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To VAT or not to VAT…that is the question!
By Robert Amoroso   

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To VAT or not to VAT…that is the question!

By Robert Amoroso

 

With profound apologies to William Shakespeare, for high jacking perhaps one of the best known and iconic phrases of all time, “to be, or not to be: that is the question”, the opening line is of course from “Hamlet”, and throughout the centuries this masterpiece of a drama, along with its timeless soliloquy has been studied and dissected by countless theologians and philosophers through the years. What was the profound message behind these immortal words?

 

Many scholars have interpreted Shakespeare's words has a choice between ("to be") and life of silent acceptance…or ("not to be") as a primary focus of Hamlet's dilemma. However, if we take those timeless words with their profound meaning within the context of the current financial  drama that is now being played out in Washington, then we'll perhaps have a better understanding of our own modern day tragedy that is now unfolding..

 

Former Federal Reserve chairman and Obama adviser Paul Volcker, suggested that the United States should consider imposing a "value-added tax" (VAT)  similar to those charged in Europe to help get the deficit under control. The "value-added tax" is simply another slow and calculated march towards  what can best be described as the “socialization of America”.

 

 Like Shakespeare’s “Hamlet” who asked “Whether 'tis nobler in the mind to suffer the slings and arrows of outrageous fortune, or to take arms against a sea of troubles and by opposing end them”.

 

The dilemma for Hamlet as he confronted is own existance and his fears of the unknown, is the same paradox that we now face as a nation And if what is taking place in Washington today, were a “Shakespearean Drama”, our opening line would be “do we die a slow and silent death, and  slowly sink into the abyss or do we stand up and fight against a government that has lost its principles”? That’s the dilemma that we currently face as a nation, and if anyone doubts the course that this administration is on, simply use that God given gift called “common sense”.

 

Within the first 14-months of this administration, the budget deficit has quadrupled, and the out of control spending of  bailouts, stimulus packages, and massive government entitlements, threatens our triple A standing around the world, and brings us ever closer to the brink of bankruptcy.

 

We are currently 8-trillion dollars in debt, and within the next decade the CBO projects that another 12-trillion dollars will be added to the debt, add to that this massive healthcare entitlement bill, that has just been rammed through congress, with its slight-of-hand tricky (double counting of Medicare and other accounting gimmicks), and you have at a minimum, another projected 2-trillion dollar entitlement.  Combine that with a growing senior population and record unemployment, and you have the perfect financial storm.   

 

In order for this administration to sustain this massive spending and borrowing orgy, and to pay down the debt, they need to raise revenues; however Obama is a slick and wily politician and realizes that rising taxes among the middle class would outwardly break his campaign promise of not raising taxes and of course would be unpopular in the midst of a severe recession and further erode his presidency.

 

And while taxing the “rich” is always a good political strategy for “progressives”, it would not generate the types of massive revenues needed, and that’s where the "value-added tax" comes in, its’s a insidious form of hidden taxation, and a perfect tool for this administration to hide behind.

 

Volcker acknowledges, that instituting a VAT tax would be a highly unpopular move, but quickly added that such a tax is "not as toxic an idea as it has been in the past."

 

Of course the White House on cue, issued an immediate response to Volckers comments “"The president has passed historic tax cuts for middle-class families and continues to push for more tax cuts. The president is not proposing to cut the deficit at the expense of middle-class families."

 

Again, all one needs to do is  look at the numbers and this adminstration’s progressive agendia to “fudamently transform America”  to realize that the course this adminstration is on,  is simply unstainable without massive tax increases across the board

 

I suspect that within the next few months this trial balloon by the White House will once again be floated out by another Obama adviser, and of course downplayed again by the White House. My sense is that they're priming the pump, and trying to gauge how severe the pushback will be.

 

If anything the healthcare debate has showcased Obama’s abilities to manipulate the process behind-the-scenes, without directely being envolved. It’s an excellent strategy in pushing through his radical agenda, and of course as demonstrated, he’s more then willing to sacerfice  house members and colleauges within his own party to push through whatever agenda he needs to push through.

 

For those unfamiliar with the VAT tax, simply take a look at our Europian neighboors across the pond, and you’ll have a good idea of what’s in store for us. Unlike a sales tax, that adds a one time tax on an item sold at the end of the manufacturing cycle,  the VAT tax is levied  at each stage of the production cycle for  whatever goods and services you purchase.

 

Politicians of course love this form of taxation because it gives them political cover, in that the tax is hidden within the purchase price of the goods and services sold, and of course no one is exempt. The danger with this type of insidious tax is the temptation by politicians to quietly raise rates to produce more and more revenues, as illustrated in Europe.

 

Countries like Denmark, Germany, Great Britain, Greece, and Italy are just a few of the countries that have raised the VAT tax, and by conservative estimates even a 1% VAT tax could raise as much as  $100 billion dollars a year, in additional revenues, and a 5% VAT  tax could bring in $500 billion dollars.

 

Of course it would be great if the VAT tax simply replaced the Income Tax. However the addition of 16,000 IRS Agents, to mandate healthcare suggests to me just the opposite is true, in that IRS will have sweeping new powers and be the enforcement arm of Obama’s healthcare bill.  Incredibly, the federal government now either owns or controls over 50% of private industry and 100% of the funding for higher education.

 

The battle lines have been drawn, and though at times we may despair. I’m quickly

reminded once again of our Founding Fathers and how they would have responded to this new “transformation of America” I suspect they would have once again been in the forefront leading the way, and perhaps remind this new “king” who currently occupies the oval office of another iconic character of William Shakespeare- King Richard III, when on the verge of his downfall, uttered these words in despair "Conscience is but a word that cowards use, Devis'd at first to keep the strong in awe".

 

 

 

Mr. President, we’re no longer in “awe”…and come this November, we’re taking back our country…one vote at a time!

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



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