Best of the Week
Most Popular
1.Stock Market in DANGER of Strangling the Bears to Death - Nadeem_Walayat
2. Germany Pivoting East, Exit US Dollar, Enter Gold Standard - Jim_Willie_CB
3.Flight MH17 – Kiev Flash Mob's Last False Flag? - Andrew_McKillop
4.Stock Market Crash Nightmare! - Nadeem_Walayat
5.Gold - The Million DOLLAR Question... - Rambus_Chartology
6.Gold And Silver – BRICS And Germany Will Pave The Way - Michael_Noonan
7.The Jewish Selfish Gene, People Chosen by God, Everyone Else is Goyim to Kill - Nadeem_Walayat
8.The Israeli Promised Land Dream - The Criminal Roadmap Towards “Greater Israel”? - Felicity Arbuthnot
9.Which Way is Inflation Blowing? Watch Commodities - Gary_Dorsch
10.U.S. Economy Quarterly Review and Implications for 2014-2015 - Lacy Hunt
Last 5 days
The Big Energy = Power Battle Is Coming - 25th July 14
USrael - Zionists in Control of America's Goyim Brainwashed Second Coming Slaves - 25th July 14
More Weakness Ahead for Gold Miners - 25th July 14
Gold Price Strong Season Starts - 25th July 14
Geopolitics and Markets Red Flags Raised by the Fed and the BIS on Risk-taking - 25th July 14
Gold Lockdown Until Options Expiry - New Singapore Gold Contract Threatens Price Manipulation - 25th July 14
The Bond Markets, Black Swans, and the Tiny Spirit of Santo - 25th July 14
No Road Map For Avoiding The Future - 25th July 14
Israeli War Machine Concentrating Women and Children into UN Schools Before Killing Them - C4News - 25th July 14
Israeli Government Paying Jewish Fundamentalist Students to Post Facebook Gaza War Propaganda - 25th July 14
Why the Stock Market Is Heading For A Fall - This Time Is Not Different - 25th July 14
An Economic “Nuclear Strike” on Moscow, A “War of Degrees” - 25th July 14
BBC, Western Media Working for Israeli Agenda of Perpetual War to Steal Arab Land - 25th July 14
Ukraine: What To Do When Economic Growth Is Gone - 24th July 14
Stock Market Clear and Present Danger Zone - 24th July 14
The Five Elements to Creating a Something-for-Nothing Society - 24th July 14
Instability is the New Normal? - 24th July 14
Israel's Suicide Bombers Over Gaza - 24th July 14
EUR-AUD Heads Into The Danger Zone - 24th July 14
Tesco Supermarket Death Spiral Accelerates as Customers HATE the Mega Brand - 24th July 14
Ukraine MH17 Crisis - Best Remember Who Your Friends Are - 24th July 14
Three Reasons Why Gold Price and Gold Stocks Will Rise - 24th July 14
HUI Gold Bugs Fighting To Break Downtrend - 23rd July 14
What Putin Knows About Flight MH17 - 23rd July 14
Why Microsoft Will Continue to Rebound, Huge Upside Potential - 23rd July 14
Will Putin Survive? - 23rd July 14
MH17 Crash Next Phase Economic Warfare - 22nd July 14
The TRUTH about China’s Massive Gold Hoard - 22nd July 14
Forex Multi-week Consolidation in EUR/USD Ended - 22nd July 14
Bitcoin Price Medium-term Trend Being Tested - 22nd July 14
Beware Of The Flash Mob - 22nd July 14
Can Putin Survive? - 22nd July 14
Israel Assault on Gaza: A Historic Crime, Nazi Like Final Solution - 22nd July 14
Zionist Israel an International Pariah - 22nd July 14
Reflections on the Global Misery Index - 22nd July 14
GDP Economic Statistic : A Brief But Affectionate History - 22nd July 14
TransTech Digest: Super Battery Bio-Power vs. Dirty CleanTech - 21st July 14
How to Find Trading Opportunities in the Currency Markets - 21st July 14
Stock Market One More Pull Back - 21st July 14
The Conquest Of Real - Degenerate Philosophies of the Book - 21st July 14
A Clear Way to Profit from a Graying Population - 21st July 14
Last Chance Critical Financial Market Forecasts Special Total Access - 21st July 14
Stock Market Crash Nightmare! - 21st July 14
Why the Stock Market Is STILL Cheap - 21st July 14
From Gore-Bore To Gore-War - 21st July 14
Gold Price Looking Drab - 21st July 14
An In-Depth Look at Gold Chartology - 21st July 14
The Jewish Selfish Gene, People Chosen by God, Everyone Else is Goyim to Kill - 20th July 14
AUD NZD Taking The Forex Bull By The Horns - 20th July 14
US-backed Israeli Invasion of Gaza Unleashes Death and Destruction - 20th July 14
The Israeli Promised Land Dream - The Criminal Roadmap Towards “Greater Israel”? - 20th July 14
Stock Market in DANGER of Strangling the Bears to Death - 20th July 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

A Matter of Time for a U.S. VAT Tax

Politics / Taxes Apr 25, 2012 - 10:20 AM GMT

By: BATR

Politics

Best Financial Markets Analysis ArticleThe insatiable thrust for federal spending continues. The will to correct our fiscal black hole is absent. Even the Tea Party Republicans lack the strength of determination and votes to reverse the ship of state. No matter which party wins the next elections, the deficits facing the budget are huge. Until a total reformation of the way the central government functions, no solution is possible to balance the books. There is no way to escape this stark reality. Expect more gimmicks, additional devaluation of the currency and the inevitable imposition of new forms of taxes.


