VAT Tax

[Magox]

Mitch Daniels is one of my favorite politicians, and he certainly in my view is the most qualified person to be the next president of the U.S.

 

Here are some of the things that he has accomplished:

 

Conservative bona fides afford him the credibility to be more candid than other possible 2012 contenders. He inherited a $200 million deficit in 2004 and transformed it into a $1.3 billion surplus. He paid off the state’s outstanding debts, doubled venture capital investment in the state and reduced the number of government jobs by 15 percent. His well-established reputation as a penny-pincher makes it hard to stereotype him as a tax-and-spender.

 

He's also reduced the cost of health care with his HSA plans and has saved the state millions of dollars.

 

you can read it here: http://online.wsj.com/article/SB10001424052748704231304575091600470293066.html

 

Former Japanese Prime Minister Shinzo Abe said word of Daniels’ stellar reputation on economic stewardship has reached Asia. “To tell the truth, we could use some of your ingenuity in facing down our fiscal challenges,” he said during the dinner’s program.

 

 

Unfortunately for Mitch Daniels, he is an honest politician that has an uncanny ability to be candid on all issues even though many of his positions are loathed by the far right.

 

Like this position for instance:

 

Daniels also caused a stir among social conservatives in June when a Weekly Standard story reported his proposal for a “truce” so that the country could focus on pressing economic issues.

 

He realizes that social issues aren't what middle of the road voters care about, he understand that we care about the deficit, jobs and the economy and in order to attain that goal we have to focus on these core issues.

 

Another position that he took just yesterday was introducing new taxes on oil imports and a VAT tax. Of course, when the far right here's "new taxes" or even worse yet "VAT tax" they go ballistic without even attempting to understand it's benefits. Here's what he said:

 

 

Indiana Gov. Mitch Daniels opened the door Thursday to supporting both a value added tax and a tariff on imported oil, bold proposals that could cause trouble for him with conservatives as he flirts with a long-shot bid for the presidency.

 

I can just see some far right conservatives heads exploding right now. Although he did follow it up with:

 

 

Daniels recited from Kahn’s book: “It would be most useful to redesign the tax system to discourage consumption and encourage savings and investment. One obvious possibility is a value added tax and flat income tax, with the only exception being a lower standard deduction.”

 

“That might suit our current situation pretty well,” said Daniels, who served as George W. Bush’s Office of Management and Budget director and was a senior adviser in Ronald Reagan’s White House. “It also might fit Bill Simon’s line in the late ‘70s that the nation should have a tax system that looks like someone designed it on purpose.”

 

I just had a conversation with TPS yesterday about our trade deficit problems. I argued that the currency issue between us and China is virtually a non sequitur. Yes it does play a role but doesn't come close to structurally solving the problem. I always talk about structural solutions that is what I focus on. Mitch Daniels is proposing that we tackle this problem.

 

Our country has a problem with too much spending, not just from the government level but on a personal household level. We are the worst savers out of the developed countries. We spend and we don't save. Adding a VAT tax structurally helps tackle this problem. He also wants to add a tax on IMPORTED oil, which would provide incentive for us to either boost more domestic energy sources. It would also send less money over to countries such as the Saudis, Iran, Venezuela and other middle eastern countries.

 

However he does say he would ONLY do this if it was accompanied by a flat tax and elimination or reduction of capital gains taxes. That's a big offset folks.

 

 

The so-called VAT, common in European economies which have stagnated, is a toxic acronym to fiscally conservative activists like Grover Norquist and Dick Armey. It slaps a tax on the estimated market value for products at every stage of production. Progressives, meanwhile, loathe flat income taxes because they’re regressive and punish the poor. But some on the right have found the VAT attractive as an alternative to progressive income taxes and levies on capital gains.

 

Daniels also suggested support for increasing gasoline taxes. Kahn wrote, in a passage Daniels read from Thursday, “One fully justifiable tax would be on imported oil. Any large importation of oil by the U.S. raises security problems. There are, in effect, external costs associated with importing oil that a tariff would internalize.

 

“Now, maybe that transgresses some philosophical viewpoint of yours,” Daniels told the well-heeled crowd of 250. “But to me, that’s an interesting point today, just as valid as the day he wrote it.

 

“Now, none of us is Herman’s equal. But we are all his heirs, if we choose to be,” he added.

 

These comments come on the heels of a September profile in Newsweek, in which Daniels said tax increases might be necessary to tackle the federal deficit. “At some stage, there could well be a tax increase,” Daniels told the magazine. “They say we can’t have grown-up conversations. I think we can.”

