Today’s installment describes the VAT, and how it would be managed under the current political environment. Roger Bucholtz explains…
Two current issues:
1) A VAT is far superior to the income tax, however, when Washington talks about a VAT they are usually referring to it as an additional tax, not a tax to replace the current income tax code. VAT taxes do stop the practice of punishing productive behaviors (work, saving, investing, etc) by taxing the fruits (income/money) of this behavior. It also can be readily border adjusted (backed out of export prices) so that American labor and capitol can compete on a level playing field for the first time in generations. The problems with a VAT are that, but it is actually a somewhat hidden sales a sales tax included in the price of goods and services; and it has a high compliance cost that is also added to the cost of goods and services. Burying taxes in prices is “good” for fooling the people by keeping them ignorant of their true tax burden, and ultimately results in bigger and more intrusive government.
2) We have cause to be disappointed in legislators’ lack of enthusiasm for upsetting the trade in tax favors that empowers and enriches most of our elected representatives, and those serving on the House Ways and Means Committee are where the real action is. This is what the Potomac fever is all about. We hope that the bodies of our representatives have natural defenses to the fever such as the best interest of constituents, the desire to do the right thing, and other such antibodies. If these natural defenses prove insufficient then the best medicine approved by law and the election commission is fear. Fear of losing their position of power, privilege and riches can scare the fever out of the body politic.
To bring about that which we desire, the FairTax, we should try real hard to bring out the politicians’ natural defenses by informing them about the FairTax by every means possible, to include face to face meetings, letters, etc. If that does not cure the disease, then that is the time to cause them to fear for their job.
MI FairTax President (volunteer)