Charlie Rangel Looking at a VAT<br> to Pay for Government Health Care Plan
House Ways and Means Chairman Charlie Rangel (D-NY) today became the latest Beltway politician to float a value-added tax (VAT) as an additional tax to pay for health care (link requires subscription):
Among the revenue options appears to be a value-added tax, or a levy on each stage in the development of a product and bringing it to market. "It's a point of discussion," said Ways and Means Select Revenue Measures Subcommittee Chairman Richard Neal, D-Mass. "To say there's any consensus would be misleading," he said.
Rangel would not say whether he favored that approach, only that "it's been put on the table." He said his preference was not important relative to that of panel members and the Caucus.
President Bill Clinton floated a value-added tax to fund his healthcare overhaul effort in 1993, but it landed with a thud in Congress. The tax is considered among the most regressive because it falls heaviest on the poor.
Estimates by the Tax Policy Center put the revenue gained at as much as $50 billion annually from a mere 1 percent VAT, however, and backers argue the health coverage gained will offset higher consumer costs.
The retail industry opposes a VAT, arguing it will further depress auto and home sales and prolong the recession. National Retail Federation tax counsel Rachelle Bernstein called it "the absolute wrong thing to do in this troubled economy."
Rep. Allyson Schwartz, D-Pa., said, "I do have some concerns about creating a new tax," particularly on necessities like food and clothing, although she said there was some support on the panel for a new tax on sugary sodas. She said there was less support for increasing alcohol taxes.
Rep. Sander Levin, D-Mich., said he disliked the idea of a VAT. "I think at this point everything's on the table, including some bad ideas -- and that's one of them," he said.
You might recall that President Obama floated the idea over the Memorial Day recess.