The Silent Killer: Obama's VAT Proposal

Townhall.com
Dick Morris and Eileen McGann
Saturday, April 24, 2010

When conservatives like Neal Boortz proposed the "fair tax" (a levy on consumption, not on income), we should have known that the Barack Obama left would seize on the proposal not as Boortz intended it to be -- a replacement for the income tax -- but as an addition to it. Now Obama has let it be known that the value-added tax, or VAT, is "on the table" as he casts about for taxes to lock in his gigantic levels of federal spending.

At stake, of course, is our free-market system. When Obama took office, federal, state and local spending accounted for 30 percent of gross domestic product. Now it is up to 35 percent, and when health care is fully implemented, it will rise to above 40 percent. But taxes are still below 30 percent. The difference is the deficit, now grown to 10 percent of our GDP.

If our government is to continue spending 40 percent of our GDP, we will morph into the European model of a socialist democracy. But if we can roll the spending back to 30 percent, while holding taxes level, we will retain our free market system.

In 2011, we will have three choices:

-- Raise taxes up to 40 percent.

-- Cut spending down to 30 percent.

-- Or half and half.

Now Obama proposes the ultimate step to convert us into a European nation: the VAT.

The VAT is levied at each stage of a commercial transaction. So the raw material seller charges the manufacturer, who then adds a new tax onto the price when he sells his finished product to a retailer, who then adds on a new levy when he sells it to a customer.

And the customer doesn't know it.

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