Friday, June 8, 2012
Economist Bruce Bartlett makes a good point about the Value Added Tax, something I wouldn't be in favor of on a long term basis. Especially to go on top of the Federal Income Tax and Federal Payroll Tax but his valid point has to do with how it could be used for Deficit Reduction. Saying that it would be a good alternative to raising taxes on High Earners, because his point is if we were to do that. They would find ways to get out of if, either through current Tax Loopholes or moving their money oversees, which could end up being a bigger lost in revenue for Uncle Sammy, had we just left those Tax Rates where they are today. But with a Value Added Tax or VAT, we would all get hit by it, there would be no way out of it, unless there's an exception for Low Income people. Which I believe there has to be, for the good of them and the economy, otherwise they wouldn't be able to afford to buy anything and end up collecting more Public Assistance. This could be a short term solution, to help pay down the debt and deficit but it would also have to include smart Budget Cuts and Government Reform, to make Uncle Sammy more efficient. And a plan to generate Economic and Job Growth.
You come up with a Deficit Reduction Act or package, that includes a VAT, with an exception for Low Income people, so they don't get run over by it. To go along with Economic Recovery Act, to jump start Economic and Job Growth thats paid for, as well as Budget Cuts that are done in a smart way. Uncle Sammy cuts back on things that he doesn't have to do, that could be done by the States or Non Profit Community Sector, that have to do with Public Assistance. You hammer at the bloated Defense Budget, not to weaken our National Security but to improve and cut waste from it. By getting us out of places that we don't need to be, nations that can defend themselves but are getting our National Security for free. Europe, Saudi Arabia, Korea and Japan. You come up with a plan that accomplishes these things within 5-10 years and you plan i according to Economic Growth as well and we can pay down our debt and deficit.
A Value Added Tax by itself, especially with no exceptions for Low Income people, will do nothing to pay down our debt and deficit. But if anything add to them, especially if its indefinite with all of the other Federal Taxes we are already paying. But if its done in a short term basis, to go along with all the other reforms I mentioned, could help us pay down our debt and deficit.