Democrats in Washington haven't wanted to be terribly forthcoming as to how they intend to pay for the new healthcare entitlement program and other massive spending programs being passed.
It seems that our national debt ceiling now is raised every few months, and the federal deficit is higher than it’s ever been — exponentially so.
Well, we now can see why the liberal establishment hasn't wanted to address the issue head-on with the American people. At a private event the other evening, one of the Obama administration’s lead economic counselors, Paul Volcker, reportedly indicated the support for a value-added tax (VAT) may be more achievable than in the past.
This statement does not surprise me in the least. You see, to fund the federal government’s record spending, hard-working families and small businesses are going to be required to cover more of the bill — it is that simple. After passage of a nearly $1 trillion healthcare bill, the Obama administration no longer can deny this.
The only question in my mind has been how much will our taxes be raised — and when.
A VAT is added to a good at each stage of the production process. For example, a tax is tagged on when a hypothetical widget’s first component is put together. That's just the start. A new tax is added at each further stage of assembly, development, and distribution — all the way through until final sale.
Not surprisingly, the producers don’t bear VATs by themselves. Instead, those incremental taxes are passed along to consumers in the form of higher prices.
Even more troubling, this tax comes with a complete lack of transparency. Unlike a sales tax, which consumers see as a line item on their sales receipts beyond the retail price, a VAT is simply a hidden tax. It is another way for the federal government to take our money and deliberately leave taxpayers in the dark about their share of paying for the bloated federal budget.
Now keep in mind, the addition of a VAT would be on top of our already overly burdensome federal tax system — meaning that you would continue to pay your federal income, payroll, capital gains, and estate taxes. Don't be deceived into seeing this as a sister to the FairTax reform. This is an entirely new accounting that will increase the price of every good you buy significantly.
Some will argue that Volcker’s unofficial statement was merely just an administration official discussing possible new revenue streams with a friendly audience — not portending things to come. Not so. Things rarely happen from our leaders in Washington by accident. This was the first salvo in what many of us have feared — Democrats gearing up to increase our tax burden by creating a new form of federal taxation.
Those of us who believe that the federal government should learn to do its job with less money, just as the private sector is forced to do, must begin to prepare for this battle. We almost stopped the passage of healthcare reform despite little time to gear up a national effort in opposition. Short of a procedural maneuver, we would have succeeded.
Here, we have the advantage of time on our side, and we must get ready to fight. Fight for smaller, smarter government; fight to keep more of our hard-earned dollars; fight against yet another policy that moves us closer to the European socialist model.
Join me at Reagan PAC
to join a grass-roots force that will help lead the charge in keeping the VAT in Europe from being imported to our shores.
Mike Reagan, the elder son of the late President Ronald Reagan, is spokesman for The Reagan PAC and chairman and president of The Reagan Legacy Foundation
© Mike Reagan