Taxing realities
Bookworm on Aug 04 2009 at 8:55 am | Filed under: Taxes
Democrats already plan to repeal the Bush tax cuts, but that won’t raise enough money. So they’re proposing an income tax surcharge on “the wealthy,” but that won’t raise enough either. Democrats have no choice but to soak the middle class because only they have enough money to finance the liberal dream of yoking the middle class to cradle-to-grave government entitlements.
Democrats have already taxed the middle class by raising cigarette taxes to pay for the children’s health-care expansion. They’re also teeing up average earners with their cap-and-tax energy bill. Mr. Obama had hoped that cap-and-tax would raise some $646 billion over a decade, but Democrats in the House had to give most of that away in bribes to business to pass their bill. To finance ObamaCare, they’re also proposing another 10-percentage-point increase in the payroll tax on firms and individuals that don’t purchase health insurance. But this won’t raise enough money either.
So waiting in the wings is the biggest middle-class tax increase of them all: a European-style value added tax, or VAT. This tax would apply to every level of production or service, and it is beloved by politicians in Europe because it raises so much money so easily without voters noticing. Ezekiel Emanuel, a White House aide and brother of Chief of Staff Rahm Emanuel, has advocated a 10% VAT to finance national health care. Look for a VAT to be one of the prominent options when Mr. Obama’s tax reform commission issues its report later this year.
The undeniable reality is that you can’t run a European-style welfare-entitlement state without European-style levels of taxation on the middle class (and eventually without low European-style growth and high jobless rates). It’s looking more and more like Mr. Obama’s no-middle-class-tax pledge was one of the greatest confidence tricks in American political history.
I lived in England under the VAT. It’s a heinous tax that destroys individual wealth and, in a vicious spiral, leaves people ever more dependent on the government they’re financing.
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Let’s see a show of hands for who wants another audio cast from Book!
I certainly do ; )
Just this AM on one of the financial blogs I read, they’re predicting dire stuff due to the fact that apparently people have stopped paying down their credit card debt. There seems to be a dichotomy between whether we’re entering a phase of inflation (money worth less) or depression (money worth more – people have less). One is predicting a tightening of credit – the result of a lot of default on the credit card debt – and a return to a cash economy (this is one who is predicting depression). If you add a VAT to this, I see the probability of a huge increase in the underground cash economy. Of course, the good news about that is that we’ll be on an equal footing with the illegals. We’ll enter a phase of “catch me if you can” as far as taxes go.
When we were looking for a business to buy, we naturally reviewed their tax returns for the last 3-5 years. Some of the returns were seriously weird – which the broker explained quite simply as businesses that only counted credit and checks when they counted sales. The cash simply “disappeared”. No accounting in the official books. When they wanted to sell the business, of course, then they had to boost their sales levels to make the business look attractive, and they did that by counting their cash sales.
Makes you wonder how they think they’ll control that…they’ll either lose out on the taxes, or they’ll have to hire _thousands_ of tax auditors. My guess is the latter. It increases the size of government and the dependence of the populace on the government for income. Hence it increases government control.
We could go Galt, but then you have the control imposed by the requirement to ID all livestock. There’s been some resistance to that, but I’m not sure how effective it is.
People are also being conditioned: if they hold off on payments, they’ll be rescued. It happened with mortgages and it happened with old cars, so why shouldn’t it happen with credit card debt too?
People used to be rewarded for paying off their obligations and keeping current with their lives. Now, the “good guys” in terms of personal budget and life management are being punished and the slackers (whether intentional or accidental slackers) are being rewarded. There’s a lesson there.
I know from my European experience that VAT taxes typically run 10-20% of the retail price on all consumer goods. That’s a FEDERAL tax that would come on top of State and Local taxes that are also in the process of being raised. So, in the midst of a serious recession cum depression, these whiz kids in Washington plan to stimulate (??) the economy by effectively reducing disposable income through massive price increases. Add inflation to the mix…
What is so interesting is that all these Lefty ideas such as a VAT tax, tobacco taxes, user fees, carbon taxes and the new mileage tax proposed in Congress today are all highly regressive taxes. They will most hurt the very working class poor these Lefty Democrats profess to champion. Like all good Leftists, they will destroy the very people that brought them to the dance. I should feel a certain schadenfreude about all this except that I happen to be sitting at the prow of the same Titanic as these Obama voters and the iceberg is looming dead ahead.
There’s a lesson there.
Elect the bottom 25% of the human species in terms of ability and ethics, and that’s what’s what.