Monday, April 18, 2016

What Is A Value Added Tax


The Value Added Tax (VAT) is widely known in Europe and many democracy-based countries. The idea of implementing this tax in America has been discussed among our Washington politicians nowadays. So, what would a VAT look like in the United States?
Today, the U.S. citizenry is taxed once at the time of a consumer purchase. A VAT would tax every item and service at every point at which its value increases up to the final product. Imagine how many company-to-company sales there are leading up to the production of a car.
Take a power steering pump for example. The ingredients to make steel would be purchased and taxed. The pump's parts would be purchased and taxed. When the pump is sold to a distributor, it would be taxed. Then, it is sold to the car manufacturer. Finally, a tax is paid when the car is purchased.

Government taxes collected would increase exponentially for our money-starved governance to spend just as sagely as always. Costs for the consumer, however, would necessarily proliferate and the cost of everything would rise for everyone. America is still midst the longest recession in decades. Placing a VAT into law now is foolhardiness in its puritanical form.
Ultimately, the American consumer would be burdened with higher taxes. All of the taxes that were paid throughout the production of a product would be accounted for at the time of the sale. Unless, corporations decide to take the loss for the good of the country -- don't hold your breath.
It is argued by the left that this tax would boost the economy lines like a rocket ship. But, history shows us that higher taxes do not boost the economy. After WWII, the rich paid a 91% tax and corporations paid a 50% tax. Government had more money, but it didn't last long.
Back then, it was difficult to move a business out of the country. Today, it is vastly easier, and that is what companies would do – and it's already happening. Carrier, Hostess and Ford Motor Company are just a few that have fled the country because of high taxes -- imagine what a VAT would do.
Republicans oppose the tax insofar as revenues would be too plentiful for Democrats to ever consider spending cuts. Knowing that American compatriots have little tolerance for new taxes, government simply borrows foreign money to feed their monetary addiction.
It is quite flummoxing as to why the left hasn’t pursued a VAT already. If it were passed into law, Americans may not notice and they wouldn’t see it on any receipt or tax return. It seems that this would be a perfectly occult avenue to feed the government's lascivious appetite to generate and devour taxpayer money.

Photo by Pixabay: Public Domain, free for commercial use No attribution required
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