 

Daniels has previously clashed with Norquist over the former’s refusal to sign the “No New Taxes” pledge.

 

Musing about tax hikes in speeches and interviews isn’t something a serious Republican contender usually does, but the soft-spoken Daniels’ biggest strength may be that he’s not a typical GOP candidate.

 

 

In a brief interview after his speech, Daniels downplayed the significance of his comments. He stressed that he would support a VAT “under only the right circumstances,” reiterating his desire for it to be paired with a flat income tax.

 

I talked about thinking out side the box just yesterday with another poster on this board, unfortunately his view like many are so hardened that they simply won't look at other alternatives no matter how much they make sense. If you want to drive down the cost of health care, then you have to focus on the core issue, which is the HUMAN BODY!!

 

If you want to lessen our dependence on foreign oil, then you have somehow provide incentive to move away from it.

 

If you want to tackle the trade deficit, then you have to change consumption patterns.

 

 

“He thinks outside the box, and you don’t see that too often today in politics,” said former Vice President Dan Quayle, who introduced Daniels at the Willard InterContinental Hotel, just two blocks down Pennsylvania Avenue from the White House. “Because, you know, you have the conventional campaigns. You’ve got all the consultants. You’ve got things you can do and can’t do. It’s pretty well, many times, scripted. But Mitch has always been a person that would think outside the box. And that’s why, I think, he’s been tremendously successful in Indiana.”

 

remember ROss Perot, who you could call the ultimate tea party candidate?

 

 

independent candidate Ross Perot, who led what some see as a precursor to today's tea party movement, proposed a 50-cent-a-gallon tax on gasoline to help eliminate the federal budget deficit and reduce consumption.

 

What I don't get from some of you and some far right conservatives is that we talk about tackling the deficit and yet we want to permanently extend the Bush Tax cuts , specially considering that it adds $4 Trillion to deficit over a ten year period. We have a debt problem and yes it's mainly because of SPENDING!! But, it's all hands on deck time, and as Mitch Daniels says, "it's time to have grown-up conversations".

 

 

If you think that the paramount problem for the country is the debt, and we’ll never get on top of it without really robust growth, one of the things you want is a very different, more pro-growth tax system,” Daniels told POLITICO. “And a quarter century ago, (Kahn) was writing about one. That’s all. There are other ways to get at it."

 

“The point here is: think about solutions, think about outcomes,” Daniels added, when pressed on whether he’d back oil tariffs.

 

Mitch Daniels is a intellectual powerhouse when it comes to budgetary issues, the guy has a proven track record, he realizes that we have a major debt problem and he understands that in order to solve structural problems we need structural solutions.

 

It's unfortunate guys like Romney and Daniels won't be able to survive a primary because all the energy is on the far right and in these primaries someone like a Palin would most likely be the odds on favorite, in which she would have very little chance in winning the 2012 elections.

Edited October 15, 2010 by Magox

[ExiledInIllinois]

Close the locks down in Illinois and see where the whole economy of Northern Indiana heads... Right down the tubes... Just sayin' Mitch.

 

Laugh all you want... I actually want to see it happen... So I can say to you dolts... I told you so.

 

"Indiana Gov. Mitch Daniels opened the door Thursday to supporting both a value added tax and a tariff on imported oil, bold proposals that could cause trouble for him with conservatives as he flirts with a long-shot bid for the presidency."

 

That red part above? Hmmmmm... What is that about?

Edited October 15, 2010 by ExiledInIllinois

[BB27]

Yeah, higher taxes is definately the answer:blink:

 

And a truce implies that the other side will abide by it.........not gonna happen. We will honor a truce until they attack us again, they will just use the truce as an opportunity to train and plan for the next attack.

[Magox]

Close the locks down in Illinois and see where the whole economy of Northern Indiana heads... Right down the tubes... Just sayin' Mitch.

 

Right, people are going to run out of the state that has produced the best surplus with one of the best unemployment rates and lowered the cost of healthcare to Illinois . You're killing me

[Gene Frenkle]

How refreshing to see a Republican who doesn't just think from his (or her) gut.

 

I'd consider voting for a guy like that. Romney on the other hand...

[Magox]

Yeah, higher taxes is definately the answer:blink:

 

And a truce implies that the other side will abide by it.........not gonna happen. We will honor a truce until they attack us again, they will just use the truce as an opportunity to train and plan for the next attack.

I guess you missed the part where he said only on the condition of a proposed flat tax (as opposed to the progressive income tax code) and elimination or reduction of capital gains taxes.

 

yup, we aren't ready for a "grown-up conversation".... That is for sure....

