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The new levy will need to be big, so big that the most probable choice is a European-style value-added tax or VAT. That looming revenue machine is the phantom in the room, the tax that's still invisible to most Americans, but that threatens precisely the group that's supposed to emerge from all the deal-making as the Great Unthreatened, our middle class.
As background, it's important to understand the current fiscal picture, and how it limits our freedom to maneuver in the future -- especially because borrowing levels are already so high. Today, government spending is running at almost 23% of GDP, compared to an average of 20% from 1989 to 2008. Because of the meager expansion, tax revenues have fallen to 16% of national income, far below the long-term average of over 18%. The shortfall has saddled us with a near-7% budget deficit, and driven the burden of debt-to-GDP to 73%, well below European levels, but nearing the danger zone.
If Washington gridlock persists, the big new tax is a virtual certainty. The most probable choice will be a VAT. Since the VAT is assessed on things people buy, not their incomes, it falls heavily on the middle class. Suddenly, the issue is sneaking into the fiscal debate. A January 7th editorial in the New York Timescalled for a VAT. The same week, in a piece criticizing the nomination of Jack Lew for Treasury Secretary, the Wall Street Journal editorial page groused that President Obama's spending plans will saddle America with a VAT by default.
This isn't what the middle class was promised. But the numbers, even assuming good days ahead for the economy, point inexorably in that direction. We don't know what crisis will enable the phantom to take charge. But every day of inaction brings that crisis nearer.
The HST in Ontario, which is taxed on just about every good and service is 13 % --- it really takes a bite out of poor and middle class household's incomes.
If they don't BO will do the usual - pull the Executive Order card. If you don't agree with him out comes the pens. He's using EO on gun control to enforce what HE wants. He is not an negotiator - in the sense that he will not sit down with people from the other side to negotiate because he already decided what he wants before he goes into a meeting. The meeting is nothing more than a formality. Negotiating with him means agreeing with him.
The HST in Ontario, which is taxed on just about every good and service is 13 % --- it really takes a bite out of poor and middle class household's incomes.
Since that where the bulk of the money is, who else's money does it make sense to take?
Even the US doesn't have enough rich people to satisfy our politician's voracious appetite for spending money.
It has to come from the middle and lower classes. What are they gonna do, move to another country, lol?
Actually several members of the House GOP have been the most vocal advocates of something similar. Most notable is John Linder. Democrats on the other hand tend to oppose such taxes because some consider them to be regressive.
Actually several members of the House GOP have been the most vocal advocates of something similar. Most notable is John Linder. Democrats on the other hand tend to oppose such taxes because some consider them to be regressive.
Actually several members of the House GOP have been the most vocal advocates of something similar. Most notable is John Linder. Democrats on the other hand tend to oppose such taxes because some consider them to be regressive.
Cite them please
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