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 'Value-Added Tax' Being Considered By Obama.

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PostSubject: 'Value-Added Tax' Being Considered By Obama.   Wed Apr 07, 2010 6:46 pm

Here we go, more taxes!

Obama Economic Adviser Says U.S.
Should Consider 'Value-Added Tax'


Acknowledging it would be a highly unpopular
move, White House economic adviser
Paul Volcker said yesterday the United States
should consider imposing a "value added tax"
similar to those charged in Europe to help
get the deficit under control.

A VAT is a national sales tax that, like state and
city sales taxes, would be collected by retailers.

Volcker, at the New-York Historical Society,
told a panel on the global financial crisis that
Congress might also have to consider
new taxes on carbon and energy.

"The President has passed historic tax cuts
for middle-class families and continues to push
for more tax cuts. The President is not proposing
to cut the deficit at the expense of middle-class
families," said a White House official
asked for comment.

The VAT suggestion was immediately met with
outrage by Republicans.

"It shouldn't surprise anyone that the Obama
White House would advocate a European-style
tax to help finance their European-style
government health-care plan," said Brian Walsh,
a spokesman for the National Republican
Senatorial Campaign Committee.

"When you hear things like this, though,
it's almost as if the Democrats think the
American people will forget that we're in t
his situation because of their reckless
spending agenda."

Volcker, a former chairman of the Federal Reserve,
told the global economic panel that a VAT is
"not as toxic an idea as it has been in the past."

He added, "If, at the end of the day, we need
to raise taxes, we should raise taxes."

The tax has long had backing from House
Speaker Nancy Pelosi (D-Calif.), who last
year said it is "on the table" for dealing with
the country's fiscal woes.

Some say the tax can be a good way to raise
money because -- depending on how it's imposed
-- the burden does not have to fall on the
consumer alone.

A VAT can also be imposed down the line on
manufacturers, producers and any other
business that adds value -- as well as retailers.

Presumably, each could be asked to pay a
smaller amount, since the burden would
be spread out.

Also, since the government would be collecting
at each step of the manufacturing process,
If a retailer cheated, the taxman wouldn't
be left completely in the cold, because levies
would have been collected at earlier steps
leading up to the sale.

A major reason the tax is so hated is that
it does not eliminate sales taxes,
but is charged on top of them.

It's a quick way for governments to raise cash,
but the tax could wind up being a burden
on the poor, critics say.

The VAT idea has percolated in Washington
over the years, but lawmakers have always resisted it.

The US budget deficit is expected to reach
$1.5 trillion in fiscal 2010. With Reuters

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