Left Continues to Telegraph VAT Strategy

Posted by Ryan Ellis on Tuesday, June 30th, 2009, 5:13 PM PERMALINK

You can't say they didn't warn us.  The latest indication that a value-added tax (VAT) is on the table comes in today's Wall Street Journal by former Clinton Administration Deputy Treasury Secretary Roger Altman:

We all know the recent and bitter history of tax struggles in Washington, let alone Mr. Obama's pledge to exempt those earning less than $250,000 from higher income taxes. This suggests that, possibly next year, Congress will seriously consider a value-added tax (VAT). A bipartisan deficit reduction commission, structured like the one on Social Security headed by Alan Greenspan in 1982, may be necessary to create sufficient support for a VAT or other new taxes.

More from Americans for Tax Reform

Taxpayer Timeline of Obama's First 150 Days

Posted by John Kartch on Thursday, June 18th, 2009, 2:40 AM PERMALINK

Obama’s First 150 Days: New Taxes. Higher Spending. More Debt. Protectionism. Government Intervention. Broken Promises. 

To mark President Barack Obama's first 150 days in office, Americans for Tax Reform (ATR) today released a taxpayer timeline covering Obama's most recent 50-day period -- Day 101 through Day 150:
Day 105 – May 4: President Obama announces his plans to double-tax the international profits of American firms, a proposal which will cause U.S. companies to ship jobs overseas and relocate their headquarters abroad. Americans for Tax Reform countered the Obama administration’s claims.
Day 108 – May 7: President Obama releases a misleading budget document that claims to consist solely of spending cuts, but in fact contains $26.4 billion worth of energy taxes.
Day 113 – May 12: President Obama’s Treasury releases the “Green Book” -- the details of his plans for tax increases. ATR exposes details of his ‘tax increase playbook’:
  • Some families making less than $250,000 per year will see an income tax hike, yet another violation of Obama’s tax pledge
  • American families will bear the brunt of the Obama tax blueprint’s energy tax hike
  • Small businesses will shed jobs to pay for the higher small business tax rates
WBAL TV in Baltimore reports that thousands of dead people are receiving “stimulus” checks in the mail.
Day 116 – May 15:  Americans for Tax Reform releases an overall review of Obama’s energy tax hikes, a total of $968 billion in new taxes.
Day 121 – May 20: Democrats on the House Energy and Commerce Committee hire a speed reader to read the Waxman-Markey ‘cap-and-tax’ bill; anything to avoid actually reading the legislation themselves.
Day 128 – May 27:  The Washington Post reports the Obama White House has not ruled out a Value Added Tax (VAT) to finance government-run health care.  Peter Orszag’s spokesman Kenneth Baer: “While we do not want to rule any credible idea in or out as we discuss the way forward with Congress, the VAT tax, in particular, is popular with academics but highly controversial with policymakers.”
Obama marks 100 days since the passage of the “stimulus” bill. According to the Administration, $112 billion from the “stimulus” has been spent or obligated at this point.  Assuming that the President’s unsubstantiated claim that the legislation has “saved” 150,000 jobs is correct, each job “saved” cost taxpayers $746,600.
Day 135 – June 3:  Vice President Biden, in defending the “stimulus” says “we know some of this money is going to be wasted”.  Does ‘we’ include Barack Obama? Apparently the President was not on the same page when he claimed the “stimulus” would be “without waste, without inefficiency, without fraud” back on February 20.
President Obama makes official his support of government-run health care in a letter to Senators Baucus and Kennedy.
“Buy American” language in the “stimulus” causes Canadian municipalities to pass their own protectionist legislation. "If one country starts to build protectionist barriers that hurt businesses in another country, there will be an impulse to retaliate, and I would like to see this resolved at the executive level in the United States," states Canada’s Trade Minister Stockwell Day.
Day 137 -- June 5: The Bureau of Labor Statistics employment report shows steep job losses under President Obama:
  • 345,000 jobs lost in the month of May
  • 1.5 million jobs lost in the three full months since the “stimulus” bill passed
  • 9.4 percent unemployment, the highest level since 1983.
However, in January, White House economic advisors Christina Romer and Jared Bernstein said the unemployment rate would not rise above 8% if the “stimulus” was passed.
Day 140 -- June 8:  Microsoft CEO Steve Ballmer says Obama’s double-tax proposal will cause the company to move jobs out of the U.S.  “It makes U.S. jobs more expensive…we’re better off taking lots of people and moving them out of the U.S.”
Day 141 – June 9: President Obama submits a PAYGO proposal which would give a built in excuse to raise the short- and long-term cost of government AND practically require Congress to raise taxes to "pay for" it. 
Day 142 -- June 10: The U.S. Chamber of Commerce announces a new campaign to support free enterprise “in the face of rapid government growth and attacks by anti-business activists.”
Day 143 -- June 11: President Obama reiterates his support for a public health care option. During the same town hall meeting in Green Bay, Wisconsin, President Obama also claims he doesn’t believe in expanding the government’s role:
The reason is not because we want a government takeover of health care…I've already said, if you've got a private plan that works for you, that's great. But we want some competition. If the private insurance companies have to compete with a public option, it'll keep them honest, and it'll help keep their prices down.”
Day 146 -- June 14: On Meet the Press, Vice President Biden admits the “stimulus” was based on incorrect assumptions about the economy and they cannot measure whether it has “saved or created” any jobs:
"Everyone guessed wrong at the time the estimate was made about what the state of the economy was at the moment this was passed."
On Meet the Press, Biden confirms the taxing of employee health care benefits is on the table:
“MR. GREGORY:  Will the president sign a bill that taxes health care benefits for employees?
VICE PRES. BIDEN:  We made it clear we do not think that is the way to go. We think that is the wrong way to finance this legislation.
MR. GREGORY:  So if the bill comes with that...
VICE PRES. BIDEN:  But--no, no, no.
MR. GREGORY:  ...the president wouldn't sign it?
VICE PRES. BIDEN:  I didn't say that.”
Day 147 -- June 15: Obama again asserts he does not want to expand the role of government, this time during a speech to the American Medical Association: “When you hear the naysayers claim that I’m trying to bring about government-run health care, know this – they are not telling the truth”
Day 148 -- June 16:  In an interview with Bloomberg News, Obama states he is “confident” he will not have to raise taxes on “ordinary working families”: “One of the biggest variables in this whole thing is economic growth. If we are growing at a robust rate, then we can pay for the government that we need without having to raise taxes.”
 “I’m confident that we don’t have to raise taxes on ordinary working families.”
Earl Devaney, head of the Recovery Act Accountability and Transparency (RAT) Board, estimates that at least $55 billion of “stimulus” funds may be lost to waste, fraud and abuse.
Obama once again claims he has a limited government philosophy during an interview with the Wall Street Journal:
"I think the irony … is that I actually would like to see a relatively light touch when it comes to the government."
(We find it ironic too, Mr. President.)

