Kill the VAT Tax!
Or the VAT Kills the FairTax!
FairTax Mama to Members of Congress:
Join the Anti-VAT Tax Caucus… or Else!
Dear FairTax,
Stand by for one nasty tax increase idea -- there has been talk in Washington of the “need” for a European-style Value-Added Tax, or VAT Tax.
Let’s make this clear right now: if the VAT Tax is adopted, the FairTax is dead. A VAT has none of the protections of the FairTax for the middle class and poor. It is a secret, hidden tax which the politicians could increase at any time and we would never know. The VAT is a new, added tax; unlike the FairTax, the VAT does not eliminate or even reduce any other tax. It is a very bad form of consumption tax that would drive up the cost of living and make the politicians and special interests even more powerful! Once a VAT is in place, we could never convince the American people to adopt the FairTax. Take your stand right here, right now with your FairTax organization against the proposed new European-style VAT Tax!
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Your FairTax Anti-VAT Tax Action Demand
Why is the VAT Tax the Worst Possible Kind of Tax?
Here is how a Value-Added Tax works for the politicians and powerful special interests and against American Taxpayers:
- A tax is added to the cost of every product made in America, as it is produced, at every level of production. So in making a car, the iron ore has a VAT tax added, the steel mill adds a VAT tax. Then the car company adds a VAT tax. And finally the dealer adds a VAT tax and all of this is added to price you pay for your car!
- Now here is the part the politicians really like: you do not see the value added tax! The VAT tax is the perfect politician’s tax. Every time the politicians want to spend, and spend and spend some more, they increase the hidden VAT tax…"just a little." You would never have any idea how much the VAT tax adds to your cost of living!
In Europe the Value-Added Tax started very low. Then, like all taxes, it was increased "just a little." Then a little more… and now the European VAT adds 18% on average more to the cost of everything!
Would the VAT replace some other tax? Of course not! The VAT would hit us after all the taxes and other payroll deductions have already been taken from us. The proposed new European-style Value-Added Tax on all Americans would be in addition to all those taxes we already pay!
Would the VAT reduce any other tax? Of course not! All the taxes - income taxes, death taxes, alternative minimum tax, capital gains taxes, excise taxes, Social Security taxes, employment taxes, the marriage penalty - they will all still be there grabbing at every dime, every penny, every dollar that moves and many that stand still!
The only money that does not get taxed is that which has been taken out of the United States, or where some special interest has made a deal with the power brokers in Congress to avoid taxes.
Do you ever think of moving money out of the United States? NO!
Do you ever get one thin dime of tax relief from the special deals recorded in the 70,320 pages of the current tax code? NO!
Why not? Because the politicians in charge do not care about honest, hard working Americans. The Special Interest lobbyists earn over $1,500,000,000.00 every year—that is 1 Billion, 500 Million dollars a year from banks, insurance companies and others to cut sweet special deals that result in lower taxes for them, and higher taxes for ordinary Americans!
That is why those 70,320 pages of tax code increases by an average of five pages a day, every day, 365 days a year… and not one page, not one paragraph, not one sentence, not even a word for you or any other typical honest American taxpayer. So take action now!
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Your FairTax Anti-VAT Tax Action Demand
But of course you know there are those who oppose the FairTax. The special interest lobbyists make $1,500,000,000.00 a year just getting the power brokers to add more pages to the tax code which is already 70,320 pages long. The Members of Congress who serve on the important tax-writing committees very much enjoy all the attention they get from the rich and powerful, the junkets and the sheer power that comes with being able to give wealthy people--along with banks and other financial institutions--huge tax breaks.
These are powerful people who will not give up their power or their big incomes easily. But we can do it. It is in your hands right now. I have signed and returned the Anti-VAT Tax Action Demand, I hope you will too.
Of course drug dealers, black marketers, illegal aliens and tax lobbyists are not going to like the FairTax either.
So, it is so urgent that you take action right here and right now!
Thank you for your support! We can beat the VAT, we will pass the FairTax—and that is a promise!
Urgently yours,
Ken Hoagland
Chairman, FairTax National Victory Campaign
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Your FairTax Anti-VAT Tax Action Demand.