 

 

And a truce implies that the other side will abide by it.........not gonna happen. We will honor a truce until they attack us again, they will just use the truce as an opportunity to train and plan for the next attack.

 

What the hell does that mean? who is going to attack us? The libs or the baptists?

[ExiledInIllinois]

Right, people are going to run out of the state that has produced the best surplus with one of the best unemployment rates and lowered the cost of healthcare to Illinois . You're killing me

 

 

I said you would laugh, didn't I? The picture out of Indiana isn't pretty. Yes, they wil run out of state when the cost of transportation jumps through the roof.

 

Why does Indiana have low umemployment?

 

"Indiana's three-port system serves the world's most productive industrial and agricultural region and relies on a combination of strategic location, specialized facilities and most importantly intermodal connections such as the Chicago locks to do so," said Jody Peacock, director of corporate affairs for the Ports of Indiana. "The port and maritime activity on the Indiana lakeshore are responsible for 104,567 total jobs, $14.2 billion of economic activity and $567 million of state and local tax revenue. The Chicago locks are an essential piece of this infrastructure, and are vital to the overall economic health of Indiana's lakeshore economy. Not to mention, the locks directly contribute to $1.9 billion in economic activity to the regional economy and 17,655 jobs themselves."

 

 

Impact Study

 

How refreshing to see a Republican who doesn't just think from his (or her) gut.

 

I'd consider voting for a guy like that. Romney on the other hand...

 

Why should he think from his gut... He has Indiana sitting in the catbird seat.

Edited October 15, 2010 by ExiledInIllinois

[TPS]

I just had a conversation with TPS yesterday about our trade deficit problems. I argued that the currency issue between us and China is virtually a non sequitur. Yes it does play a role but doesn't come close to structurally solving the problem. I always talk about structural solutions that is what I focus on. Mitch Daniels is proposing that we tackle this problem.

I agree the trade deficit thingy is a structural problem, but not in the way you view it--as an over-consumption problem--that's simplifying it as well. The middle/lower classes, especially those with families, won't change consumption based upon a VAT because they spend everything they earn. The structural issue is that we have ensured they shop at place like Walmart, and that's where most of the trade def with China comes from. Why? Because we don't mass produce most of those products domestically anymore. That's the problem I have with the currency issue: even if the yuan appreciates, all that will happen is that Walmart will buy in other asian or Latam countries that haven't appreciated.

 

On a more radical note, why do we need american households to save more? There certainly is NO lack of funds in US financial markets right now, but there is a lack of demand in goods markets.

[Magox]

I agree the trade deficit thingy is a structural problem, but not in the way you view it--as an over-consumption problem--that's simplifying it as well. The middle/lower classes, especially those with families, won't change consumption based upon a VAT because they spend everything they earn. The structural issue is that we have ensured they shop at place like Walmart, and that's where most of the trade def with China comes from. Why? Because we don't mass produce most of those products domestically anymore. That's the problem I have with the currency issue: even if the yuan appreciates, all that will happen is that Walmart will buy in other asian or Latam countries that haven't appreciated.

 

On a more radical note, why do we need american households to save more? There certainly is NO lack of funds in US financial markets right now, but there is a lack of demand in goods markets.

It is an over-consumption problem. And yes, the middle/lower class will change their consumption patterns. Wrong on both counts....

[/dev/null]

VAT in place of current system is worth considering

 

VAT on top of current system is a tax hike

[3rdnlng]

VAT in place of current system is worth considering

 

VAT on top of current system is a tax hike

 

Neal Boortz's "Fair Tax" is the way to go. No multi-level hidden taxes. Just a national sales tax and get rid of all other income taxes.

[Magox]

I said you would laugh, didn't I? The picture out of Indiana isn't pretty. Yes, they wil run out of state when the cost of transportation jumps through the roof.

 

Why does Indiana have low umemployment?

 

"Indiana's three-port system serves the world's most productive industrial and agricultural region and relies on a combination of strategic location, specialized facilities and most importantly intermodal connections such as the Chicago locks to do so," said Jody Peacock, director of corporate affairs for the Ports of Indiana. "The port and maritime activity on the Indiana lakeshore are responsible for 104,567 total jobs, $14.2 billion of economic activity and $567 million of state and local tax revenue. The Chicago locks are an essential piece of this infrastructure, and are vital to the overall economic health of Indiana's lakeshore economy. Not to mention, the locks directly contribute to $1.9 billion in economic activity to the regional economy and 17,655 jobs themselves."

