IBD h/t:

A new study warns that a value-added tax would kill 850,000 jobs in a year and cut retail spending by $2.5 trillion over 10 years. Sounds too bad for Washington to pass up.

An analysis for the National Retail Federation by Ernst & Young finds that adding a VAT to the U.S. tax system would reduce GDP for years, causing the loss of “850,000 jobs in the first year,” plus “700,000 fewer jobs 10 years later.”

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If you are not aware of what the Value Added tax is (VAT), Dick Army explains it a bit:

….“But, I always believed that when the Democrats got the majority in both the House and the Senate – and I’ve told this to people for years – when they get the House and the Senate and the White House, they’re going to add a Value Added Tax to the existing income tax,” said Armey.

“It’s not going to be a VAT instead of – it’s in addition to, and, of course, they are doing exactly what I predicted. Why? Because they’ve got gluttonous spending habits, and they want to spend more, and they need to raise money to do it, and they can’t raise the money out in front of God and everybody for the taxpayer to recognize what they’re doing,” he said.

“So they are looking at that best instrument to hide the tax from the taxpayer. And that’s why the VAT tax is attractive. The VAT tax has never been attractive to anybody except tax leviers,” Armey added.

The VAT is a general sales tax added to the price of goods and services at each step of production whenever value is added to those goods and services. According to the Tax Policy Center, the VAT was first imposed by France in 1948 and then by the European Community (EC) in 1968. To date, over 100 countries impose some form of a VAT except Australia and the United States.

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VAT is a good idea (flat tax is the best) if you abolish the income and state taxes all-together. But the Democrats want to add this tax ON TO the already existing tax matrix, thus, hurting the poor the most. Charles Krauthammer has been saying almost immediately after liberal-care (Obama-care) passed. Here is his article on the issue:

The VAT Cometh

…We are now $8 trillion in debt. The Congressional Budget Office projects that another $12 trillion will be added over the next decade. Obamacare, when stripped of its budgetary gimmicks — the unfunded $200 billion­–plus doctor fix, the double-counting of Medicare cuts, the ten-six sleight-of-hand (counting ten years of revenue and only six years of outflows) — is, at minimum, a $2 trillion new entitlement.

It will vastly increase the debt. But even if it were deficit-neutral, Obamacare would still pre-empt and appropriate for itself the best and easiest means of reducing the existing deficit. Obamacare’s $500 billion of Medicare cuts and $600 billion in tax hikes are no longer available for deficit reduction. They are siphoned off for the new entitlement of insuring the uninsured.

This is fiscally disastrous because, as President Obama himself explained last year in unveiling his grand transformational policies, our unsustainable fiscal path requires control of entitlement spending, the most ruinous of which is out-of-control health-care costs.

[….]

What will it recommend? What can it recommend? Sure, Social Security can be trimmed by raising the retirement age, introducing means testing, and changing the indexing formula from wage growth to price inflation.

But this won’t be nearly enough. As Obama has repeatedly insisted, the real money is in health-care costs — which are now locked in place by the new Obamacare mandates.

That’s where the value-added tax comes in. For the politician, it has the virtue of expediency: People are used to sales taxes, and this one produces a river of revenue. Every 1 percent of VAT would yield up to $1 trillion a decade (depending on what you exclude — if you exempt food, for example, the yield would be more like $900 billion).

It’s the ultimate cash cow. Obama will need it. By introducing universal health care, he has pulled off the largest expansion of the welfare state in four decades. And the most expensive. Which is why all of the European Union has the VAT. Huge VATs. Germany: 19 percent. France and Italy: 20 percent. Most of Scandinavia: 25 percent.

[….]

Ultimately, even that won’t be enough. As the population ages and health care becomes increasingly expensive, the only way to avoid fiscal ruin (as Britain, for example, has discovered) is health-care rationing.

It will take a while to break the American populace to that idea. In the meantime, get ready for the VAT. Or start fighting it.

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