VAT Tax

[TPS]

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.

If the VAT comes to pass, the details remain to be worked out...of course.

 

Not all households behave the same. Those in the bottom 60-70% save 0. It's not really a choice; they consumer all of what they earn to pay the bills. The way a VAT changes "savings" is to increase "public savings" i.e. tax revenues. Conservatives love to point out that the bottom ??% don't pay any income taxes, so ANY VAT tax will be an increase in the overall taxes they pay. Regardless of whether or not there is a VAT those households will still spend all of their income. If QE crushes savings rates, then why has been rising?

 

I agree with the last point, all that will happen is that we'll import those goods from some other country since we don't produce them. Of course, it will show up in the data that our trade deficit with China fell, "caused by" the appreciating yuan.

[Magox]

If QE crushes savings rates, then why has been rising?

 

 

Savings rates rose not because of QE but because of risk aversion. Big difference....

[RkFast]

Savings rates rose not because of QE but because of risk aversion. Big difference....

 

What do virgins have to do with any of this, conner?

[Rob's House]

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

He was in bad shape, but he gave up his regular apples for organic ones and his employer passed out jump ropes so now he's a picture of good health.

[Pine Barrens Mafia]

I am against a VAT unless it's accompanied by a scrapping of the income tax system. Taxing people's work is immoral. Taxing people's consumption is not.

[Magox]

I am against a VAT unless it's accompanied by a scrapping of the income tax system. Taxing people's work is immoral. Taxing people's consumption is not.

Of course there would have to be an offset. However in my view in order for us to avoid a debt crisis there will have to be additional taxes, whether it's allowing the entirety of the Bush tax cuts to expire or some other means of generating revenues. At this stage of the game, reducing spending isn't enough.

[Dante]

Only way I would consider accepting a VAT is if they scrapped the current system and went to a flat tax. A low number flat tax at that. Otherwise, no way I go for another tax like the gst in Canada. Had enough of that crap in my life. Honestly, I think the entire notion that the only way to solve fiscal debt through taxation is misguided. The only way to do it is address the problem itself. Huge government bureaucracy's and the dependent class they rely on to keep them in power. jmho

Edited October 15, 2010 by Dante

[Magox]

Glad to hear at least some of you are open to a VAT tax, I was just listening to Mitch Daniels on CNBC and they stated that not only did he turn a large deficit into a huge budget surplus but he decreased property taxes by 30%....

 

 

He has accomplished some pretty impressive feats since he's taken over Indiana.

[Pine Barrens Mafia]

Of course there would have to be an offset. However in my view in order for us to avoid a debt crisis there will have to be additional taxes, whether it's allowing the entirety of the Bush tax cuts to expire or some other means of generating revenues. At this stage of the game, reducing spending isn't enough.

 

 

No, cutting spending would be enough. You cut enough spending until it is equal or less than tax reecipts. Don't care where you do it.

[Rob's House]

No, cutting spending would be enough. You cut enough spending until it is equal or less than tax reecipts. Don't care where you do it.

Well said, Sr. Six Pack. The beauty of your plan is its simplicity. Once a plan gets too complex everything can go wrong.

 

This article sheds some light on the reality of tax revenues per Hauser's law. Magpie should check this out too.

 

http://www.heritage.org/Research/Commentary/2010/05/Tax-Hikes-Wont-Raise-Revenue

[Magox]

No, cutting spending would be enough. You cut enough spending until it is equal or less than tax reecipts. Don't care where you do it.

No, it's not enough! You guys don't realize how deep in debt we are and the ramifications of what that debt can cause. Maybe if we weren't in such deep **** then we could just point to spending but that's not where we are. Spending is the main problem no rational person disputes that but our taxing policy doesn't hurt, the Bush Tax Cuts fall on the wrong side of the Laffer Curve. What part of adding $4 Trillion to the National debt over a 10 year period do you not understand?

 

You guys take your cues from the talkingpoint spin doctors. Enough of the simpleton talk.

 

The funny thing is that ROB provided a link about a month ago regarding the Laffer Curve and it was suppose to back up his argument in which it didn't, it actually went against what he was trying to prove. Then he links this garbage of an article regarding "Hauser's law" that totally dismisses the Laffer Curve . Jesus Rob, do you actually think for yourself? Which is it, do you believe in the Laffer Curve or not?

 

Also, this article presumes that you add a VAT tax on top of existing taxing policy, no one here is suggesting such a thing.

 

 

Now Give me specifics of $1.4 Trillion a year in where you can cut spending. SPecifics. I want to hear from you two geniuses.