More from Americans for Tax Reform

Charlie Rangel Looking at a VAT<br> to Pay for Government Health Care Plan

Posted by Ryan Ellis on Tuesday, June 16th, 2009, 7:42 PM PERMALINK

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.

It's coming...

More from Americans for Tax Reform

Half of America Strongly Opposed to<br> VAT to Pay for Socialized Medicine

Posted by Ryan Ellis on Tuesday, June 2nd, 2009, 3:01 PM PERMALINK

Half of Americans are opposed to any sort of sales tax (including a VAT) to pay for government-controlled health insurance, according to Rasmussen.  Only 18 percent support a national sales tax at all, but:

There is more support for the concept if sales tax revenue is used to provide health insurance for all Americans. In that scenario, 40% favor a national sales tax and 49% are opposed.

Democrats strongly support a national sales tax to provide universal health insurance coverage. Republicans are opposed by a three-to-one margin, and those not affiliated with either major party are opposed two-to-one.

More from Americans for Tax Reform

ATR Resurrects Anti-VAT Caucus

Posted by Ryan Ellis on Monday, June 1st, 2009, 4:00 PM PERMALINK

Americans for Tax Reform has re-invigorated our Anti-VAT caucus.  There are currently 45 Congressmen and 2 Senators in the caucus.  ATR is inviting every elected official to join, as reported today in Roll Call.

