Pajamas Media: The VAT Man Cometh: It Will Happen. How Bad Is It?

Ahh! The old Beltway. Round and roun she goes …

Meant to add:

Life’s a crap shoot. Every once in a while we run out of crap to shoot so we need to hire Great Statesmen like our very own Bama Lama tp shovel more our way.

Roun’ an roun’ she goes… unless you move she’ll sto(m)p on your toes.

I could get behind the VAT, in lieu of, but not in addition to, income tax.

There are 3 basic tax revenue sources: income, outgo, and static wealth.

Income taxes get you as the money comes in, VAT or sales taxes get you when you spend, and property taxes get you when you just sit there quietly.

The problem with income tax is defining income. The vast IRS Code is devoted to the subject, which is arcane and riddled with loopholes for “special interests” — those successful at bribing legislators.

Sales taxes are somewhat simpler, although the loophole train adds boxcars every day.

Property taxes are based on appraisals, which are complicated. There are loopholes for the “special” people there, too. Death taxes are a form of property tax levied on the freshly deceased. You can’t take it with you, or leave it to your heirs.

This blog is devoted to the study of uncertainty, so it is nice to discuss solid certainty once in awhile. “In this world nothing can be said to be certain, except death and taxes.” — Ben Franklin, 1817.

Mike D., add imports, gasoline, and “sins” to your list.

At least no one is obligated to pay the sin tax.

I would prefer to tax consumption over income. Why tax people for saving money? I also hate the payroll tax. Property taxes make sense to me. People with property have the most to loose, and benefit from the security that government provides. While I am on this rant, the number of taxes is overwhelming. Tax me once and be done with it.

One frustration for me is the constant tinkering. As much as people blast the gridlock it creates, I completely support the California policy of supermajorities for tax increases.

And for all the talk of taxation — and for that matter for all the talk of deficits, they miss the point. We should be concerned with the money that is spent and less worried about how that spending is financed!

The VAT is tempting to feds because in their simple minds it is an untapped vein of high-grade ore. The fact that many (most?) states have already staked healthy claims to the minefield is merely a trifling detail. They control the sheriff, so when push comes to shove they think states will be forced to either move over or out. Has the tipping point already past? Are we inexorably headed into anarchy?

I am favor of all federal, state and local revenues coming from a VAT but I have always opposed it becasue i was sure that the democrats (and a lot of republicans) would force us to have both VAT, income, sales, . . . plus anything else they can think of taxes too.

Mike D. — Franklin died in 1790? And for some reason I recall the quote about death and taxes being Shakespeare, but I could be wrong about that.

The talk of taxes rising, discouraging, just as so many of us are about to collect retirement — isn’t it fun to have government constantly change the rules? It will turn out to have been cheaper to pay the taxs and make the investments in after tax dollars probably, but then most people would not have saved at all.

Tax what you don’t want not what you want.

If you want savings don’t tax savings. If you want people to have larger incomes don’t tax income. If you want people to own real property do not tax it.

That of course leaves consumption and since we don’t care as much about how much people consume lay the tax here. But the problem is not as much the source of the tax as spending.

We will likely need to limit congresses hands in the spending arena via Constitutional Amendment. It clearly cannot do so itself.

Since 1946 we have consistently been able to recover tax revenues of 19% of GDP. We spend more nearly every year, today nearly 10% more. The deficit and/or debt are only paid down when GDP grows rapidly and outstrips spending.

I would suggest a spending limit of 19% of GDP provide the debt is 15% or less of GDP. If debt were greater, spending would be limited to 15% of GDP. During a time of declared war, congress could annually authorize excess limit spending by 2/3’s vote of congress. This would be limited to a period not to exceed 4 years, after which excess spending would need to be authorized by a referendum to the voters.

Raising the spending limit from 15% of GDP would require a 2/3’s vote of congress. Lowering the spending limit would only require a 50% vote of congress.

These limits would be for all federal revenue from whatever source derived not just income or consumption taxes but fees and tariffs as well.

While I would prefer a consumption tax for economic reasons, the spending limit and debt reduction features are more important that the tax source at this point.

Before Obama became President, I would have considered this comment to be absurd. But Obama is proving to be a destructive catalyst to the second way. He is also opening the electorate to acceptance of the third way. How ironic if Obama’s legacy is dismantler of the second way.

Mark Sherman