pelosi stated, “Somewhere along the way, a value-added tax plays into this.  Of course, we want to take down the health care cost, that’s one part of it.  But in the scheme of things, I think it’s fair to look at a value-added tax as well.”

The implementation of a VAT would assuredly break President Obama’s pledge that no one making under $250,000 would see a tax increase of any kind.  A VAT is essentially a massive sales tax (over 20% in some countries) on all consumers.  What’s worse, a VAT is typically not transparent, that is, prices go up but consumers don’t see the tax when they’re at the checkout counter.

See below for Obama’s pledge.  Studies on the regressive and horrible idea of a VAT here and here.