Watch For National Sales Tax

One of the ideas for “revenue enhancement” that I’ve been hearing occasional rumbles about recently, is what’s known as a value added tax… or VAT. Basically, that’s a sales tax… though a VAT is supposed to avoid the cascade effect that we enjoy under a normal sales tax. The idea has been that a national VAT could bring in lots of revenue to pay for PresBo’s massive spending increases.

And now we hear a little more about it. John Podesto was President Clinton’s Chief of Staff, and he now says a national VAT is more possible now than it ever was before. He says that the higher the deficits get, the more sense such a tax makes.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aGxdXdfWrZ7o

John Podesta compared the nation’s current budget crisis to the situation former President Bill Clinton faced in 1993 and said some form of a value-added tax is “more plausible today than it ever has been.”

“There’s going to have to be revenue in this budget,” said Podesta, Clinton’s former chief of staff and co-chairman of President Barack Obama’s transition team, said in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” airing today.

A so-called consumption tax would “create a balance” with European and Japanese economies and “could potentially have a substantial effect on competitiveness,” said Podesta. Value- added taxes in Europe and Japan encourage savings by taxing consumption.

Podesta said such a tax may be regressive, but can be balanced by exempting some products and using “the money to support low-wage workers.”

For a definition of a VAT, visit the following site. Note: Wikipedia is not always the most reliable source, so check elsewhere on the web.
http://en.wikipedia.org/wiki/Value_added_tax

In my humble opinion, such a tax would be an incredibly bad idea. First, there’s Obama’s signature promise, his solemn word, that he wouldn’t raise taxes on 95% of Americans. He breaks that pledge at his own political peril. Second, such a tax would impact all of us directly, and would negatively impact economic growth. If PresBo is looking for an idea to cripple US economic growth for decades to come, this is the one. Of course, he’s already well down that path with his ObamaCare, bailout packages, “stimulus” spending, and government takeovers of the private sector. So it shouldn’t surprise anybody if PresBo does, eventually, endorse a proposal like this.

It won’t be this year, though… he has to know that the backlash in 2010 would knock his party WELL out of power. NOBODY likes sales taxes, and they’d respond by voting Democrats out of power. So PresBo won’t support anything like this until after the midterm elections.