Although an Obama spokesman has denied it's being considered, that assertion is disputed by the Executive Director of a White House panel charged with finding ways to reduce the national debt. Annual federal spending is projected to go from 1990 levels of $21k per household to somewhere around $42k in 2019. Since doubling income tax would be political suicide, that VAT is beginning to look a lot more appealing to government officials who refuse to cut spending. As George Will explains, "A VAT is collected on value added at stages during the process of production, but most of its burden is borne by consumers. They file no VAT returns, so its stealthiness delights the political class, which can increase it in small, barely noticed increments, with every percentage point yielding another $100 billion."
Yesterday, LV Congressman Charlie Dent signed on to a resolution offered by Rep. Todd Tiahrt, which would express Congress’ belief that a VAT would be harmful to America’s economy.
“One of my major concerns with the recent Health Care bill is that it puts America on the path of becoming a European-style welfare state, and a value-added tax would be a dangerous next step,” Congressman Dent said in a news release. “A value-added tax disproportionately and unfairly targets low and middle-income workers, and would be devastating to Americans on fixed income. By raising the cost on almost everything that is made, purchased or consumed in America, a VAT would further move our country toward a government-centered economy rather than one fueled by American innovation.”
The resolution noted that the VAT has been widely adopted by European nations and is routinely cited as encouraging public spending at the cost of private job creation. For example, Denmark enacted a 9 percent VAT in 1962, but today Denmark's VAT has surged to 25 percent.
“If we are to enjoy a sustainable recovery, we must entrust more economic power with the American people and less with Washington bureaucrats,” Congressman Dent said.
How does Dent's Congressional opponent, John Callahan, feel about a national sales tax? As Bethlehem mayor, Callahan recently advocated a 17% sales tax increase. To be fair, I called his campaign HQs and asked whether Callahan supports this national sales tax, especially since he has already supported an optional increase on a more local level. His communication director told me she'd either call or email me with his position. At the time this story is being published, I have no answer. If I get it, I will update this post accordingly. If I don't, you can draw your own conclusions.