Basically, the argument goes something like this: because global economies are still weak, unemployment remains high, and many people who had not needed public services in the past do now (food stamp participation has spiked), cutting spending...
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In the modern world economy, money can change hands across oceans and currencies in fractions of a second, and multinational holdings have skyrocketed in the last decade to coincide with the trends of globalization. Likewise, a business’s location no longer has...
Given the U.S. government response to the collapse of the financial markets in 2007 and the EU response to the Greek sovereign debt meltdown, both governments have been left in sticky situations. They have both set precedents: large institutions will not be allowed to fail, no matter the systemic risk that they may or may not pose.
When the TARP funds ended up being used to bail out Wall Street firms of systemic importance, while contentious, the funds were being used to prevent failure of significant firms. When Fannie Mae and Freddie Mac were instructed to buy up toxic assets from the market at large with no caps on their exposure...
As difficult as it may be to believe, the United States has a debt problem. Moreover, whereas one normally borrows money for capital expenditures, the U.S. now borrows for day-to-day expenses. And while one would certainly lend money to someone to buy a car, the U.S. is now borrowing to pay for the drive-thru food. Moreover, the rest of the world lends to the US at inexpensive rates and always buys the debt, at least for now.
Proponents of the VAT have been lauding its alleged benefits in the news lately. A commonly repeated claim is that U.S. competiveness would increase, because it would lower or replace taxes in other areas. Bill Clinton went as far to say,
“I think they ought to look at a progressive value-added tax, just because — and I think it's important the American people understand this — most of our competitors have tax systems like this…If you have a value-added tax ... you lower the income taxes, corporate and personal, …Such a tax would be "not easily evadable" and would make the U.S. more competitive…” (Emphasis added)
However, even a cursory look at our competitors’ tax trends disproves President Clinton’s statement. According to Dan Mitchell of the Cato Institute, most of our competitors did not replace other taxes or lower taxes as a share of GDP after a VAT implementation. In fact, most of our competitors raised taxes, which made them less competitive, not more. Take Greece for example. They enacted a VAT in 1997, and no one can seriously claim that they are better off because of it. Establishing a VAT in the U.S. would hurt our standing worldwide by further destabilizing an already fragile economic period. Of the 29 countries that comprise the OECD, the U.S. is the only member without a VAT. Let’s keep it that way.
By raising taxes on energy, the government effectively will raise the price of all goods using energy as an input. The Institute for Energy Research calculated that about 15% of the gas we buy at the tank goes directly to federal and state governments. An energy tax will cause industries’ costs to rise, and with higher costs, much of these new expenses will be passed on to consumers in the form of higher prices.
AEI reported that almost half of the total energy we consume goes into producing foods, medicines and other consumer goods. Of the total indirect energy consumption, the highest amounts went into healthcare services and pharmaceuticals and the second highest to food production. Energy taxes will only serve to increase the prices of these essential goods and services.
The carbon tax or cap and trade initiative does not just affect big businesses; it affects anyone who drives a car, who purchases fruits and vegetables, who purchases healthcare services, or any other product that uses energy as an input.