Feds look at VAT tax, ignore need to trim fiscal obesity

Sen. Jim DeMint (R-S.C.) called the Recovery Bill a 'Three Trillion Dollar Mistake.' [Photo from US Senate pages.]We’ve heard rumors for awhile and an article in The Washington Post seems to confirm the federal government is looking at a value-added tax to trim the fiscally obese US deficit. WaPo declares the obvious—a VAT tax “would increase the cost of just about everything.”

If the government were to dismantle the current tax system, a tax on goods could be more palatable. But some legislators like Sen. Kent Conrad (D-N.D.) want the VAT tax AND a tax on “high-end” incomes. The problem with that sort of income tax is how the term “high-end” is defined and Washington tends to define wealth on smaller income ranges than most taxpayers. President Barack Obama frequently cites incomes above $200,000 as “wealthy,” but many of us believe that amount too small to confer real financial security. Included in the newspaper article as a targeted group are incomes above $100,000.

Ironically, taxes are one issue many Americans seem to agree upon. The Tax Foundation released Special Report 166 in April. The ‘2009 Survey of U.S. Attitudes on Taxes, Government Spending and Wealth Distribution’ revealed, “4 in every 5 adults say the federal tax code is complex (85 percent) and say that the tax system needs to be completely overhauled or needs major changes (82 percent).” And 56 percent of U.S. adults believe “that the federal income taxes they pay are "too high" (56 percent).” The Foundation notes, “[A]merican opinions on tax issues have not changed markedly since 2007…”

The Tax Foundation’s Matt Moon told TUSR by phone Wednesday the administration is “trying to look for every way they can to get revenue for plans.” Moon said efforts to ‘go after international tax cheats” are actually a good idea.

But Obama hasn’t mentioned something he promised during the campaign, to—“go through the federal budget "page by page, line by line -- eliminating those programs we don't need and insisting that those that we do need operate in a sensible, cost-effective way." A cursory glance at an A-Z list of US government departments and agencies offers rich possibilities for significant cuts. Furthermore, little attention is paid to the stimulus money the administration heralded as going to “shovel-ready” projects that would get the economy going again. Examples of some of those misguided projects, listed at Washington Watch, include $500,000 for fish food and a program with one employee who will dole out and allegedly monitor $100 million under the auspices of FEMA.

The administration and the current Democratic-Party led Congress are setting record levels for spending, with one of the most expensive items universal healthcare. Moon said no one knows whether spending to pay for that healthcare will “bring that value” to the consumer.

The idea to impose a VAT tax comes in part from a book, ‘Health Care, Guaranteed,’ by Ezekiel Emanuel, brother of White House chief of staff Rahm Emanuel. At present, WaPo says, the US Treasury “is borrowing 46 cents of every dollar it spends, largely from China and other foreign creditors.”

The budget awaits the president and the cabinet’s attention to a “page by page, line by line” scrutiny. Economists and others may tout a VAT tax as a solution to the federal government’s fiscal obesity, and most of us would agree the antiquated tax system needs true reform. But taxpayers who manage households prudently know the first step to fiscal strength always begins with a red pen and trimming spending. Sen. Jim DeMint (R-S.C.) called the Recovery Bill a “Three Trillion Dollar Mistake.” Sen. John Boehner described the bill as —“1100 pages not one member of this body has read.”

Perhaps every US taxpayer should send a box of red pens to Washington, insist the government freeze spending and require legislators to join Obama in a “page-by-page, line-by-line” search for items to delete. That would be the logical place to start in returning fiscal integrity to a government that one day, if current spending continues and increases, will reach a point where it cannot be sustained.

Feds look at VAT tax, ignore need to trim fiscal obesity by Kay B. Day