Kristina,
ReplyDeleteKen's letter is full of inaccuracies. A VAT and a Sales tax are both forms of consumption taxes. He failed to note that producers add the VAT only to the value added at any particular level of production. He makes it sound as if the VAT tax percentage cascades or accumulates at each level. It doesn't! Assuming a 23% VAT, it doesn't matter how many levels of production there are, the tax rate remains the same--23%.
A 23% VAT would raise the same amount of revenue as a 23% Fairtax. The only difference is that a portion of the tax revenue is collected at each stage of production rather than at the retail cash register. And due to the collection method, a VAT will have a much lower evasion level, which is good.
There is nothing hidden or secret about a VAT. If Congress votes for a 23% VAT, then everyone knows what the tax rate is. If you want to see the rate and tax amount that has been paid on the retail cash register receipt, it can easily be done. No different than seeing the Fairtax rate on the receipt. Even better, because the Fairtax receipt fails to show that the retail merchant actually added 30% to his costs in order to arrive at a 23% tax inclusive price.
The VAT may or may not replace some existing taxes contrary to Ken's rant. We will have to wait until December to learn about details of the Obama Commission's recommendations, but it may be that the VAT would replace all income taxes for those below a certain income level.
Stay tuned!
What happens with a VAT is that a small percentage is added at each stage of production, embedding taxes into everything we buy (which is currently done with payroll and corporate income tax).
ReplyDeleteThe VAT would be something like 1% on each stage. Since each good created has differing stages of production, it's unlikely they'll create a "total VAT" of 23% because there's no formula that could predict what to add at each stage. The more something is process, the higher the embedded VAT tax.
A VAT is embedded, not transparent. There will not be a line-item on my retail receipt showing the tax included in the purchase price. It's nearly impossible to tell how many different entities contribute to the chicken wings I purchase wholesale for my restaurant or the cooking oil I use gallons of every day. The cost to me will be higher, which means I then have to raise the cost to my customer just to make the same profit.
On top of it, everything in America will have a built in VAT when sold overseas. Our payroll and corporate income taxes already reduce the competitiveness of our products on the world market. VAT will completely kill it. When was the last time you purchased something made in the UK that didn't cost an arm and a leg??
Finally, VAT is on top of our current income tax structure. So what if the Obama Commission says that they'll remove income taxes for lower-income people - the bottom 47% don't pay taxes now! Oh, wait, I guess you mean "LET'S TAX THE RICH!" That's not going to fix our economy, Dutchman3. It's only going to force businesses and corporations to leave America for a better economic climate.
The only thing the VAT does is give more money to the government. It will kill our economy.
Sorry, Kris, but you don't seem to understand the workings of a VAT. The Congressionally mandated VAT rate would be applied at every level just on the value added at that level. A business can look at the costs to purchase materials from suppliers and look at their own sales data and essentially pay the VAT on the difference, or what is known as the value added. In practice, each supplier must attach a certificate as to the amount of VAT paid, and the next producer up the line simply applies the VAT rate to total sales, reduces the tax by the amount previously paid, and sends the difference off to Washington, Nothing is secret or hidden in the process. We all will know what the VAT rate is, and if you want to see the VAT rate and amount of tax previously paid, it can easily appear on your retail sales receipt.
ReplyDeleteDue to the collection process and the VAT paid certificate, a VAT tends to have far less illegal evasion than a sales tax or income tax. Suppliers that don't pay the VAT will be quickly dropped because the next business up the line won't be able to deduct that piece of the VAT. Honesty counts!
How does it simplify our tax system?
ReplyDeleteKristina,
ReplyDeleteFrom whose perspective and compared to what? Compared to the current income tax system, a VAT is simplification squared for all of us. No more tax filings, record keeping, lost sleep, etc. etc.
From the perspective of businesses, more record keeping for sure, but nothing they don't have data for now.
I'm surprised mthat so called experts continue to bash the VAT, claiming it is a hidden tax, etc. I hope by now you realize there is nothing hidden about a VAT, and it raises the same amount of revenue that an identical sales tax would raise.
I sometimes wonder if the real problem is the VAT wasn't invented in the USA. If 135 countries arond the world use the VAT, it can't be any good???