NCPA - National Center for Policy Analysis

Don't Be VAT Stupid

November 29, 2010

President Obama's Debt Commission and the Bipartisan Policy Center's Debt Reduction Task Force have both floated their ideas for reducing our nation's runaway national debt.  These ideas are a long way from becoming law, but they are generating, as intended, much discussion about the merits of each idea, says Herman Cain of the Daily Caller.

The worst idea is a proposed national sales tax, which is a disguised value-added tax (VAT) on top of everything we already pay in federal taxes.

Here are three of the biggest reasons the national retail sales tax is the worst idea on the table.

First, we have a spending problem in Washington, D.C., not a revenue problem.

  • The Commission claims their goal is to reduce the deficits by $4 trillion over the next decade.
  • The task force says its plan would save $6 trillion by 2020.
  • It's sort of like dueling promises that would never happen, because when has a proposed cut in Washington, D.C., ever produced the intended savings over 10 years? Never!

Reason number two: In every country that has established a VAT with the promise of reducing its national debt, the VAT has eventually gone up or expanded on top of the existing tax structure.

The third reason the national retail sales tax on top of all the taxes we already pay is a bad idea, is that there is already proposed legislation that replaces all of the federal taxes we pay.  It's called the fair tax, says Cain.

Source: Herman Cain, "Don't Be Vat Stupid," Daily Caller, November 22, 2010.

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