 

 

$1.4 trillions worth

Edited October 16, 2010 by Magox

[Pine Barrens Mafia]

No, it's not enough! You guys don't realize how deep in debt we are and the ramifications of what that debt can cause. Maybe if we weren't in such deep **** then we could just point to spending but that's not where we are. Spending is the main problem no rational person disputes that but our taxing policy doesn't hurt, the Bush Tax Cuts fall on the wrong side of the Laffer Curve. What part of adding $4 Trillion to the National debt over a 10 year period do you not understand?

 

You guys take your cues from the talkingpoint spin doctors. Enough of the simpleton talk.

 

The funny thing is that ROB provided a link about a month ago regarding the Laffer Curve and it was suppose to back up his argument in which it didn't, it actually went against what he was trying to prove. Then he links this garbage of an article regarding "Hauser's law" that totally dismisses the Laffer Curve . Jesus Rob, do you actually think for yourself? Which is it, do you believe in the Laffer Curve or not?

 

Also, this article presumes that you add a VAT tax on top of existing taxing policy, no one here is suggesting such a thing.

 

 

Now Give me specifics of $1.4 Trillion a year in where you can cut spending. SPecifics. I want to hear from you two geniuses.

 

 

$1.4 trillions worth

 

Eliminate the Dept of Education (including student loans)

Raise the mandatory retirement age for SS to 75

Cut Medicaid spending in half

Eliminate Obamacare

Slash DoD spending by at least a quarter

Every department of the Federal gov't should take a 50% slash in funding.

Reform the MANDATES for SS/Medicare. These should be reduced to a discretionary spending status, and radically slashed so that only the poorest of the poor receive benefits.

 

And that's just a start. I'm talking AUSTERITY.

 

What this government needs is an intervention, a drastic, radical rethinking in spending. ALL discretionary spending must stop until the crisis is resolved, and Social Security/Medicare need to be slashed drastically. The Boomers (the idiots who put this country int his mess) need to feel the most pain in this process.

Edited October 16, 2010 by joesixpack

[Magox]

Eliminate the Dept of Education (including student loans)

Raise the mandatory retirement age for SS to 75

Cut Medicaid spending in half

Eliminate Obamacare

Slash DoD spending by at least a quarter

Every department of the Federal gov't should take a 50% slash in funding.

Reform the MANDATES for SS/Medicare. These should be reduced to a discretionary spending status, and radically slashed so that only the poorest of the poor receive benefits.

 

And that's just a start. I'm talking AUSTERITY.

 

What this government needs is an intervention, a drastic, radical rethinking in spending. ALL discretionary spending must stop until the crisis is resolved, and Social Security/Medicare need to be slashed drastically. The Boomers (the idiots who put this country int his mess) need to feel the most pain in this process.

I agree we need austerity, but you just can't cut the Dept of Education. It definitely needs to be scaled back but it's nonsensical to eliminate it. Maybe a phasing out of sorts. This has Glenn Beck written all over it.

 

Eliminating Obamacare is something that I believe has to happen but that hasn't added a red cent to our current debt.

 

Cut Medicaid spending in half? Great! Not feasible, there would be millions and millions of people left uninsured.

 

Raising S.S to 75 WOW!!! Talk about extreme! It needs to be raised but not 75, that's ridiculous sorry. Plus, just so you know, as of right now, talking about the current $1.4 Trillion national debt, S.S isn't playing a significant role in that whatsoever. That is a future problem that needs to be reformed.

 

Slash DOD spending by a quarter, mmmm maybe, I'd have to look further into it, it definitely needs to be slashed but a quarter may be too much, not sure...

[jjamie12]

Eliminate the Dept of Education (including student loans)

Raise the mandatory retirement age for SS to 75

Cut Medicaid spending in half

Eliminate Obamacare

Slash DoD spending by at least a quarter

Every department of the Federal gov't should take a 50% slash in funding.

Reform the MANDATES for SS/Medicare. These should be reduced to a discretionary spending status, and radically slashed so that only the poorest of the poor receive benefits.

 

And that's just a start. I'm talking AUSTERITY.

 

What this government needs is an intervention, a drastic, radical rethinking in spending. ALL discretionary spending must stop until the crisis is resolved, and Social Security/Medicare need to be slashed drastically. The Boomers (the idiots who put this country int his mess) need to feel the most pain in this process.

 

What, do you suppose, are the expected oucomes of doing everything you've just cited above? What is the downstream effect on jobs, growth, etc? Well... forget downstream effects... What do you suppose are the immediate consequences of the following:

 

Cutting the DoD by 25%

Cut Medicaid Spending in half

Every department of the federal government takes a 50% cut

Eliminating the Dept. of Education (and Student Loans)

Edited October 16, 2010 by jjamie12

[Magox]

What, do you suppose, are the expected oucomes of doing everything you've just cited above? What is the downstream effect on jobs, growth, etc? Well... forget downstream effects... What do you suppose are the immediate consequences of the following:

 

Cutting the DoD by 25%

Cut Medicaid Spending in half

Every department of the federal government takes a 50% cut

Eliminating the Dept. of Education (and Student Loans)

Good point, I didn't even get into the economic ramifications of such draconian measures. Millions of jobs would be lost in education, healthcare and defense related jobs including manufacturing jobs.

