Is a National Sales Tax in Our Future?

By Mary Pilon

easyfairs.com

More for eggs?

A debate in Washington could lead to you paying more for everything.

The possible tradeoff? Better health care for all.

Policymakers are debating a value-added tax, or VAT. Put simply, it’s a national sales tax. The concept was dismissed as a nonstarter among policymakers in the past, but is now wiggling its way into political conversation, according to the Washington Post.

From the WaPo:

A VAT is a tax on the transfer of goods and services that ultimately is borne by the consumer. Highly visible, it would increase the cost of just about everything, from a carton of eggs to a visit with a lawyer. It is also hugely regressive, falling heavily on the poor. But VAT advocates say those negatives could be offset by using the proceeds to pay for health care for every American — a tangible benefit that would be highly valuable to low-income families.

Some debate that end result, the article says, and argue that the details could work out differently in practice in the U.S. One argument claims that those who are wealthier tend to consume more, and therefore would pay more VAT.

Although the VAT is only an idea at this point and unlikely to hit taxpayers anytime soon, it’s interesting to note that it’s now part of the conversation and that top VAT advocates are now represented in discussions. Especially now as the federal government looks for new ways to create revenue.

Europeans are no strangers to the VAT. It started in France in the 1950s and has spread to other European countries as well as Australia and India. Europeans even have to pay the VAT on U.S.-based things such as memberships on Second Life. The VAT has experienced success in countries where collecting taxes based on income is difficult, such as developing nations.

Fortune offers an example of how the VAT could figure into the purchase of a car:

Take, for instance, a car with a sticker price of $30,000 and a value-added rate of 10%. Ford might buy its steel and other materials for $8,000 plus $800 in a VAT tax. A dealer then pays $25,000 plus a $2,500 tax for the finished vehicle. Ford takes an $800 credit for the tax it already paid and sends $1,700 to the government. A buyer then pays $30,000 for the SUV and $3,000 in taxes. The dealer collects the $3,000, takes a credit for the $2,500 worth of taxes already paid, and sends $500 to tax authorities. Ultimately, the government pockets $3,000, or 10% of the retail price of the car, in taxes.

Source:  WSJ Blog – The Wallet

The concept of the VAT is not a new thing… but when it has been looked at before it was to replace Federal Income Tax not in addition to, which is what is being considered presently.  It is a hidden tax source and it is a bad thing unless it replaces the Federal Income Tax.

Cap and Trade (tax) – BAD

the VAT unless it replaces National Income Tax – BAD

Remember Obama’s campaign promise of no tax increases for people who make under $250,000 and hold him to it!!

It there was ever a time to pay attention to what is going on… it is now!

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About Ask Marion

I am a babyboomer and empty nester who savors every moment of my past and believes that it is the responsibility of each of us in my generation and Americans in general to make sure that America is as good or even a better place for future generations as it was for us. So far... we haven't done very well!! Favorite Quotes: "The first 50 years are to build and acquire; the second 50 are to leave your legacy"; "Do something that scares you every day!"; "The journey in between what you once were and who you are becoming is where the dance of life really takes place". At age 62 I find myself fighting inoperable uterine Cancer and thanks to the man upstairs and the prayers from so many people including many of my readers from AskMarion and JustOneMorePet... I'm beating it. After losing our business because of the economy and factors related to the re-election of President Obama in 2012 followed by 16-mos of job hunting, my architect-trained husband is working as a trucker and has only been home approximately 5-days a month since I was diagnosed, which has made everything more difficult and often lonely... plus funds are tight. Our family medical deductible is 12K per year for two of us; thank you ObamaCare. But thanks to donations from so many of you, we are making ends meet as I go through treatment while taking care of my father-in-law who is suffering from late stage Alzheimer's and my mother-in-law who suffers from RA and onset dementia as well as hearing loss, for which there are no caretaker funds, as I continue the fight here online to inform and help restore our amazing country. And finally I need to thank a core group of family, friends, and readers... all at a distance, who check in with me regularly. Plus, I must thank my furkids who have not left my side through this fight. You can see them at JustOneMorePet.
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