Obama is still interested in a Value Added Tax (VAT)

President Obama's desire to turn America into a socialistic European country needs more funding. The Europeans have instituted a Value Added Tax (VAT) to accomplish their needs to confiscate large portions of their citizens money.A VAT is a hidden sales tax at every stage of production. Some European countries have VAT taxes as high as 25%. A VAT has been discussed for years by some tax reform advocates as a replacement for income taxes. Unfortunately, Obama doesn't want to replace income taxes, he wants to add a VAT tax on top of income taxes. Undoubtedly, the starting percentage would be a very low 1% or 2%, but, slowly, this would be bumped up to European levels. The worst thing about a VAT tax is it is hidden from the taxpayer as part of the cost of goods. Taxes can be increased more easily under a VAT. Since consumers don't see the VAT amount, they may mistake tax increases for market driven price increases or inflation.

AP reported:

President Barack Obama suggested Wednesday that a new value-added tax on Americans is still on the table, seeming to show more openness to the idea than his aides have expressed in recent days.

Before deciding what revenue options are best for dealing with the deficit and the economy, Obama said in an interview with CNBC, “I want to get a better picture of what our options are.”

Great News! The Senate Hates the VAT

A value added tax, commonly known as VAT, is a kind of sales tax where a percentage is charged to businesses anytime the add to they value of a product. It a hidden (to the consumer) sales tax at each phase of production. Here is an example with a 10% VAT. When a manufacturer buys raw materials for $1000 there would be a VAT tax of $100 (10%) paid by the seller. The materials actually cost $1100. The manufacturer shapes the materials into a more valuable product and sells them for a $500 gross profit. Thus, the value added is $500. Then, there is 10% tax paid by the manufacturer causing the final cost to the consumer to be $1650. This is a rough example. VAT's actually can get extremely complicated and many time taxes are overcharged. The worst thing about VATs is their hidden nature. In the example above, there is a $150 VAT sales tax, but the consumer doesn't see anything but the final price. Politicians love these kind of taxes. It is much easier to raise taxes when they are hidden in the cost of the product. Consumers don't see the tax. They only know prices are going up. VAT taxes are very common in the socialistic leaning countries of Europe. The great news is the Senate hates this idea. Thursday, they passed a nonbinding resolution against the VAT by a vote of 85-13.

It’s official: The Senate doesn’t like the idea of a value-added tax, which would be similar to a national sales tax.

The Senate voted 85-13 Thursday to pass a nonbinding “sense of the Senate” resolution that calls the value-added tax “a massive tax increase that will cripple families on fixed income and only further push back America’s economic recovery.”

The issue came up because White House adviser Paul Volcker told a group in New York last week that taxes might have to be raised to bring budget deficits under control. He added that the value-added tax “was not as toxic an idea” as it had been in the past, according to a report by the Reuters news service.

VAT: A Hidden New Tax to Finance Much Bigger Government (video)

Nancy Pelosi has mentioned the Value Added Tax (VAT) as a way to pay for Congress' drunken sailor spending habits. What is the VAT?

From YouTube:

This Center for Freedom and Prosperity Foundation video explains why a value-added tax would be a dangerous money machine for big government.

The Value Added Tax: A Hidden New Tax to Finance Much Bigger Government (video)