With budget deficits soaring and President Obama pushing a trillion-dollar-plus expansion of health coverage, some Washington policymakers are taking a fresh look at a money-making idea long considered politically taboo: a national sales tax.
A White House official said a VAT is "unlikely to be in the mix" as a means to pay for health-care reform. "While we do not want to rule any credible idea in or out as we discuss the way forward with Congress, the VAT tax, in particular, is popular with academics but highly controversial with policymakers," said Kenneth Baer, a spokesman for White House Budget Director Peter Orszag.
Which means they aren't saying no.
The federal budget deficit is projected to approach $1.3 trillion next year, the highest ever except for this year, when the deficit is forecast to exceed $1.8 trillion. The Treasury is borrowing 46 cents of every dollar it spends, largely from China and other foreign creditors, who are growing increasingly uneasy about the security of their investments. Unless Congress comes up with some serious cash, expanding the nation's health-care system will only add to the problem.
Key lawmakers are considering other ways to pay for health reform, including new taxes on sugary soda, alcohol and employer-provided health insurance. The last proposal could raise a lot of money -- nearly $1 trillion over the next five years, according to White House budget documents. But options on the table would raise a fraction of that sum. And while it might pay for health care, it would barely dent deficits projected to total nearly $4 trillion over the next five years and to grow rapidly in the future, as baby boomers draw on Social Security and Medicare.
Did you catch that? The VAT will bring in nearly $1 trillion dollars BUT we are expecting a $4 trillion dollar deficit. So it wont even help!!!
The VAT has advantages: Because producers, wholesalers and retailers are each required to record their transactions and pay a portion of the VAT, the tax is hard to dodge. It punishes spending rather than savings, which the administration hopes to encourage. And the threat of a VAT could pull the country out of recession, some economists argue, by hurrying consumers to the mall before the tax hits.
Why do they want to punish spenders?? Why, Why, Why?? Aren't spenders the ones who, oh I don't know, move the economy?? What are they thinking? Are they so disconnected from "flyover country" and think that the only people who buy things are rich people? Don't they know how hard it is for impoverish people right here in the Seattle area to buy food? Over-taxation will ultimately hurt the poor, no matter the intention. If the gov't gets rid of ALL other taxes then I might be open for a VAT that does not include food.
In my oh-so humble opinion, taxing food is wrong. It makes me think of the third world countries like Africa who have war-lords that use food as a way to control people.