If Obama wants a VAT, he needs to eliminate the income tax

Barack Obama has suggested that he is open to instituting a VAT (Value Added Tax) in the United States. If you’re not familiar with a VAT, it essentially taxes a product at each level of production as it moves from a raw material to a finished product. Not surprisingly, the VAT has been used in Europe for years.

I’d be open to considering a VAT if it replaced the income tax and capital gains tax. At all levels of government, ways are found to add new taxes and fees to separate citizens from their money in a myriad of ways. Then, we hear about small, almost inconsequential tax increases that we will hardly notice. Of course, we end up enduring a series of tax and fee increases that can add up to substantial amounts. That’s why any talk of adding a VAT would have to at the very least include the elimination of the income tax. Including the capital gains tax would further reduce the burden and simplify the tax code. We don’t need yet another way of spreading our taxation around. Of course, I wouldn’t count on this happening.

The VAT is a regressive tax, and most liberals would fight any attempt to derive a substantial amount of revenue from a tax that isn’t progressive and doesn’t penalize those who are successful. After all, we can’t actually have those putting the most strain on services actually paying their fair share. That would fly in the face of the socialist utopia many liberals dream about.

I would actually like to see the United States eliminate the income tax, or at the very least move to a flat tax which eliminated all credits and deductions, with the exception of a standard deduction for each member of a household. Of course, this would hamper the government’s ability to spread around our tax increases in the hope we won’t notice or make too much of a fuss. A flat tax would be easy to monitor. That probably explains why we don’t have the option. Of course, the opposite could be said of the VAT, which would apply to multiple levels of production. I don’t know about you, but I think it’s a bit abstract and detached for the typical citizen to follow. That’s probably exactly what the government is hoping to achieve.