A VAT won't be good for small business
Upon hearing a lady remark about how good the air was in Ireland, Jonathan Swift, author of “Gulliver’s Travels,” fell to his knees and exclaimed, “For God’s sake, madam, don’t say that in England; for if you do, they will surely tax it.” These days it’s easy to empathize with Swift’s exasperation.
If you haven’t already, you will soon begin to hear about something called “VAT.” This is the acronym for value-added tax, a/k/a national sales tax. A VAT is a tax that’s added to a product incrementally as it’s manufactured, assembled and delivered along the production/distribution chain. It’s a stealth tax because it is built into the cost and not easily discernible by the ultimate consumer.
So why are you going to hear more about a VAT? Because at current spending levels the federal government will have deficits and a massively prohibitive national debt as far as the eye can see, and a VAT can raise billions in tax revenue very quickly. But this isn’t Monopoly money or manna from heaven; it’s a brand new tax that will come out of the pockets of consumers and businesses.
Small business owners often feel they spend half their time calculating and paying their own taxes and the other half collecting and remitting taxes due from employees and customers. A VAT will be bad for small businesses because not only will the things we buy cost more, which we may or may not be able to pass on to customers, but the tax compliance and remittance burden for small businesses will grow significantly.
Here are four things we now know about America’s two political parties: 1) The big spending party is the one with the majority; 2) Republicans cut taxes; 3) Democrats don’t; 4) Neither party has demonstrated the discipline to stop spending.
As a consequence, the political class has produced the fast-approaching federal budget deficit/national debt train wreck that is putting the long-term well-being of America in jeopardy.
Washington’s track record indicates that imposing a VAT will merely give politicians more money to spend, not solve our budgetary or debt challenges. If you’re still not convinced, consider these two facts: 1) The European Union is having its own deficit problems; 2) Most EU members have collected a VAT for years, on top of all other taxes. Any questions?
A national VAT will be bad for the U.S. unless it replaces the national income tax, which can only happen if the 16th Amendment is repealed.
Write this on a rock … A VAT will not be good for America’s small businesses.
Jim Blasingame, Creator/Host of The Small Business Advocate Show
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