The Bear's Lair by Martin Hutchinson offers an assessment on the addition of a VAT Tax.

"The introduction of a VAT, perhaps at a low initial rate of say 5%, will solve Obama’s problems. It is likely to be unpopular, but if it is passed under a cover of bipartisanship Obama and the Democrats should avoid most of the electoral blowback. Most important, once a VAT is in place, Obama’s healthcare plan will be funded and further Obama spending schemes will be possible without inflating budget deficits. Outlays, currently 23.8% of GDP and projected (unrealistically) by the Congressional Budget Office to decline to a low of 22% of GDP by 2015 before increasing thereafter, will with a VAT be able to increase further, to perhaps 27% of GDP by the end of Obama’s second term. Revenues will trail outlays, but instead of 20% of GDP in 2015 (including repeal of the 2001/2003 tax cuts) will rise to perhaps 24% of GDP, leaving the deficit at 3% of GDP, or about $500 billion in today’s money. Of course, were a further spending-prone President elected in 2016, outlays would rise further, as entitlement spending spiraled upwards, but that problem could be solved, at least in the short term, by increasing the VAT rate towards European levels."

A simple and elegant method to steal more from the public is an attractive alternative for the corrupt political class. The political capital needed to approve a quasi-national sales tax would be ugly, but the intensity of a financial meltdown disaster would provide another excuse for extreme measures. As long as the Federal Reserve monetizes the debt by buying Treasury obligations, the purchasing value of the dollar sinks. Larger deficits could provide cover for "so called" fiscal conservatives to abandon principle and jump on the destructive revenue enhancement deception.

The Fiscal Times article, Can a VAT Tax Solve the Nation’s Fiscal Problems?, describes the way a VAT Tax works.

"While there have been no formal VAT proposals yet and it is by no means a certainty, "it is probable," says Rudolf G. Penner, a fellow and economist at the Urban Institute. "It will be fought over vigorously, but a VAT is easy. It’s an efficient tax. And it could be implemented fairly quickly."

Penner predicts that the next fiscal crisis could prompt lawmakers to adopt the VAT. "It could be a failed Treasury auction, it could be S&P and Moody’s downgrading out debt or passing some psychological barrier with the debt to GDP ratio," he says. "In many other countries you have had to have a crisis that demanded a fiscal policy response to it."

The straightforward implementation of a VAT is a prime reason why it is attractive to the central government. Abolishing the entire tax code and starting over would be a sound start, but that option is impossible within the political structure of the depraved federal system. More taxation and increased sources is the only way the political elite have to service the interest on the national debt.

At What Cost? Basic Economics of a Value Added Tax video is an overview lecture of the rudiments of adding a VAT to an already disserted economy. Yet, when did a defective tax plan ever stop Washington from enacting higher confiscation. When the big push comes to bail out the excessive spending entitlement apparatus and the printing money ATM falters, Middle America is targeted as the last resort. Never underestimate the creative legal exploitation to plunder the taxpayer.

Pushing America into the socialist slavery that is European governance is the plan. Merging the economic burden into a global debtor obligation requires improvising our own people. If the passage of a VAT Tax requires voting out of office the last stalwart of domestic independence, the financial powers will double their efforts.

VAT Tax Ends the Consumer Economy makes the case for the consequences of adopting another source of federal revenue.

"In a rush for additional revenues, the Federal Government is poised to slam another stick up the derrière of the public. Don’t be fooled with the claims that a VAT Tax will replace the oppression of the income tax. When interest rates inevitably rise because government bonds will not sell without a higher return, the cries will become deafening that only additional revenue will forestall default. The Socialism of Europe becomes complete with the integration of America into the central controlled managed economy."

Plainly, a VAT is no resolution to the deficit spending problem. All the same, the beltway culture has never been in the solution business. Thinking that a Republican victory in the 2012 election will remove the peril of a national tax is shortsighted. Politicians are spending addicts and any revenue increase that collects higher sums of money to feed the appetites of government careerists is wishful thinking.

Short of a total collapse of the world financial system, the domestic economy will continue to struggle, while losing ground in real terms. This fact cannot be said about the growth on the federal bureaucracy or unfunded programs. Because of this inevitability, new punitive and destructive taxation is in play. Balancing expenditures by growing taxes from strong economic performance is a pipedream. Budget cuts and elimination of entire programs is core to any public fiscal sanity.

Discuss or comment about this essay on the BATR Forum

http://www.batr.org

"Many seek to become a Syndicated Columnist, while the few strive to be a Vindicated Publisher"

© 2012 Copyright BATR - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014