The VAT is a type of national sales tax much like a Flat Tax, levied on the value added at each stage of production. If imposed without eliminating the existing Income Tax system, a VAT would finish the transformation of our Country into a European-style slow-growth nation.
If proponents wanted a VAT to replace the Internal Revenue code it could provide the revenues needed to reduce the exorbitant deficits and debt foisted on us by this reckless Democratic Administration. However, here's the rub...Obama and his crack economic team, would not only keep the Income Tax but raise taxes AND, on top of that, layer the taxpayers' burden with a European style VAT tax...PLUS keep on spending like there's no tomorrow!
That said, it would be a mistake for Republicans to dismiss a consumption based tax system too quickly. The VAT could result in fewer loopholes, a fairer tax system and increased revenues. Today's income tax code enables 50% of of taxpayers NOT to pay any tax at all which means that massive tax hikes are inevitable.
Bruce Bartlett, a former Reagan economic adviser, said the country's finances are in such dire shape, a VAT is the best option to move forward. (Is it?)
The VAT as proposed by this administration should be strongly opposed; however, in 2012 the Republican Party could offer to REPLACE the Income tax with a FLAT TAX, or VAT, in order to dig this Country out of this gigantic debt hole, promise to reduce spending, shrink the size of government and eventually balance the budget.
Today the public's anger over the horrifying government debt and oppressive growth of government might well signal the peoples' willingness to accept a bold NEW SOLUTION that won't involve class warfare or soaking the rich.
The elimination of the unpopular Internal Revenue System might be just the BIG IDEA Republicans need to win the presidency in 2012?