Everything you buy is about to become 20% more expensive...
I'm not kidding. The latest idea out of Washington is to pay for its insatiable appetite for spending with what's called a "Value-Added Tax."
It's like a huge new national sales tax, on everything. In simple terms, the difference is that with a sales tax, the consumer pays it. With a "VAT," the manufacturer pays it. The consumer won't see it in the price on the shelf or on their receipt.
Politicians love this tax because it's a stealth tax... You can't see it when you buy something, but they still get their money. And unless you make your voice known, chances are excellent we'll eventually have a Value-Added Tax here.
The thing is, making things 20% more expensive here and giving that money to politicians won't save America. It'll make us less competitive. For Exhibit A, consider the state of European governments right now...
Greece, for example, has a VAT of 21%. Its government is bankrupt. The Value-Added Tax didn't save Greece.
Italy and Portugal have a VAT of 20%, and they're only a little less bankrupt than Greece.
Astoundingly to me, the Value-Added Tax in France has now crept up to a full 50% of France's government revenues. So how are things going in France with a Value-Added Tax?
France is unable to compete in the world. Unemployment is terminally high. The unemployment rate is now 10% in France. In 2005, the unemployment rate was 10%. And back in 2000, unemployment stood at 11%. Like I said, it's terminal...
Clearly, the system is not working. So why is the U.S. government in such a hurry to adopt it?
The Wall Street Journal explained it yesterday: "Taxes on the rich can't begin to finance the levels of new spending that the current government has unleashed... "
And foreign governments have been less willing to buy our government bonds lately. So the government needs a new source of a lot of money.
More Here..
This part doesn't make sense, maybe a typo: The unemployment rate is now 10% in France. In 2005, the unemployment rate was 10%. And back in 2000, unemployment stood at 11%. Like I said, it's terminal...
ReplyDeleteTerminal? Sounds stable.
VAT is tax debuctible until the end consumer pays for it. Like in New Zealand, where GST (Goods & Service TAx) is 12.5%. In business we sell as a base price and add GST onto it when we invoice. The buyer uses this to make their products but they claim the 12.5% GST back as a business expense.
ReplyDeleteAlso, if a GST/VAT is added, there will be tax cuts to compensate the VAT/GST rise.
Bring it on!
ReplyDeleteThe Wall Street Journal explained it yesterday:
"Taxes on the rich can't begin to finance the levels of new spending that the current government has unleashed... "
“Spending” should clearly read “ bailouts” and the increasingly subsidised levels of interest that must flow to pay the bankster holders of the growing national debt issued by Treasury for the internal carry trade. Cheap but high interest bond issues for the benefit of long suffering rich who have nowhere else to invest their money.In American industry for example where it is impossible to make a profit with a high waged labour aristocracy .
But ,think of the money to be got by increasing the prices on all those Chinese imports! Patriotic Americans will be happy to pay a 20% tax for these Chinese goodies.
So ,the VAT will be a tax willingly paid by patriotic americans and even the unemployed can contribute to Americas jobless recovery for american capital.
The Heroes at Treasury and the Fed cannot afford to single - handedly save america and
continue to supply the current levels of free money to the rich AND healthcare and pensions too , without the help of patriotic Americans to pay the interest on the national debt to banksters and the rich.
Long live free money for the rich backed by a VAT. A brilliant idea!
"Chemist Peter" assures us not to worry . There will be refunds to business in the U.S. because a VAT is organised like that in NZ!
ReplyDeleteThe US economy is driven 72% by consumption there will be no refunds on that!
That's flat out wrong.
ReplyDeleteVAT is a consumer tax.
Businesses pay VAT on their sales and reclaim VAT on their purchases, so they only pay a small amount of VAT on the difference.
VAT puts up the shop prices of everything by 20%, that the consumer pays. That's why food and essentials are usually exempt from VAT
BillK
It's time for a revolution!
ReplyDeleteAnd the sheeple say "Baaaaaa"
ReplyDeleteNot to worry, the criminals in Washington will pass this tax in a NY second. Prepare to spend more. With the predicted hyper inflation coming, just imagine what things will cost in a year?
The GST in CANADA is not tax deductible! Unless you are self employed and you took a client out to lunch. These taxes are self destructive. In BC and ONTARIO they will combine federal and GST together for a 13% and 12% tax for each province. I say DEPRESSION and massive job loss for each destroyed province, especially the restaurant areas.