[Magox]

This is exactly what I was talking about, some of the far right yahoos condemn the VAT that is being discussed by Mitch Daniels.

 

 

Indiana Gov. Mitch Daniels has now managed to alienate prominent social and fiscal conservatives.

 

The potential presidential candidate’s already rocky path to the Republican nomination became more treacherous this weekend after the country’s most powerful anti-tax activist and one of the House’s most respected fiscal conservatives disparaged Daniels’ openness to considering a controversial value added tax as part of a larger tax system overhaul.

 

“This is outside the bounds of acceptable modern Republican thought, and it is only the zone of extremely left-wing Democrats who publicly talk about those things because all Democrats pretending to be moderates wouldn’t touch it with a 10-foot poll,” Americans for Tax Reform President Grover Norquist told POLITICO. “Absent some explanation, such as large quantities of crystal meth, this is disqualifying. This is beyond the pale.”

 

It's this sort of thinking and rhetoric that will never allow us to advance with intelligent dialogue. When Mitch Daniels said that he believed we were ready for a "grown-up conversation" he was wrong, and I knew it. The Conservative Echo Chamber of "NO VAT, JUST CUT SPENDING" wins politically, the reality is that it will take much more than spending and some creative outside of the box thinking to get this country going again and put us in sound fiscal position.

 

 

Even fiscal conservatives who defend Daniels as one of them—at least, for the most part—say it was a boneheaded political move if he’s seriously thinking about jumping into next year’s presidential contest. If he actually meant nothing by it, it’s the kind of amateur mistake that it’s quite hard to envision the real pros, like Mitt Romney or Tim Pawlenty, making.

 

Politically he's screwed, social conservatives such as Palin and Huckabee will condemn him for his "truce" on social issues comment and now "fiscal" bonehead conservatives like Grover NOrquist criticize him for this comment, no way the far right will get behind him, even though substantively speaking, there is no one with the fiscal intellect and track record that can come close to touching Mitch Daniels.

 

“I don’t want to go out and attack him because I think what he was doing was engaging in a thought experiment,” said Max Pappas, the vice president for public policy at tea party-linked FreedomWorks. “The last thing I want to do is encourage politicians to be less thoughtful and just deliver the talking points, like most of them do…It wasn’t a politically astute thing (to say), and unfortunately politics doesn’t always encourage the best approach to trying to find solutions.

 

“If he put forward a proposal that called for a value added tax, than that would be a different story,” he added.

 

Like I've been saying, too many people including many on this board get their cues from the conservative talking point maestros and it diminishes any possibility of having a substantive discussion regarding this countries future.

 

 

Daniels’ intimation that the whole tax system could be replaced reminds people involved in the already-raging silent primary of his background as chief executive at the Hudson think tank, where he could remove himself from the realities of governing.

 

“This is where Daniels is going to catch flak: I know exactly what he’s talking about. I speak wonk. The conservative base that’s going to be reading that is not going to understand that. They’re just going to see the headline: ‘Daniels open to VAT,’” said Curtis Dubay, senior tax policy analyst at the Heritage Foundation. “It could be an improvement but with a giant, huge caveat, which is that it has to replace entirely the income tax system.”

 

It's too bad, instead someone like Sarah Palin will probably get the nod in the GOP primaries, in which of course she'll get crushed by Obama.

[Pine Barrens Mafia]

I agree we need austerity, but you just can't cut the Dept of Education. It definitely needs to be scaled back but it's nonsensical to eliminate it. Maybe a phasing out of sorts. This has Glenn Beck written all over it.

 

Why not? It's a pointless arm of the government and a waste of hundreds of billions of dollars. Education is a local service, the feds have no business getting involved.

 

Cut Medicaid spending in half? Great! Not feasible, there would be millions and millions of people left uninsured.

 

Too bad. Health insurance isn't a right guaranteed by the constitution. Keep it for the most desparate of the desparate, eliminate it for the rest.

 

Raising S.S to 75 WOW!!! Talk about extreme! It needs to be raised but not 75, that's ridiculous sorry. Plus, just so you know, as of right now, talking about the current $1.4 Trillion national debt, S.S isn't playing a significant role in that whatsoever. That is a future problem that needs to be reformed.

 

SS accounts for 20+% of federal expenditures. 20%. It needs radical solutions. I don't care who suffers. There will be suffering to create a fix, everyone needs to pay the piper.

 

Slash DOD spending by a quarter, mmmm maybe, I'd have to look further into it, it definitely needs to be slashed but a quarter may be too much, not sure...

