We are led to believe that
the two political parties are fighting ferociously to protect and PROVIDE for
their constituencies. Ha! Not so. Either consumption tax as a
"solution" would further cripple those with the least disposable
income, the poor and the productive middle class. The burden of debt as it
exists right now is heaped upon the backs of the working class right now. Additional burdens will bring him
to his knees.
Republican Sham of a VAT Tax on the American People
Even those with a rudimentary understanding of our income tax will know that
the Congress end-rounded the Constitution by eliminating the equal
"apportionment" requirement. The income tax started out as only a tax of 1%
on incomes exceeding $3,000 and then 7% exceeding $500,000. In 1917 there were but 3,473 returns - TOTAL! How's that play out today for trusting
We should point out that Lincoln was
the first ever President to
impose an income tax
in 1862. Subsequently, direct
income taxes were rightfully held to be un-Constitutional. So, if Republican
Lincoln could break the Constitution, why shouldn't today's GOP sneak in a
VAT on the American people? It's consistent with their historical methods of
building government bigger. Yes, We Can!
The Value-Added Tax Is Not the Answer
by Murray N. Rothbard
This originally appeared
in Human Events, March 11,
One of the great and striking facts of recent months is the growing
resistance to further taxes on the part of the long-suffering American
public. Every individual, business, or organization in American society
acquires its revenue by the peaceful and voluntary sale of productive goods
and services to the consumer, or by voluntary donations from people who wish
to further whatever the group or organization is doing. Only government
acquires its income by the coercive imposition of taxes. The welcome new
element is the growing resistance to further tax exactions by the American
In its endless quest for more and better booty, the government has contrived
to tax everything it can find, and in countless ways. Its motto can almost be
said to be, "If it moves, tax it!"
Every income, every activity, every piece of property, every person in the
land is subject to a battery of tax extortions, direct and indirect, visible
and invisible. There is of course nothing new about this; what is new is that
the accelerating drive of the government to tax has begun to run into
determined resistance on the part of the American citizenry.
It is no secret that the income tax, the favorite of government for its
ability to reach in and openly extract funds from everyone's income, has
reached its political limit in this country. The poor and the middle class are
now taxed so heavily that the federal government, in particular, dares not
try to extort even more ruinous levies.
The outraged taxpayer, after all, can easily become the outraged voter. How
outraged the voters can be was brought home to the politicians last November,
when locality after locality throughout the country rose in wrath to vote
down proposed bond issues, even for the long-sacrosanct purpose of expanding
Defeat in New York
The most heartening example – and one that can only give us all hope
for a free America – was in New York City, where every leading
politician of both parties, aided and abetted by a
heavily financed and demagogic TV campaign, urged the voters to support a
transportation bond issue. Yet the bond issue was overwhelmingly defeated
– and this lesson for all of our politicians was a sharp and salutary
Finally, the property tax, the mainstay of local government as the income tax
is at the federal level, is now generally acknowledged to have a devastating
effect on the nation's housing. The property tax discourages improvements and
investments in housing, has driven countless Americans out of their homes,
and has led to spiraling tax abandonments in, for example, New York City,
with a resulting deterioration of blighted slum housing.
Government, in short, has reached its tax limit; the people were finally
saying an emphatic "No!" to any further rise in their tax burden.
What was ever-encroaching government going to do? The nation's economists,
most of whom are ever eager to serve as technicians for the expansion of
state power, were at hand with an answer, a new rabbit out of the hat to save
the day for Big Government.
They pointed out that the income tax and property tax were too evident, too visible,
and that so are the generally hated sales tax and excise taxes on specific
commodities. But how about a tax that remains totally hidden, that the
consumer or average American cannot identify and pinpoint as the object of
his wrath? It was this deliciously hidden quality that brought forth the rapt
attention of the Nixon administration, the "Value Added Tax" (VAT).
The great individualist
Frank Chodorov, once an editor of Human Events,
explained clearly the hankering of government for hidden taxation:
It is not the size of the
yield, nor the certainty of collection, which gives indirect taxation [read:
VAT] preeminence in the state's scheme of appropriation. Its most commendable
quality is that of being surreptitious. It is taking, so to speak, while the
victim is not looking.
Those who strain
themselves to give taxation a moral character are under obligation to explain
the state's preoccupation with hiding taxes in the price of goods. (Frank Chodorov, Out
of Step, Devin-Adair, 1962, p. 216–239)
The VAT is essentially a
national sales tax, levied in proportion to the goods and services produced
and sold. But its delightful concealment comes from the fact that the VAT is
levied at each step of the way in the production process: on farmer,
manufacturer, jobber and wholesaler, and only slightly on the retailer.
The difference is that when a consumer pays a 7 percent sales tax on every
purchase, his indignation rises and he points the finger of resentment at the
politicians in charge of government; but if the 7 percent tax is hidden and
paid by every firm rather than just at retail, the inevitably higher prices
will be charged, not to the government where it belongs, but to grasping
businessmen and avaricious trade unions.
While consumers, businessmen, and unions all blame each other for inflation
like Kilkenny cats, Papa government is able to
preserve its lofty moral purity, and to join in denouncing all of these
groups for "causing inflation."
It is now easy to see the enthusiasm of the
federal government and its economic advisers for the new scheme for a VAT. It
allows the government to extract many more funds from the public – to
bring about higher prices, lower production, and lower incomes – and
yet totally escape the blame, which can easily be loaded on business, unions,
or the consumer as the particular administration sees fit.
The VAT is, in short, a looming gigantic swindle upon the American public,
and it is therefore vitally important that it not pass. For if it does, the
encroaching menace of Big Government will get another, and prolonged, lease
One of the selling points for VAT is that it is supposed only to replace
the property tax for its prime task of financing local public schools. Any
relief of the onerous burden of the property tax sounds good to many
But anyone familiar with the history of government or taxation should know
the trap in this sort of promise. For we should all know by now that taxes never
go down. Government, in its insatiable quest for new funds, never relaxes its
grip on any source of revenue.
You know and I know that the property tax, even if replaced for school
financing, will not really go down; it will simply be shifted to other
expensive boondoggles of local government. And we also know full well that
the VAT will not long be limited to financing the schools; its vast potential
(a 10 percent VAT would bring in about $60 billion in revenue) is just too
tempting for the government not to use it to the hilt, and, in the famous
words of New Dealer Harry Hopkins, "to tax and tax, spend and spend,
elect and elect."
Let us now delve more deeply into the specific nature of the VAT. A given
percentage (the Nixon administration proposal is 3 percent) is levied, not on
retail sales, but on the sales of each stage of production, with the business
firm deducting from its liability the tax embodied in the purchases that he
makes from previous stages. It is thus a sales tax hidden at each stage of
production, from the farmer or miner down to the retailer.
A "Regressive" Tax
Read more>>The Value-Added Tax Is Not the Answer by
Murray N. Rothbard