Tags: pelosi | vat | tax

Pelosi Admits New Taxes Are Likely

By    |   Thursday, 08 Oct 2009 02:09 PM

House Speaker Nancy Pelosi has raised the idea of imposing a value-added tax (VAT).

Such taxes are common in Europe and the developing world. They work like sales taxes but fall on every part of the production chain, from farm to factory to table.

The effect, simply, is to greatly increase the sales tax without letting on to the consumer, much like most state gas taxes are hidden in the price.

Pelosi discussed adding a VAT as part of comprehensive tax reform on PBS’ Charlie Rose Show.

"Somewhere along the way, a value-added tax plays into this," she said.

"Of course, we want to take down the health-care cost, that's one part of it. But in the scheme of things, I think it's fair to look at a value-added tax as well."

The VAT idea also was endorsed recently by John Podesta, president of the liberal Center for American Progress. The former Obama advisor recommends a "small and more progressive" VAT.

A 1 percent VAT on all goods and services would raise $63 billion, according to the Heritage Foundation.

If the VAT were raised to 20 percent, a not uncommon figure for countries with nationalized healthcare systems, it would bring in $1.26 trillion a year and cost every U.S. household $10,680 annually, the conservative think tank calculated.

Even if Congress passes a low VAT now, it would likely lead to higher rates in the future, the group warned.

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House Speaker Nancy Pelosi has raised the idea of imposing a value-added tax (VAT). Such taxes are common in Europe and the developing world. They work like sales taxes but fall on every part of the production chain, from farm to factory to table.The effect, simply, is to...
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2009-09-08
Thursday, 08 Oct 2009 02:09 PM
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