The liberal case for regressive taxation (VAT).

[pampango]

http://www.salon.com/news/feature/2010/08/10/liberal_case_regressive_taxation/index.html

"Just when you thought that bipartisanship was dead, many progressives can be found agreeing with most conservatives in opposing the adoption of a national consumption tax in the form of a value-added tax (VAT) of the kind that every other developed nation has.

The ironies are rich on both sides. Many of the conservatives who denounce the very idea of an American VAT support less efficient flat national consumption taxes, like the proposed Fair Tax. Meanwhile, many American progressives want a European-style welfare state, but don’t want to pay for it the way the Europeans do: with payroll and consumption taxes that fall on everybody, not just the rich. Instead, they dream of funding more generous Social Security benefits and a reformed Medicare program out of higher progressive taxes on the wealthy few -- something that not even the social democratic Swedes have done.

The best way to address income inequality in America is to focus on reducing exorbitant and unproductive pre-tax incomes, rather than redistribution. We want people to get rich by inventing new products or by long-term investment in enterprises that create jobs and wealth in the U.S. But steep inheritance taxes can nip hereditary dynasties in the bud. A financial transaction tax can close off short-term speculation as a road to riches, while encouraging patient investors. Capital gains can be taxed at the same rate as other forms of income. And control of professional certification can be taken away from the American Medical Association and American Bar Association and other cartels, so that America’s overpaid professionals can no longer rig entry requirements in their fields to drive up their fees.

For all these reasons, anti-VAT progressives should reconsider a position that puts them in the same camp as Tea Party libertarians instead of European social democrats. A left-right coalition against an American VAT is bipartisanship of the most misguided kind."

The EU also gets to assess imports with a "tariff" equivalent to their VAT since the VAT raises the price of all their manufactured goods.

[Hannah Bell]

1. there is no case for vat. the oligarchs *like* vat; european vat rates keep being raised

in conjunction with increasing inequality.

the wet dream is to fund government through vat leaving vast incomes untouched.

[aquart]

2. And then we can approve the flat tax. The VAT is rubbish.

And only millionaires want it.

[zipplewrath]

3. VAT is unprogressive

The european nations do not generally rely upon VAT alone. It is part of an extensive set of taxes that include steep taxes on income, especially the highest incomes. Property taxes are also steep.

We already have regressive taxes on fuel, tobacco, and alcohol. These are consumption based taxes generally speaking. And expansion of that, while leaving alone the other types mentioned would be silly. The last tax we need is the VAT, not the first. Get the capital gains back up with the income tax first. Get the top rate back up to something approaching 40%. Get a real social safety net in place, and we can talk about a VAT to pay for it then.

[pampango]

6. While the VAT is regressive it has provided funding for a progressive safety net that has withstood

stood the test of time.

I agree that a VAT without a "real social safety net" would be a terrible thing that would provide more resources for our MIC. Since Europe uses it (along with progressive taxation and others) and has the most equitable distribution of income in the world (outside of Japan) it may be something that they see as a "necessary evil" to provide the large amounts of funding that their social safety net requires. Europeans seem to realize that, while they almost universally cherish their safety net, its financial support cannot come from progressive taxes alone (perhaps because they have such an equitable distribution of income :) ).

There may also be a psychology at work that is similar to our Social Security taxes and political support for the program. Although FICA is a regressive tax system (and could be much less so with progressive changes), it has built a great base of political support over the generations for what is about the best "safety net" that we have.

[zipplewrath]

7. Taxes are about accessing wealth

It is hard to get at the wealth, because so much of it can be hidden, or otherwise inaccessible. We already have VAT taxes to some extent, they are called state and local sales taxes. They can run upwards of 20% in some tourist areas. We also have alcohol and other "sin" taxes. There is no doubt that we will always have regressive taxes. But as you suggest, in a place like Europe where wealth is taxed MUCH higher than here, VAT taxes become vastly less regressive since there is vastly more equity in the income distribution to begin with.

The US has gone backwards on progressive taxation in the last 40 years and really until we get some action on capital gains and other similar taxes, we have no business discussing VAT taxes. Practically every president since Reagan has managed to increase regressive taxes of one sort or another, while taxes on the wealthiest incomes have actually declined. This is especially true BECAUSE we have chosen to fund Social Security through a relatively regressive form of the FICA tax. Please don't use that example as a reason for MORE regressive taxation. If anything, it is an indication that VAT taxes shouldn't be considered at all until FICA is "fixed".

[Statistical]

4. VAT is regressive.

The benefits & programs funded by it *may* be progressive (but most likely in the US would be used to simply cut taxes and expand military) however that doesn't change the fact that VAT is horribly regresive.

We already have many flat & regressive taxes. State income taxes, real estate taxes, sales taxes, and excise taxes (gasoline, tobacco, alcohol, etc) are horribly regressive.

The only thing that *somewhat* offsets that is the fact that most federal taxes are progressive:
* income tax
* estate tax
* capital gains tax.

Adding another regressive tax at federal level will simply make the current unfair system even MORE unfair.

I will vote against any politicians who introduces or supports VAT. Period. It will be the last nail in the coffin of the middle class.

[Bandit]

5. How else will we get more money for War and Military Spending?

:shrug: