Is There a VAT in our Future?

by Sal on February 8, 2010

in Economy,Politics

Shawn Tully of Fortune Magazine seems to think so.  In fact, he predicts that a value added tax (VAT) is the only practical solution to the exploding of deficit spending that is part of Obama’s mammoth $3.9 trillion budget.  Tully argues that there are really three options to get rid of our deficit:

  • Economic Growth could raise the revenues to cover the deficit.  However, government spending typically depresses economic growth, so Tully does not see this as viable.
  • Reducing spending would obviously be the best solution, but is not foreseeable with the current administration and makeup of congress.
  • A value-added tax, which is essentially a national sales tax (in addition to our income tax) would be able to feasibly cover the current deficit projections.

Since the closest thing to immortality is a government program, and the Democrats control the White House for at least another two years, a VAT is not inconceivable.  What is inconceivable is the burden it will put on our economic system and on working families.  If a VAT is implemented, it may be decades before we again see the prosperity in this country that we knew from 1980-2008.

{ 1 comment… read it below or add one }

Mike February 8, 2010 at 2:33 pm

I think you mean 1983-2008. That’s when the effect of the Reagan tax cuts were first felt. Let’s not give Jimmah credit he doesn’t deserve.

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