Everyone knew the good times couldn't last forever. With Obama's spending spree piling up debt faster and in greater amounts than all the Presidents which have preceded him something has to give. There's a reason Democrats are known as the party of "tax and spend." They're doing the spending now and like night follows day the taxes are not far behind.
The question is how. How much and how fast. One trial balloon currently floated by former Federal Reserve Chairman Paul Volker is a European style value added tax (VAT) along with higher energy taxes.
VAT is a great way for politicians to hide their mischief by slowly ratcheting up the percent of tax applied to every stage of manufacture and retail. People don't see the tax go up, just the price of goods and services. No doubt Obama's ilk will blame those increases on greedy corporations in the same way they demonize insurance companies whose profit margins are much lower than other nonessential goods and services.
VAT started in Britain at a relatively modest 7.9% but is currently 17.5% and soon to head to 20%. The chart below illustrates how the VAT has grown into a monster sapping the economic strength of Europe's economies and leaving them mired in stagnation and high unemployment for decades.
Bam man pitching national sales tax
By GEOFF EARLE in Washington and TONY DAVENPORT in NY
New York Post
April 7, 2010
Acknowledging it would be a highly unpopular move, White House economic adviser Paul Volcker said yesterday the United States should consider imposing a "value added tax" similar to those charged in Europe to help get the deficit under control.
A VAT is a national sales tax that, like state and city sales taxes, would be collected by retailers.
Volcker, at the New-York Historical Society, told a panel on the global financial crisis that Congress might also have to consider new taxes on carbon and energy.
The VAT suggestion was immediately met with outrage by Republicans.
"It shouldn't surprise anyone that the Obama White House would advocate a European-style tax to help finance their European-style government health-care plan," said Brian Walsh, a spokesman for the National Republican Senatorial Campaign Committee.
"When you hear things like this, though, it's almost as if the Democrats think the American people will forget that we're in this situation because of their reckless spending agenda."
The tax has long had backing from House Speaker Nancy Pelosi (D-Calif.), who last year said it is "on the table" for dealing with the country's fiscal woes.
The White House denies they are planning a VAT tax. But it has been widely speculated that the recently announced budget deficit commission was nothing more than window dressing to provide political cover for the coming tax hikes.
The coming tax hikes will violate Obama's solemn pledge not to raise "one dime of ANY of your taxes" for those making less than $250,000 per year. Of course he's already violated that pledge and so many more that perhaps he thinks you'll let this one pass too. Will you?