Even if they do benefit because of the port, how is it that before he got there, that they had a deficit and now they have a surplus? That port was there before he got there wasn't it? The guy before Mitch Daniels had similar set of circumstances yet Mitch Daniels paid off the states outstanding debts, doubled venture capital investment in the state and reduced the number of government jobs by 15 percent and lowered health care costs. Why wasn't anyone else able to do that?

 

I know it kills it you that the GOP governor next door was able to do everything that your elected leaders from your state have never been able to do, like balancing a budget.

Edited October 15, 2010 by Magox

[TPS]

It is an over-consumption problem. And yes, the middle/lower class will change their consumption patterns. Wrong on both counts....

Lower/middle class households will continue to buy clothes, toys and electronics from asia because we don't mass produce them in the US.

A VAT is a way to shift the tax burden onto those lower income households, and yes it will lower consumption as that VAT% of income normally spent on goods is transferred to the government--e.g. a 10% VAT will transfer 10% of the income from households who consume all income to the govt. This will also help the trade def, as these households are consuming less of all goods, including Walmart's.

 

At some point, there will be a day of reckoning for the govt, and the battle right now is to determine who takes the biggest hit--the top 10%, or the rest of us...

[DC Tom]

At some point, there will be a day of reckoning for the govt, and the battle right now is to determine who takes the biggest hit--the top 10%, or the rest of us...

 

As though, when the fiscal day of reckoning comes for the government, you can allocate the pain to only a segment of the US populace.

[TPS]

As though, when the fiscal day of reckoning comes for the government, you can allocate the pain to only a segment of the US populace.

Yes, which is why I said it's about who takes the biggest hit--all will be, but some classes more than others.

[3rdnlng]

Yes, which is why I said it's about who takes the biggest hit--all will be, but some classes more than others.

 

The "Fair Tax" rebates money that would have normally been a deduction or credit up to a certain amount. That allows the lower income people to not have a tax increase.

[Magox]

Lower/middle class households will continue to buy clothes, toys and electronics from asia because we don't mass produce them in the US.

A VAT is a way to shift the tax burden onto those lower income households, and yes it will lower consumption as that VAT% of income normally spent on goods is transferred to the government--e.g. a 10% VAT will transfer 10% of the income from households who consume all income to the govt. This will also help the trade def, as these households are consuming less of all goods, including Walmart's.

 

At some point, there will be a day of reckoning for the govt, and the battle right now is to determine who takes the biggest hit--the top 10%, or the rest of us...

You are suggesting that it primarily shifts the burden to lower income households. A couple things that you are missing, one that VAT taxes that are being discussed would exclude the essentials such as food, clothing and educational materials... So in actuality it wouldn't shift the tax burden as much as you suggest.

 

Two, what many people fail to realize is that this is a way to shift consumption patterns and gives incentives for saving. I can tell you this right now, QE policies such as Krugman and Fed members are endorsing makes this trade deficit issue even worse. QE crushes savings rates and two provides incentives for further consumption which of course are two factors that inhibit growth through larger trade deficits.

 

People don't realize that the difference between what we import to what we export is a major factor in lowering our GDP growth. It serves as a huge negative and addressing the currency situation with China wouldn't nearly have the impact that they claim.

[Rob's House]

I've been running a trade deficit with the liquor store for quite some time, and thus far it's working out for both of us.

[Magox]

I've been running a trade deficit with the liquor store for quite some time, and thus far it's working out for both of us.

It looks like the guy on your profile pic has been running a trade deficit with McDonalds and probably along with his health insurer.

[ExiledInIllinois]

Even if they do benefit because of the port, how is it that before he got there, that they had a deficit and now they have a surplus? That port was there before he got there wasn't it? The guy before Mitch Daniels had similar set of circumstances yet Mitch Daniels paid off the state's outstanding debts, doubled venture capital investment in the state and reduced the number of government jobs by 15 percent and lowered health care costs. Why wasn't anyone else able to do that?

 

I know it kills it you that the GOP governor next door was able to do everything that your elected leaders from your state have never been able to do, like balancing a budget.

 

Even in the last 5 years, intermodal has been changing drastically... Again, even in those few years... Indiana has gained the catbird seat while others lost it. Of course a place like BFLO was THEE first to lose it. Remember what your real estate agent says: "Location. location, location." Why do you really think places like Michigan are trying to get that back again after a streamlined world has made them irrelavent. This has been a zero-sum game. When one player loses, somebody else wins... That is why others can't do it... That some players want to tear the winners down. You'll see if the enviros get their way.

Edited October 15, 2010 by ExiledInIllinois