The VAT Man Cometh...

The VAT Man Cometh

This week, White House economic advisor Paul Volker said that the United States ought to consider imposing a European-style value added tax (VAT) to get the deficit under control. He said, “If at the end of the day we need to raise taxes, we should raise taxes.” A VAT tax is essentially a national sales tax, which would be added to existing state sales taxes. France’s VAT is nearly 20%. So just imagine all of your recent purchases costing 20% more.

That may seem outrageous to you, but Obama’s economic advisor doesn’t think so. Volker said that a VAT “was not as toxic an idea” today as it has been in the past. And just to be clear, Volker was not suggesting that we replace the income tax with a VAT tax, but that the VAT be added to the income tax. Evidently, Volker wouldn’t mind paying $7.00 a gallon for gas either, because he also recommended that we consider taxing carbon too.

Just like their love of socialized medicine, liberal politicians are drawn to the VAT like a moth to a flame. The reason is simple: If you’re going to fundamentally transform America into a Big Government, European-style welfare state, you’re going to need big, European-style taxes. Last year, Speaker Nancy Pelosi told PBS’s Charlie Rose, “Somewhere along the way, a value-added tax plays into this. …I think it’s fair to look at a value-added tax as well.”

Is a VAT tax imminent? That depends. Obama’s spending is clearly out of control. Yesterday, Fed Chairman Ben Bernanke warned Congress that the deficit is the biggest threat to long-term economic growth and stability. I guarantee you that in the weeks ahead, we’ll hear from Obama about the need to get the deficit he created under control.

But there are only two ways to get the deficit under control – cut spending or increase taxes. Volker and Pelosi are clearly on the side of raising taxes, and Obama, who has already added $2 trillion to the national debt (that doesn’t even include ObamaCare), is clearly unable to restrain himself when it comes to spending. So I predict that all the rhetoric we’re going to hear about “fiscal discipline” in the days ahead will be laying the ground work for massive tax hikes down the road.

-Gary Bauer, American Values