by: Jeffrey Quinn
No surprise that big government is scrounging around for even more tax dollars. How else can the next social program to come down the pike be funded?
So here comes the Washington Post with news about the seriousness with which some in D.C. are looking at a national sales tax--that's right, now that you've actually saved a few shekels after paying your income tax and all of the other taxes, you might very well now be asked to pay tax to Uncle Sam, yet again, on what's left, when you go out and buy something with it!
The Post notes that at a White House conference earlier this year on the government's budget problems, a bunch of tax experts actually "pleaded" with (income tax expert, and Treasury Secretary) Geithner to consider a "value added tax," or VAT.
"There is a growing awareness of the need for fundamental tax reform," quoth Senator Kent Conrad (D-N.D.) recently. "I think a VAT and a high-end income tax have got to be on the table."
So, the latest thinking on "fundamental tax reform" includes hammering the "high-end" folks even more. Where will it end?
VAT espousers do recognize, of course, that this sort of tax is highly regressive--meaning that it burdens the lower income folks, proportionately, the most. But the Post notes that VAT advocates tend to slough off this negative aspect when viewing VAT revenue as a potential source for the next great social "reform" looming on the horizon: government controlled "universal" health care.
"While we do not want to rule any credible idea in or out as we discuss the way forward with Congress, the VAT tax, in particular, is popular with academics but highly controversial with policymakers," said Kenneth Baer, a spokesperson for White House Budget Director Peter Orszag. Nonetheless, Orszag has hired VAT advocate Ezekiel Emanuel (brother of Rahm, and author of 'Health Care, Guaranteed').
"Everybody who understands our long-term budget problems understands we're going to need a new source of revenue, and a VAT is an obvious candidate," notes Leonard Burman, co-director of the Tax Policy Center. "It's common to the rest of the world, and we don't have it."
Now there's a good reason for a new tax: everybody else has it but us!
And from our "let's shed a tear for the government" department cometh word that Federal tax revenue sagged $138 billion, or 34% in April, 2009 compared to a year ago, as reported in a recent study by the American Institute for Economic Research.
No surprise--given the state of the economy.
But all the more reason to find yet a new tax scheme, don't you think?
CONSULT YOUR TAX ADVISOR - This article contains general information about various tax matters. You should consult your CPA regarding the implications to your own particular situation.
Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno. He is also a contributor to the recently published twelfth edition of Tax Savvy for Small Business, published by Nolo. He can be reached at 831-7288, and welcomes comments at
jquinn@ashleyquinncpas.com.