The following letter was sent to all Congressmen and Senators urging them to join:

President Obama and Congressional Democrats have proposed a series of tax hikes on the American people to pay for government-run health care.  Just after Memorial Day, they floated a plan for a value-added tax (VAT) in the Washington Post.    Americans for Tax Reform maintains a list of anti-VAT Congressmen and Senators known as the “Anti-VAT Caucus.”  I am writing you today to give you the opportunity to join this pro-taxpayer, Anti-VAT caucus.  The Anti-VAT caucus currently has 43 Congressmen and 2 Senators, and we’re looking to grow the list quickly over the next several weeks.  This caucus has no meetings to attend and no dues to pay.  All you need to do is sign up.  Contact Jacob Feldman at ATR ( to do so, and he will sign you up right away.

In Europe, a small VAT was first enacted in 1967.  At that time, Europe and the United States both confiscated about $.27 out of every dollar of national income.  Since the introduction of the VAT in Europe, its average tax take has gone from 27% to 41%, nearly a 50% increase in just four decades.  There is currently a minimum VAT requirement of 15% to be a member of the European Union, and an average VAT rate of 20%.  Meanwhile, the VAT-less United States still taxes at about the same level as it did in 1967.

The experience of Europe should teach us that the imposition of a VAT, even in the pursuit of very worthy ends, is too often the precursor to bigger government.  It is simply too easy for politicians to raise a tax that is hidden from citizens.

A VAT is not like a national retail sales tax.  A sales tax is a line-item on a cash register receipt, and is easily known by the consumer: a very effective check on raising the sales tax rate.  A VAT, on the other hand, is embedded in the final cost of the goods sold, and is hidden to the consumer.  The VAT is applied at every stage of consumption, from wholesale to retail.  It is passed along until it literally becomes as much an inherent and cloaked component in the price as transportation or raw materials.  As a result, countries that have adopted a VAT have been sorely tempted to raise the rate over time.

That’s why I urge you to join the Anti-VAT caucus today, to let your constituents and the American people know that you think a VAT is a bad idea for America.

More from Americans for Tax Reform

Daily Media Spotlight--Fighting the VAT, Wisconsin Tax Hike Outrage

Posted by Douglas Kellogg on Monday, June 1st, 2009, 11:18 AM PERMALINK

“Americans for Tax Reform, for one, sent out a letter Friday to Members of Congress urging them to join a long-dormant Anti-VAT Caucus.
‘It’s [the Democrats’] plan,’ ATR President Grover Norquist said. ‘It’s always been their plan. It is the only way to get the kind of money that they need to increase the size of government. They have to lie their way into office, but once safely in power, this has always been their plan.’”
“Grover Norquist, one of the nation's leading fiscal conservatives and president of Americans for Tax Reform, joined with state anti-tax leaders to criticize tax increases and what they called excessive spending by government.
When one participant said he feels "hopeless" because Democrats control the Legislature and the state's top political offices, Norquist told him:
‘I encourage you to stay and fight, because we can fix this state, and turn it around.’”
Governor Doyle is increasing and extending the cell phone tax, at an overall cost of $100 million to everyone who uses a cell phone. The measures go so far as to apply the tax to land lines. By redirecting funds from their 911 surcharge, the tax proposal would make Wisconsin unable to receive Federal 911 funds.
Wisconsin blogs are exposing the Governor’s ill-conceived new tax increase proposals:

More from Americans for Tax Reform

VAT Taxes and Shareholders

Posted by Ryan Ellis on Friday, May 29th, 2009, 1:08 PM PERMALINK

This post originally appeared on


There's been a buzz going around this week that some Democrats on the Hill and even in the Obama White House are looking at a value-added tax (VAT) to pay for government-run health insurance.

You can read more about this at ATR.  They also cover how this trial balloon was floated before by Bill Clinton back in 1993, and how VAT rates have risen over time with our major trading partners.

What's been left out of most of the analysis has been the impact on shareholders.  At first glance, there wouldn't seem to be one.  VATs are embedded in the price of a good, and ultimately paid for by the retail consumer.

However, a VAT is merely a very efficient consumption tax on corporate products.  As such, the tax wedge should have a similar impact to that of the corporate income tax (that CBO has said about a third of which is paid for in the form of lower returns to capital).

