4.19.2010

VAT would be just a gargantuan instrument for further subjugating Americans to government

A plan to tax everybody

Excerpts:

Corporations do not pay taxes; they collect them, passing the burden to consumers as a cost of production. And corporate taxation is a feast of rent-seeking — a cornucopia of credits, exemptions and other subsidies conferred by the political class on favored, and grateful, corporations. Because the income tax is not broadly based, it radiates moral hazard: Its incentives are for perverse behavior. The top 1 percent of earners provide 40 percent of that tax's receipts; the top 5 percent provide 61 percent; the bottom 50 percent provide 3 percent. So the tax makes a substantial majority complacent about government's growth.

Increasingly, the income tax is codified envy. A VAT is the political class's recourse when the resources of the minority that is targeted by the envious are insufficient to finance ravenous government.

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Because a VAT potentially taxes everything, it would be riddled with exemptions. This is because it maximizes the political class's opportunities for showing favoritism — by, for example, exempting certain "green" goods. It also widens that class's scope for the pleasure of being bossy. For example, it could reduce a VAT's regressiveness — like rain, a VAT falls equally on the rich and the poor, but the poor devote a larger portion of their income to consumption — by exempting most foods but not those that the nanny state disapproves: "Put down that sugary soda and step away from the vending machine!"

Money is time made tangible — the time invested in the earning of it. Taxation is the confiscation of the earner's time. Although some taxation is necessary, all taxation diminishes freedom. Adding a VAT without subtracting the income tax would constrict Americans' freedom much more than the health-care legislation does. Because the 16th Amendment will not be repealed, adoption of a VAT would proclaim the impossibility of serious spending reductions and hence would be the obituary for the Founders' vision of limited government.


Comment: Worthwhile read!

2 comments:

  1. In the Wall Street Journal today

    The Senate votes against the tax, 85-13

    Bipartisanship has broken out in the Senate, not that the media bothered to notice. Last week John McCain introduced a resolution stating that "It is the sense of the Senate that the Value Added Tax is a massive tax increase that will cripple families on fixed income and only further push back America's economic recovery." The resolution passed 85 to 13.

    ...

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