ReplyDeleteAnd I beheld a vision, "rows and rows of crosses with lawyers, bankers and politicians hanging from them on every Interstate in The USA". Then we brought our military home, guarded our own borders, returned to a gold standard and said screw the planet, let it burn!
ReplyDeleteThis tax will kill consumers; people won't buy new unless something breaks down..Europe is an example, so is Japan, etc. Most everyone lives in cracker box high rise subsidized housing with miniature style appliances so people have to grocery shop daily. Few have cars. This life style is the pits, and this is what the younger people will have to endure!!! Tea parties (less tax, less gov) are total failures, like any movement in this country it eventually fails, unless it promotes the NWO agenda. Many drop out of these groups, when they see they never produce any results and flop. Most Americans, esp those in biz, finance, local/state politics, ministry, etc are dumb sheep and only care about making money, not their kids futures.
ReplyDeleteAs long as the Oligarch bankers own the big three Ms we are screwed.
ReplyDeleteMoney printing, Military, and the Media.
They have a 100% lock on all three.
All taxes are income taxes.
ReplyDeleteA corporation may buy from another corporation, but that's only for the purpose of delivering products and services to the ultimate customer in the supply chain, namely the flesh and blood customer!
"I think the American government so far has done a FINE job of representing the interests of American's in their own country and in foreign policy and will continue to do so going forward"
ReplyDelete- Chevy chase
Chevy says "Baaa baaa" and is another Hollywood mouthpiece, as much as I enjoy his movies
ReplyDeleteChevy Chase must be out of his Wally World mind. Maybe he shot himself in the head with a BB gun?
ReplyDeleteRepublicans and tea party activists are fond of accusing President Barack Obama of being a socialist, but recently party gadfly Ron Paul said they had it wrong.
ReplyDelete“In the technical sense, in the economic definition, he is not a socialist,”… “He’s a corporatist,” Paul quickly added, meaning the president takes “care of corporations and corporations take over and run the country.”
http://blogs.wsj.com/washwire/2010/04/10/ron-paul-barack-obama-is-not-a-socialist/?mod=rss_WSJBlog
The Tea Party movement was wrong to target Osama’s “Marxism”after all there
there was no worker uprising or worker control threatened anywhere in the economy at all. So the Tea Party movement should have asked, “where is Obama the “lefty” really getting his support?”
What he is doing is including in Healthcare “insurance” and now proposed VAT is to use state power to support corporate profits and providing sops to the labor aristocracy . –the corporatist formula of fascism, not Marxism. The Tea Party should always calm down and ask itself, “do you see any worker uprising? Are factories being taken over? Who is Obama really giving benefit to?” If the Tea Party movement would stick with reality, it would be more effective in its opposition to fascism.
VAT is also applied as a tax on services .even getting your lawn mowed.
ReplyDeleteMost americans make their living as money is exchanged in service industries.
Sevices are not productive of physical wealth ,they consume wealth , using the money that is exchanged for the service.
If you work in these services industries your customers will be taxed for consuming your service. Will demand for your services go through the roof an the economy booms?
It is from these service industries that the bulk of a value added tax for the US government will be made.
Manufacturing commodity THINGS ,plays only a small part in an unproductive parasite
American economy ,that pre-crisis was financing its consumption by borrowing foreign credit to purchase cheap labour products from the third world . As well as By selling each other services and by deficit spending on militarism that provided many jobs. Chinese and other countries including Arabs financed the military deficits an wars against Arab and muslim peoples by buying US treasuries.
The economy even appeared to be delivering profits, but the balance of trade deficits and the profits were also being paid for by vendor financing credits . This worked well as long as other countries were prepared to exchange their goods for dollars that they could then send back to America , investing the dollars to earn US dividends from vendor financing for the sale of their products.
When the US dividend payouts got to be to high to pay,as Americans were burdened by too much debts.The system buckled ,beginning with sub prime and government sponsored housing mortgage bonds - Fannie and Freddy .All this U.S. economy had got a bit iffy , so did the credit supply , as selling things for US AAA paper that was not paying its promised dividends and as US paper value in comparison to other currencies was disappearing .
The result was economic crisis. A collapse of the money markets (credit supply)
Can a VAT, taxing american services provided by Americans to americans for cash , restore that old pre-crisis economy back to boom time?