Daniel J. Mitchell, Senior Fellow at The Cato Institute, said:


Handing Washington a whole new source of revenue would be akin to giving keys to a liquor store to a bunch of alcoholics.

The VAT -- on top of all the other taxes Washington imposes -- is a terrible idea. Imposing it would pretty well finish the transformation of our country into a European-style slow-growth nation. The right way to close Uncle Sam's gaping deficits is to reverse the continued explosion of federal spending.


Today's income-tax system is a nightmarish combination of class warfare and corrupt loopholes. But adding a VAT solves none of those problems; it merely gives politicians more money to spend and a chance to auction off a new set of tax breaks to interest groups. That's good for Washington, but bad for America.


Grover Norquist, president of Americans for Tax Reform, said:

The Democrats have finally showed their hand.  The plan is to spend so much taxpayer money and run up such a large debt that citizens can be terrified into accepting a massive new tax…the Value Added Tax.

The Value added tax in Europe averages about 20%.  Imagine if every product or service you purchased every day was to cost 20 percent more.  Your life savings are now worth 20% less. Your pension is worth 20% less.  Your salary is now worth 20% less in purchasing power.

That is Obama’s vision for your future.  More money for his Chicago politics.  Less for your family.

America will drift down to something between France and Greece.


Frank Askin, professor of law at Rutgers University, said:

Not nearly as much sense as restoring the Bush tax cuts and reinstating the inheritance tax. But they all may be necessary.


Justin Raimondo
, editorial director of Antiwar.com, said:

If you want to kill off what's left of the economy and impoverish the average American, then — please, by all means — be my guest and impose a "value-added tax." A new tax during a recession is the best way to push us into a full-fledged depression. We can call it America's Great Obama Depression, or to depersonalize it somewhat, simply "the Demo-pression." Just for the historical record, you understand ....


Peter Navarro, professor of economics and public policy at UC Irvine, said: 

A VAT makes no sense in an Obama administration. In theory, a revenue-neutral VAT that lowered marginal income tax rates would be a spur to growth but Obamaites would use the damn thing as a tax collector to pay for all the entitlement programs they want to create.

 

Glenn Reynolds,
Instapundit Blogger, said:

There are two problems with a VAT. One is that, despite whatever promises are made at the inception, we will wind up with an income tax as high as we have now, with a VAT on top of it. The other is that the VAT's chief attraction to politicians is its opacity. I would much prefer a national sales tax, where the amount of the tax is clearly indicated at the time of sale, and where the tax rate varies up and down along with federal spending. We are very unlikely to see that, because accountability for taxes and spending is not what politicians want.



Dean Baker, co-director of the Center for Economic and Policy Research, said:

A value-added tax could make sense in the United States but only after we had first tapped other more progressive revenue sources.

The most obvious alternative would be a financial speculation tax. A very modest tax on trades of financial assets (e.g., 0.25 percent on the buying or selling of a share of stock and 0.02 percent on a credit default swap) could raise a vast amount of money while barely affecting ordinary investors. England raises the equivalent of $40 billion a year just by taxing stock trades. A comprehensive set of speculation taxes in the Unites States could raise as much as $150 billion a year.

The only real obstacle to implementing a financial speculation tax is the power of the financial industry. They get members of Congress and other public figures to say silly things like a tax would have to be coordinated internationally or that it wouldn't raise very much money. This is in spite of the fact that the U.K. is already raising the equivalent of $40 billion a year with no international coordination. This is yet another case where politicians are asking us to believe them instead of what we can see with our own eyes.