Obama Debt Commissioner Calls for a VAT and Its Correspondingly Crippling Effects
By Jeremy Weltmer
While Barack Obama ostensibly created the Simpson-Bowles debt commission to address the presently untenable fiscal condition of the US, the latent motivation recently emerged when Erskine Bowles, co-chair of the National Commission on Fiscal Responsibility and Reform, spoke in favor of a consumption tax in an address at the Department of Commerce on July 14th.
As opposed to confronting the US overspending problem through the logical and necessary spending cuts, the Obama solution remains to raise taxes and stunt the economy, and Bowles is in lockstep. While he proposes some spending cuts (he asserts that an ideal reform package should include 75 percent spending cuts and 25 percent revenue increases), he ignores the fact that deals to raise taxes and cut spending always result in higher taxes and new spending without fail. As Grover Norquist, President of Americans for Tax Reform once asserted in an interview with the Hill, “At some point conversations about unicorns are tedious, because they don't exist in the real world. Budget deals where they actually restrain spending and raise taxes are unicorns.”
Yet to pay for his fantasy of a budget deal, Bowles advocated a “broad-based consumption tax” without giving further details, but his leanings leave little to the imagination. He has called for lower income taxes and a consumption tax, and to both cut income taxes and also raise more to pay for overspending indicates his desire for a VAT.
Over the past several months, Pelosi, Reid, and the White House have refused to take the VAT off the table, and the White House has already run the numbers on such a proposal. A VAT taxes production at every step, which leads to an utter lack of transparency that allows lawmakers to raise the rate quietly as consumers never see the cost of the tax. This very phenomenon occurred in Europe after the establishment of a VAT; while the VAT rate started at 5 percent, it now exceeds 20 percent, and income tax rates have not declined.
The report from the Simpson-Bowles commission conveniently comes out on December 1st, just after midterm elections, and Congressional leaders have promised to put the commission's recommendation to an up-or-down vote if 14 out of the 18 commissioners can reach a consensus on a proposal. While Bowles said that "getting 14 [commissioners] to agree is going to be hard," the administration selected the members of the commission carefully, and this offers a backdoor through which Obama and his ilk could slip tax policies that will punish American taxpayers and corporations for generations to come.
For more information, here is ATR’s Anti-VAT Toolkit.
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