StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between

Obama On The VAT

22 Apr 2010
Posted by Pete Davis

Here's what President Obama said on CNBC yesterday in an interview with John Harwood:

HARWOOD: If reducing consumption is a good idea, could you see the potential for a value-added tax in this country?
OBAMA: You know, I know that there has been a lot of talk around town lately about the value-added tax. That is something that has worked for some countries. It's something that would be novel for the United States. And before I start saying that this makes sense or that makes sense, I want a better picture of what our options are. And my first priority is to figure out how can we reduce wasteful spending so that, you know, we have a baseline of the core services that we need and the government should provide, and then we decide how do we pay for that. As opposed to figuring out how much money can we raise and then not have to make some tough choices on the spending side.



So let's get a list of

So let's get a list of countries in which the VAT has not worked. Any suggestions? Start with the countries that have adopted a VAT and then repealed it. Don't be shy about answering the question.

Very Political Answer

Cutting waste always sounds good. As V-P, Al Gore actually had some success in pushing this. Still, it's a small impact as compared to either raising taxes or making serious cuts in the military, Soc Sec, and/or Medicare.

JLM -- while we are at it why

JLM -- while we are at it why not a list of all the countries that have tried an income tax and rejected it?

I suspect that list would have the same length as the list of countries that have rejected the VAT -- zero.

for spencer

Some major taxes I know of that have categorically and explicitly been rejected by national governments in postWWII era have been turnover (gross receipts) taxes in parts of Europe, retail sales taxes in some of Scandinavia, and pre-retail taxes in Japan and Canada. All these were replaced by Value Added Taxes. No rejections of individual income taxes. There were some taxes dumped by countries of the former Soviet Union but they hardly count -- and none of the ones dumped were conventionally structured VATs or income taxes.

He just dodged the question

Obama knows as well as anyone cutting spending is still politically impossible. In the short term, we either raise taxes straightforwardly or through inflation, how else can the debt and obligations possibly be paid?

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