New Idea for This Side of the Pond -LAT

[Rose Siding]

snip>
Thomas has suggested replacing the payroll tax on wages, which has funded Social Security since its inception, with a value-added tax common in Europe — a levy that would function like a national sales tax.
...
Operatives in both parties see Thomas' willingness to float such an ambitious idea as a sign of Republican concern that Bush's emerging approach is unlikely to pass.

"It's like you're in one of those mazes where you say, 'I know I'm in a dead end with this path, so I'll try the other fork,' " said Grover Norquist, a leading conservative activist close to the White House. "That may be a dead end too. But he thinks that as long as it is going forward, he has a chance to bring life to it."
...
Traditionally, Democrats have also opposed a VAT, or any consumption tax, because they consider it unfair to low- and middle-income families who must spend a higher percentage of their income on consumption than the affluent....
Gene Sperling, former director of the National Economic Council under President Clinton, said Democrats should at least be willing to explore the proposal Thomas had floated.

http://www.latimes.com/news/nationworld/politics/la-na-thomas29jan29,1,4722384.story?coll=la-news-politics-national

[davhill]

1. FICA is already a regressive tax

So replacing it with a VAT wouldn't make much diference, as long as it is used for social progams alone.

[rogerashton]

2. And it is a tax on labor.

So a tax on value added -- total of all incomes generated by the production -- could actually be a bit less regressive than the SST.

On the other hand this could be an opening wedge to replace the progressive income tax by the VAT. That's another story, and a long-standing right wingnut project.

[TahitiNut]

3. Bad idea!

OASDI (FICA) reflects, through the payroll tax, the labor compensation of the working class. As the working class is screwed out of fair compensation, FICA is like a canary in a coal mine.

Increase the Federal Minimum Wage.
Insist that earned income is taxed at lower rates than unearned income.
Reinstate the Estate Tax and put the proceeds into Medicare/Medicaid.
Force corporations to account for executive compensation as an after tax expense and NOT employee compensation.