A Value Added Tax (VAT) is a tax on the estimated value of products at each stage of production and distribution. And like all taxes on business, it’s passed on to the consumer – making everything more expensive.
A VAT is similar to a sales tax in who actually pays it, but the difference is that the VAT hides the amount the consumer pays. When you look at your receipt from the grocery store you can see the sales tax. It’s right under the subtotal. When you buy a car there’s a special line just for the sales tax.
But the VAT is charged at each state of production and shipping. It’s not marked anywhere for you or me to see. With a VAT, the auto manufacturer would be charged based on the value of the car when it’s sold to the dealer. The shipper for the car would be charged a VAT for the value of the shipping. The subcontractors, the companies that make all the parts for the car, would be charged a VAT for the parts they manufacture. And the producers who make the material the parts are made of, they would pay a VAT too, as would the shippers, as would the producers of the packaging material.
And this huge and complex system would apply to most everything. All the materials and equipment everywhere in between the above process would carry the VAT hidden in its price – everything from tools to toilet paper.
This is why sneaky politicians like the VAT. They can make promises of monetary gifts to get into office, once in office establish expensive entitlements and pass huge goody bills for their friends, and pay for it by raising the VAT without anyone noticing. Historically that’s what has happened in Europe anyway.
If a sales tax is raised everyone sees it. But you can raise the VAT quietly, incrementally, with few people raising a fuss.
So why am I bringing this up? The US doesn’t have a VAT. We have income and sales tax. Well, I bring it up because the US is spending huge amounts of money, adding to the immense pile of debt, and otherwise over the past couple years has been moving in the direction of of a European style of heavy tax/entitlement. Also, Obama says the VAT is, “on the table” with regard to fixing the county’s serious budget problems.
And seriously, what else is there? Is anyone going to cut precious programs in this Liberal climate? Hell, we’re passing new ones. The answer Obama and his Dems have offered to EVERY problem so far is a huge pile of cash or a huge new bureaucracy – but usually both. He promised (pfft) not to raise taxes on anyone making less than blah blah. But he can’t raise income taxes on the rich anymore. They’re already on the down slopping side of the bell curve. (raising their taxes will result in lower tax revenue) What else is there?
So watch out for the VAT. It’s a sneaky tax. Every tax is bad for the economy – but this one dodges accountability with the consumer. It hits everyone including the poorest, which is actually good for the Democrat’s style of campaign/governance. They can suck money out of our society then distribute it back as the clumsy, slow, expensive bureaucracies see fit – VISIBLY – so the politicians can take credit for ‘giving’ assistance to people in need.
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Raging Kitty