Tuesday, January 3, 2012

Just Say No to a VAT

Daniel Mitchell of the Cato Institute asks whether Republicans will hand the Left a VAT victory.  He notes that Mitt Romney has refused to rule out the possibility of a VAT, or Value Added Tax, and has even indicated that one might be appropriate.

That's all one needs to know in order to understand why conservatives are resisting the establishment's siren song to make Romney the Republican presidential nominee.  Conservatives want to rollback the Obama Administrations signature achievements; Mitt wants to pay for them.

For those who don't know, a value added tax is added onto the price of goods that are bought and sold.  Thus, it is a consumption tax.

A VAT is the only aspect of the European social welfare state that Democrats have yet to impose on the US.  Trough-larding transfers, ObamaCare, massive regulation, cash for clunkers, etc. are all standard pages from the European Statist's playbook.  A value added tax to pay for all the bureaucracy and waste is the only thing missing.

All the jobs nonsense and class warfare venom that President Obama has been spewing since his summer vacation on Martha's Vineyard, and the Occupy Wall Street movement he set into motion, are geared towards the end of imposing a VAT on unsuspecting Americans.  It is the Democrats end game in this first leg on the road to serfdom.

Regardless of where in the transaction chain the tax is applied, its incentive is to avoid reporting the transaction so as to avoid incurring the tax.  Thus, goods and services are traded without receipts to memorialize them.  Wherever there is a VAT, as in Spain where Noman lived for ten years and has visited annually for 20, there is a large grey market.

Despite the functioning of the tax, adopting one would be a decisive step in the wrong direction.  The American and European economies are straining under the burden of too much debt incurred to finance too much government.  The solution is to reduce the size and scope of government, and to foment private, less corruptible avenues for taking care of people, not to devise new schemes for drawing more of the nation's productive wealth to federal bureaucrats.

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