Democrats, Valued Added Tax, and Recessions
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Harrison
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cap and trade defense spending deficit Democrats Liberals merkel Obama Schwarzenegger Spending taxes value added tax vat
Too bad she can't run for president in the U.S.
I think the U.S. Constitution should be modified to allow non-native born candidates to become president. The first person I would nominate to run for office would be a famous German-speaker (not Arnold Schwarzenegger). My choice? Germany’s Angela Merkel. Why? She seems to be one of the few leaders who has any idea about running a government.
The United States is currently in a recession but that should be no reason to slow down the Democrats’ desire to increase taxes. Although the Democrats are trying to gouge taxpayers on many topics ranging from healthcare to the environment, this proposal has to do with the Value Added Tax, or VAT:
At a White House conference earlier this year on the government’s budget problems, a roomful of tax experts pleaded with Treasury Secretary Timothy F. Geithner to consider a VAT. A recent flurry of books and papers on the subject is attracting genuine, if furtive, interest in Congress. And last month, after wrestling with the White House over the massive deficits projected under Obama’s policies, the chairman of the Senate Budget Committee declared that a VAT should be part of the debate.
“There is a growing awareness of the need for fundamental tax reform,” Sen. Kent Conrad (D-N.D.) said in an interview. “I think a VAT and a high-end income tax have got to be on the table.”
In Europe, the VAT has been around for many years (part of the reason why things are so expensive there, government programs are so large, and their economies recover later than ours does in the U.S. ). But Germany’s Angela Merkel (a Conservative) believes in something that would sound crazy in Washington although it makes plenty of sense to “ordinary” Americans – don’t raise taxes in a recession:
“Every discussion about VAT damages economic activity,” she told the mass-market weekly Bild am Sonntag. “With me, there will be no increase in value added tax under the next government.”
Look at that first sentance very carefully: “Every discussion about VAT damages economic activity.”
It seems like commonsense but apparently not. The Obama administration seems to partially understand this simple fact:
Mr LaHood [DOT secretary] said any increase in the federal element of fuel tax – which pays for parts of the interstate highway system – would hit the poor hardest.
“We are not going to propose any kind of an increase in the gas tax while our economy is in a state of recession and so many people are out of work,” he said.
However, you have the other part of the Obama administration (the Obama part) trying to ram through Cap-and-Trade which will cost U.S. consumers and businesses $2 trillion over the next 8 years and Democrats on Capitol Hill trying to push through a Value Added Tax. Germany has the largest economy in Europe and, indeed, one of the largest in the world. Isn’t it curious that Merkel’s remark that the VAT damages economic activity does not seem to be a part of the equation for Democrats who are seeking to tax everything they can to pay for socialized medicine and will use any story they can cook up to sell it?
For more information on the VAT and its unpopularity in the United States you may click here.
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10:28 AM
Cap and Trade–huge tax,. Health Care fix–tax. Letting the Bush tax cuts lapse–tax. Now a VAT. 9.5% unemployment will seem low in three years.
.-= vulcanhammer´s last blog ..Massachusetts State Sponsored Health Care is a FLOP! =-.
11:18 AM
if you were running a country, and all of your neighbors raised their taxes uniformly, why would you? the influx of business oppurtunity would be staggering.
11:45 AM
That’s why so many businesses leave Kalifornia every year. Econ 101. Good point.
12:27 PM
Where is Merkel’s sense of social responsibility?
.-= burro´s last blog ..Cigarette Butts Between the Cobblestones =-.
12:40 PM
She must be a hater.
2:05 AM
Harrison, VAT is value added for an economy, when wisely used. In the Netherlands we have a high VAT 18% to stimulate the economy. You pay VAT but with the VAT you paid you make it deductable for what you sell.
An example: I deliver a service for 8.000 € + 18% VAT = 9.400 € At the end of the year I have to pay the Tax Revenue those 18% VAT = 1.400 € minus the VAT I paid for example a computer, household work for my office etc. So in the end you dont pay the VAT you received to the government.
Countries like Germany, Belgium, Nordic ones and the Netherlands are competitive since they, the government bodies, help you to do business, investments etc. http://www.nfia.com for NOTH?NG, not one consultancy company can be more competitive..))!
Merkel was in her younger years a member of the Communist party of East Germany….
In Europe some things are more expensive than the USA, but when smart, you can find Italian design products in Italy for half the price so German cars in Germany, etc.
.-= Hans´s last blog ..The Netherlands? What about the Dutch! =-.
9:57 AM
The VAT raises prices and makes people have to spend more of their money to buy things. The higher the tax rate the less spending there is. The more taxes the larger the government. It is all common sense and facts. Your points don’t make sense.
10:27 PM
sorry, your way of thinking is a simplification.
If you buy a computer for example and they tell you that 1/5 of what you pay, you will get back, what will you do? the VAT is there only to stimulate the economy. nothing more nothing less.
check also which administration had the largest government the last 40 years: Reagan’s one.
which spents the most money? G.W. Bush.
Here is what Reagan did:
Reagan’s “elimination of loopholes” in the tax code included the elimination of the “passive loss” provisions that subsidized rental housing. Because this was removed retroactively, it bankrupted many real estate developments made with this tax break as a premise. This with some other “deregulation” policies ultimately led to the largest political and financial scandal in U.S. history: The Savings and Loan crisis. The ultimate cost of the crisis is estimated to have totaled around USD$150 billion, about $125 billion of which was consequently and directly subsidized by the U.S. government, which contributed to the large budget deficits of the early 1990s. All because of Rep. politics of greed.
An indication of this scandal’s size, Martin Mayer wrote at the time, “The theft from the taxpayer by the community that fattened on the growth of the savings and loan (S&L) industry in the 1980s is the worst public scandal in American history. Teapot Dome in the Harding administration and the Credit Mobilier in the times of Ulysses S. Grant have been taken as the ultimate horror stories of capitalist democracy gone to seed. Measuring by money, [or] by the misallocation of national resources…the S&L outrage makes Teapot Dome and Credit Mobilier seem minor episodes.”
I know that Reps have a selective memory, but…))))
.-= Hans´s last blog ..Dutch weird drugs policy =-.
11:38 AM
Hans, the Value Added Tax is just that, a TAX. In France, it accounts for over 52% of GOVERNMENT revenues. And I quote:
“Personal end-consumers of products and services cannot recover VAT on purchases. VAT was invented because very high sales taxes and tariffs encourage cheating and smuggling. It has been criticized on the grounds that (like other consumption taxes) it is a regressive tax.”
It is a TAX, and a big one. To say otherwise is a lie.
11:39 PM
s i m p l i f i c a t i o n USA Style.)
Do you undersstand economics and/or econometry?
.-= Hans´s last blog ..Day Opening – July 6 =-.
11:41 PM
In this conversation it is clear that one of us does.