At What Price?
On tax day, Apr. 15, President Obama declared his belief in simplifying the tax code. His Economic Recovery Advisory Board, chaired by Paul Volcker, has been tasked with presenting recommendations by Dec. 4.
Is the flat tax coming? No. Simpler code? Yes. Lower tax rates (plural)? Yes. The catch: The improved income tax code will come with a European-style value-added tax. Choke!
Politicians love the VAT. First, because the levy applies to every transaction phase and includes ser-vices as well as products, it is difficult to avoid. It's not surprise, therefore, that hte VAT was invented by the French. Second, consumers don't see it. By the time a product hits the shelf, the VAT is embedded in the retail price, unlike a sales tax, which is added at the checkout counter. Thus, in Europe, a $50 item actually includes upward of $10 in value-added taxes. The White House figures this will be a revenue bonanza that will finance not only the socialized health care system it wants to impose on us but also President Obama's second-term (if he's reelected, of course) big initiative: providing free college to everyone.
Remember, this Administration still holds to its obese ambition to remake our capitalist economy into a western-Europe-like socialized economic system, in which government dependency is high, job creation is anemic and cutting-edge innovation in health-related areas and technology is almost nonexistent.
A VAT is not just a serpent in a simple low-tax Garden of Eden - it's a nest of pythons.
Steve Forbes is President/CEO of Forbes and Editor-in-Chief of Forbes magazine
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