The Other McCain

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It’s Not So Much The VAT As The Precedent

Posted on | October 13, 2011 | 61 Comments

by Smitty

I concur with Ace’s objection to the idea of a VAT:

It should go without saying that the VAT is an exceptionally bad idea, whether it’s paired with a flat tax or a fair tax or any other tax and whether it replaces the federal income tax or not. Whatever its merits, they are outweighed by its key features: the VAT obscures for the taxpayer just how much money is being sucked up by the government; it is prone to Congressional abuse; and it is, in the words of economists, “efficient.”

Yes, you can put VAT on each and every sales receipt. But unless the taxpayer keeps and diligently tallies every receipt, he will have no idea what he’s ended up handing over to Uncle Sam.

This feature of the VAT is a tax-and-spend liberal’s wet dream because it keeps the taxpayer-voter in ignorance of how much of his property the government is appropriating over time. Even under the current complicated income tax scheme, the taxpayer-voter has a pretty good idea of how much of his annual income gets sent off to Washington, D.C. And he can then make reasonable predictions and demands and votes when Congress starts fiddling with tax rates. But for the average American, if Congress were to adjust a VAT, the question “how much does this affect me or my business” becomes difficult to answer. Again, unless the taxpayer-voter has been keeping track of his consumption.

And I respect Herman Cain very much. However, if you’re conservative, you might want to ask yourself: after Cain, who does the conserving?

Cain may respect Greenspan for having been a good Federal Reserve chair, for some value of ‘good’. However, as far as I can tell, the whole concept of the Federal Reserve has gone pear-shaped. And I don’t see how the VAT avoids sitting alongside the Federal Reserve as another tool for avoiding doing the correct, conservative, reasonable, responsible thing: saying ‘NO’.

  • Got a problem balancing the budget? VAT!

  • Need money to fund a project to buy some votes? Jack that VAT!
  • Got an economic feevuh? Call VAT man!
  • VAT! What is the question?

None of this is intended as a swipe at Herman Cain, whom I’ll happily support as GOP nominee. I’m just concerned that the real problem we face is an over-powered DC, and a VAT sets a precedent that, if history means aught, will be molested horribly within my lifetime.

Unlike the Boomers, who really don’t seem to care fig #1 about any generation past themselves, I think that we have to look really long and hard. The World’s Youngest Blogger is the guy I have to answer to about how we deal with the death of Progressivism. VATs are a really smashing success in Europe, as long as you don’t care that it’s your wallet getting smashed.

What I want to hear from candidates is how they’re going to deflate the Federal over-reach bubble. A federalist approach could diminish DC and restore the power of states and the federal government to act as vertical checks, even as we restore horizontal checks of Congress on the Executive. A VAT, on its own, won’t kill the American experiment, but it could be a contributor, mixed in with all of the other legacy Progressive ideas with which we seem strangely comfortable.

Update: linked at The Lonely Conservative.

Update II: A moment of agreement with Grover Norquist:

Norquist was even less sanguine about Cain’s 9-9-9 plan. “Having three taxes, all of which can grow – it’s like having three needles in your arm taking blood out, it’s much more dangerous than having one,” Norquist explained.

Category: Taxes

Comments

61 Responses to “It’s Not So Much The VAT As The Precedent”

  1. Shawn Gillogly
    October 13th, 2011 @ 6:54 pm

    Cain’s plan includes a requirement for Congress to pass by a SUPERMAJORITY any increase to the tax rates.

    Seen any Congressional Supermajorities–both Houses–lately?

    I didn’t think so. I’d call that as close to iron clad insurance as politics gets.

  2. Shawn Gillogly
    October 13th, 2011 @ 6:57 pm

    Does your estimates of revenue have better data than Paul Ryan? You can say “Argument from Authority” all you wish. But that’s only a fallacy if the Authority is a false one, or fails to lay out his facts. Ryan explained why he believes it will work.

  3. Shawn Gillogly
    October 13th, 2011 @ 6:59 pm

    Fallacy. Arnie never ran the nitty-gritty of any business other than his own media promotion.

  4. nonewtaxes
    October 13th, 2011 @ 7:22 pm

    And Cain got his hands dirty…how?? His shocking answers to the most rudimentary economic questions makes me think someone else did the heavy lifting in his business ventures…. we don’t need another trainee as POTUS period!! I’m not too worried however, as I’m sure Cain will make some sort of fatal gaffe very soon.

  5. Anonymous
    October 13th, 2011 @ 9:05 pm

    Yes, but only in the sense that there’s no such thing as iron clad.  Does Godfather’s now serve unicorn ribs, too?

  6. Anonymous
    October 13th, 2011 @ 9:31 pm

    I’m starting to agree with liking Cain in spite of this stupid “666” plan.

    Newt always has a bunch of stupid plans laying around. None of them would pass muster in any committee of Congress.  But I think Newt would probably make a decent President (if someone waved a magic wand and got him the nomination, which ain’t gonna happen).

    I often wonder why can’t any of these knuckleheads just point to specific principles as laid out by the founders, and make plans based on that?

  7. Anonymous
    October 13th, 2011 @ 9:35 pm

    Every time I see Laffer on Kudlow’s show, I notice he’s not a staunch defender of Reaganomics.  He defends reducing the size of government, and a lot of other stuff, but he never strikes me as being a fan of the Austrian economics guys like Hayek.

  8. Anonymous
    October 13th, 2011 @ 9:40 pm

    The supermajority clause, in any case, cannot bind a future congress.  All they have to do is repeal the act that created the supermajority.  That only takes the kind of majority defined in the chambers’ rules for all legislation.  So when it comes to picking our pockets, no tax act limits Congress.  Only voters do that, and not very damned well.

  9. Anonymous
    October 14th, 2011 @ 1:28 am

    The whole thing reminds me of an Earl Scheib commercial.

  10. John Scotus
    October 14th, 2011 @ 3:54 am

    It is hard to disagree with this complaint. Cain’s inflexibility on this issue, along with his tendency to see the concerns of 9-9-9 detractors as illegitimate, should be a concern for conservatives. He just does not seem ready for office yet, even though there is so much to like about him.

  11. Rork
    October 14th, 2011 @ 5:56 am

    “Yes, you can put VAT on each and every sales receipt. But unless the
    taxpayer keeps and diligently tallies every receipt, he will have no
    idea what he’s ended up handing over to Uncle Sam.”

    You’re describing someone who doesn’t know how much he spends and/or how to divide. That guy’s got larger problems to worry about.