More talk of VAT – gird your loins

Our dear comrade leader’s “fiscal commission” is working hard on the country’s deficit problems. Unfortunately, since it is larded with big government apparatchiks, they cannot possibly see a solution without raising taxes. (story here from DC Caller)

Two immovable facts face Democrats on President Obama’s fiscal commission: They don’t see any way to alleviate the country’s debt without raising taxes, and they know most voters hate the thought of any tax increase.

Leading Democrats on the commission tried during the first week of meetings to finesse their way toward a discussion of what they consider inevitable — by arguing that any tax hikes would be “pro-growth.”

“If we can put forward some practical proposals that control the rate of spending in the future and that raise revenues in a pro-growth way, I think we’ll get a hearing in the Congress,” said Alice Rivlin, a former White House budget director for President Jimmy Carter, who is one of 18 commission members.

Notice two key phrases here: “control the rate of spending” and “raise revenues in a pro-growth way.”

Controlling the rate of spending is NOT cutting spending. This is typical bureaucratese where not increasing spending as much as previous years is the same as a spending cut. So if you increased a budget by 5% last year and will only increase it 3% this year, that’s deemed a spending cut.

As for raising revenue – how do you do THAT without raising taxes? Moreover, how do you do that in a “pro-growth” way? This is pure bureaucratic bullshit. Another commissar was more blunt on the matter.

Commission co-chair Erskine Bowles made clear last week that any recommendations he puts forth or supports by the Dec. 1 due date will include higher taxes. The three working groups that he set up to meet weekly over the next several months are focused on mandatory spending, discretionary spending and revenue reform.

Any solution is “going to involve revenue, and we have to face up to that,” he said. Bowles, a former White House chief of staff to President Clinton, also followed Rivlin’s tack, arguing that any tax increase would have to be good for the economy, business, job creation, etc.

“I want to make sure that any time we discuss revenues that we don’t do anything that has a negative impact on economic growth,” Bowles said.

Yet how can tax increases have anything but a negative impact on economic growth? You’re taking money out of the economy to feed the government goliath. The government creates nothing.

Ryan Ellis, policy director at Americans for Tax Reform, one of the most vigorous anti-tax groups in Washington, said “pro-growth” tax hikes don’t exist.

“They’re all anti-growth, any additional taxes on top of our existing tax burden, by definition,” said Ryan Ellis, policy director at Americans for Tax Reform, a group that is against most tax increases.

“Any time you take tax dollars out of the private economy, you’re taking away the seed corn of economic growth. You’re crowding out the private sector. It’s like taking oxygen away from a fire,” Ellis said. “To talk about doing it in a pro-growth way strikes me as absurd. You’re talking about doing the least amount of damage, not helping anything.”

And this is where the VAT comes in. Raising revenue under the radar and passing it on in the form of higher prices on everything to the consumer. It might be acceptable if the government replaced the income tax with a VAT but don’t look for that to happen.

Some conservatives like the egalitarian nature of the VAT and are open to replacing the income tax with a VAT. But most believe the Obama White House would only tack it on top of the existing tax structure, creating a large new source of revenue and doing nothing to encourage government belt-tightening.

Make no mistake about it, the goal of this government, both the majority in congress and the administration, is to increase the size and scope of government to transform America into a collectivist, socialist state. They want to emulate the system that has been a spectacular FAIL in Europe.

Remember this in November.


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