American Elephants


Daniel Mitchell Explains the Value Added Tax, and Why It Should Be Opposed. by The Elephant's Child
October 15, 2009, 2:38 am
Filed under: Capitalism, Economy, Health Care, Taxes | Tags: , ,

Daniel Mitchell of the Cato Institute explains in the video above,  just what a Value Added Tax (VAT) is, and why it should be vigorously opposed.

Democrats believe that government does most things far better than they can be done by the private sector.  As far as that goes, they don’t particularly like the private sector.  They don’t like corporations, they don’t like business, they are opposed to the idea of profit which they feel is unfair.  They especially don’t like business executives, who make far too much money — that is, they make more than congressmen do.  They prefer to have government in charge.  This allows them to control things, and especially to use taxpayer money to finance worthy causes in their own states which will help them to get reelected.

You remember the TARP money, the $787 billion Stimulus Bill, the Auto Bailout, “Cash for Clunkers”,  taking over the car companies, AmeriCorps, and the yet-to-be-enacted Health Care Bill, the Climate Bill, the takeover of the Student Loan Program, the billions for Pakistan, the Smart Grid, the Amnesty Program, the high-speed rail system for the Midwest, the cash for appliances program, the second Stimulus Bill (to be called something else), new CAFE standards, and tax rebates for the folks at the bottom of the income pie who pay no taxes.  I expect I am forgetting some programs.

I’m sure that you realize that the government has no money of its own. (Not everybody does).  That means that all these exciting programs have to be paid for.  Everything starts with getting rid of the evil Bush Tax Cuts, which is a huge tax increase in itself.

The video above explains a Value Added Tax which is very appealing to Democrats. Daniel Mitchell lists some of the other taxes that Democrats have either enacted or are considering enacting, but the video passes by the list so quickly that you may not have time to absorb the enormity of it all.

  • Raise the top income tax rates.
  • Limit itemized deductions.
  • Increase capital-gains taxes and dividend taxes.
  • Raise the social security tax.
  • Tax employer-provided health benefits.
  • Tax drivers on their mileage.
  • Change the rules to raise the gift tax.
  • Restore the estate (death) tax to 45 percent.
  • Raise the cigarette tax by 62¢ a pack.
  • Raise taxes on beer, wine, liquor and soda.
  • Tax employer-provided cell phones.
  • Raise taxes on overseas corporate earnings.

There are a number of taxes proposed in the Baucus Bill (Senate Health Care), like taxing “Cadillac” health insurance plans; taxing medical equipment like wheelchairs, stents, dialysis machines, pacemakers and so on; but since the Baucus Bill exists only as a series of vague concepts, it’s all pretty wispy.  The Congressional Budget Office stuck some numbers on the Baucus Bill, but they are meaningless since there is no legislative language.

PricewaterhouseCooper and Heritage have looked at the CBO estimate and reject the idea that the bill will save money or reduce the deficit.  They say health insurance will cost more and wages will decline.   The Democrats are pulling some pretty sneaky tricks like estimating costs for the decade from 2010 to 2020 although health care doesn’t come into full effect until 2015, which makes it cheaper on paper, but phony. They are also proposing to take some expensive things out of the health care bill and tack them on somewhere else or in a separate bill so it won’t add to the cost of health care. Unethical, and a cheat.

But that is what you get when you start with the idea that things must be done by the government, and then work backwards from that, nipping and tucking and taxing.  It is a sleazy process.

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