A VAT will raise the price of goods, and thereby hurt sales.  It's a safe bet that about 30% of any new VAT tax will be paid for in the form of lower share prices and reduced dividends.  That hurts everybody who has a 401(k) or an IRA, not just direct owners of companies.

More from Americans for Tax Reform

VAT Rates Rise Over Time,<br> Bloating Government Tax Coffers

Posted by Ryan Ellis on Friday, May 29th, 2009, 11:32 AM PERMALINK

VAT Rates Rise Over Time

Source: OECD Tax Database

Country VAT Rate 1976 VAT Rate 2009
U.K. 8% 15%
France 20% 19.6%
Germany 11% 19%
Italy 12% 20%
Sweden 17.7% 25%

People who think that VAT would be a good idea for America ought to take a look at the above chart.  In country after country, VAT rates started pretty low, but crept up, up, up (with the strange outlier of France, whose VAT actually declined a bit). 

If you're interested in the full VAT rate data, it can be found at the OECD website.

Someone ought to ask President Obama why his Administration has flatly refused to rule out a VAT to pay for socialized medicine.  Maybe it's the same reason that Bill Clinton had to float this idea back in 1993 to pay for Hillarycare.

More from Americans for Tax Reform

Daily Media Spotlight--VAT Attack!

Posted by Douglas Kellogg on Friday, May 29th, 2009, 11:10 AM PERMALINK

“‘A VAT is among the most regressive tax schemes that can be imposed, and is a direct violation of Obama's no-tax-hike promise,’ Ryan Ellis, tax policy director at Americans for Tax Reform, wrote Wednesday on his group's Web site. ‘VATs are a gateway drug to more government spending.’”
“Never one to consider spending to be the problem, there are rumors the federal government is considering a 10 percent consumption tax, or value added tax, to help pay for all the spending and possibly the federal takeover of health care.”
Salem, Oregon hosts the ‘Defend the American Dream summit’ today.
“Among the people scheduled to speak at the morning session are Grover Norquist, the president of the tax-critic group Americans for Tax Reform, and Joe Wurzelbacher, also known as "Joe the Plumber" from the 2008 presidential campaign.”

More from Americans for Tax Reform

Obama Floats VAT Tax<br> To Pay for Socialized Medicine

Posted by Ryan Ellis on Wednesday, May 27th, 2009, 11:41 AM PERMALINK

•    The Washington Post today reported that Democrats all over Washington and in the Obama White House are clamoring to include a value-added tax (VAT) to pay for a government-controlled national health insurance scheme.  The White House has even brought in Rahm Emanuel’s brother to consult on this.

•    This trial balloon is another attempt by President Obama to renege on his pledge to not raise taxes on any American making less than $250,000 per year—a promise he made repeatedly and forcefully on the campaign trail in 2008, and which he broke 16 days into his Administration

•    A VAT is a version of a national sales tax.  Any person who consumes pays this tax.  The poor and working class (and certainly those making less than $250,000 per year) consume more as a percentage of their income the less they make.  A VAT is among the most regressive tax schemes that can be imposed, and is a direct violation of Obama’s no-tax-hike promise

•    VATs are a gateway drug to more government spending.  When VATs first came on the scene in Western Europe in the 1960s, they were modest taxes averaging around 5 percent in rate.  In the years since, the rates have climbed to an average of 20 percent (with a 15 percent minimum to get into the European Union)

•    There are two reasons for this.  First, politicians are always tempted to hike the rate and exclude preferred items like food, medicine, and housing.  Second, because a VAT is embedded in the price of a good (unlike state sales taxes in the United States), most people are unaware of the tax or how high it is.  Raising the VAT rate becomes a relatively-painless political maneuver, especially if it’s linked to higher welfare spending or VAT base carve-outs

•    This VAT trial balloon betrays the mentality of the Pelosi-Reid-Obama thinking in Washington today.  Raise taxes, and raise federal spending.  Ultimately, they won’t be satisfied until federal taxes and federal spending are permanently at record levels.  A VAT is a good way to pay for bigger government, which is why the Europeans are so enamored with them

PDF version

More from Americans for Tax Reform