 

There's no such thing as cutting TOO much spending. The federal government has over-reached for a century, it's time to cut it back to where it was before the overreaching began. We endure enough in taxation. Fiscal responsibility is the only fix.

[jjamie12]

Too bad. Health insurance isn't a right guaranteed by the constitution. Keep it for the most desparate of the desparate, eliminate it for the rest.

Then what happens to the people who were covered by Medicaid, but are now uncovered?

[Magox]

Why not? It's a pointless arm of the government and a waste of hundreds of billions of dollars. Education is a local service, the feds have no business getting involved.

 

 

First off, it isn't "a pointless arm of the government", it is inefficient but not pointless... If we were to eliminate it completely education would become worse than it already it is and hundreds of thousands of jobs would be lost along with scholarships and etc. Terrible idea.

 

Too bad. Health insurance isn't a right guaranteed by the constitution. Keep it for the most desparate of the desparate, eliminate it for the rest.

 

"too bad" huh? Nice and very compassionate of you. Not to mention the amount of doctors services and hospitals and jobs that would be affected. Beyond a terrible idea.

 

SS accounts for 20+% of federal expenditures. 20%. It needs radical solutions. I don't care who suffers. There will be suffering to create a fix, everyone needs to pay the piper.

 

Still doesn't address the current fiscal situation. Our ballooning national debt has nothing to do with Medicare or S.S as of yet. It needs to be reformed no doubt, but not in the way you propose. Also, "I don't care who suffers". Jesus Joe, I thought you were a Christian, so on one hand you follow Jesus and his compassionate teachings yet on the other hand, in the real life when it comes to politics you come up with "too bad" and "I don't care who suffers". Not too "Christian" like of you Joe.

 

 

There's no such thing as cutting TOO much spending. The federal government has over-reached for a century, it's time to cut it back to where it was before the overreaching began. We endure enough in taxation. Fiscal responsibility is the only fix.

 

"There's no such thing as cutting TOO much spending." Man, it's this sort of thinking that won't allow us to have these real "grown up" conversations that we will need to get out of this hole. Yes, there is a such thing as too much cutting of spending. Balance, anything that wants a shot of having success requires balance. Right now our government spends way too much, so yes we do need to cut, but not in the draconian measures you suggest. Your line of thinking would lead us to the Greatest Depression. Right now, we need to cut and raise more revenues, the Bush Tax Cuts was not a fiscally conservative measure, it was actually very irresponsible and a true conservative who is conscience of the national debt would look to have this expire.

 

This is the problem with our country. People are so hardened in their views we can't have substantive dialogue to solve our nation's problems. The Echo Chamber dominates opinions and the masses flock towards these personalities and these talking points. It's just ridiculous and it makes me even more pessimistic than ever about our country. I just hope that moderation finds it's voice because these extreme views from both the right and left are ruining this country.

Edited October 16, 2010 by Magox

[Pine Barrens Mafia]

This is the problem with our country. People are so hardened in their views we can't have substantive dialogue to solve our nation's problems. The Echo Chamber dominates opinions and the masses flock towards these personalities and these talking points. It's just ridiculous and it makes me even more pessimistic than ever about our country. I just hope that moderation finds it's voice because these extreme views from both the right and left are ruining this country.

 

If you're in debt personally, what's the FIRST thing you should do? Should you run out and find a higher-paying job? or should you cut your expenditures? That's right, class, you cut your expenditures as radically as is necessary to make your pay last longer and to make real strides at getting out of the hole. Ergo, when it comes to your plan of raising taxes without radical austerity, I'm calling......

 

bull ****. What you're asking for is nothing less than a RADICAL increase in taxes without the austerity measures required to REDUCE spending. You will not functionally affect the debt without eliminating deficit spending. The only, ONLY way to do that is to cut out all that is not needed post-haste. The government wastes FAR too much money on things that are not its domain.

 

Moderation is what has us in this mess. Half-hearted measures, lip-service and pandering to the middle is what has ruined this country. Decades ago, there was a movement underfoot to MANDATE balanced budgets with a constitutional amendment. It failed because the crooks who run this country in Congress couldn'tbear the thought of sacrificing their golden calves and pet projects.

 

We have what we deserve as a country because we're more concerned about "feel-good" measures than we are about fiscal responsibility.

 

What, do you suppose, are the expected oucomes of doing everything you've just cited above? What is the downstream effect on jobs, growth, etc? Well... forget downstream effects... What do you suppose are the immediate consequences of the following:

 

Cutting the DoD by 25%

Cut Medicaid Spending in half

Every department of the federal government takes a 50% cut

Eliminating the Dept. of Education (and Student Loans)

 

There will be pain. We can either precipitate it or have it forced upon us by our debt-holders. Which do you prefer?