An Anniversary We Will Never Forget

"Opinion"

09/02/2010

Paul Munnis


We are marching towards a tax anniversary of some importance. Back in 2001 President G.W. Bush wanted a tax cut. It was supposed to fix the economy and prevent recession. Since then we have had three recessions and the economy has decayed. Tax cuts are an economic flop and cause deficit spending. For example we had a major war in Iraq and it was all paid for with deficit spending because there was no budgeted money to fight the war with. Why wasn’t it budgeted? A lack of tax money is the reason given by the Republicans.

In December of 2010 these Bush tax cuts are scheduled to expire. This was written into the law as a sunset provision back in 2001. Nothing has to be done to make the Bush Tax Cuts come to an end. It will just happen. It is an Anniversary date that we will never forget.

Both the rich and the middle class received these tax cuts. The rich got a bigger proportion of the tax cuts and so it has been called: “Welfare for the Rich.” When the Tax Cuts expire then everyone’s taxes will increase. They will revert to the 2001 tax rates that we paid back then.

Make no mistake – it is a tax increase and it is a parting gift from G.W. Bush and the Republican Party.

Obama plans to let the tax cuts expire as scheduled by the GOP way back in 2001 this will cause a restoration of the tax rates to revert to back to the pre-Bush tax cut levels, thus leaving those couples earning over $250,000 a year with a tax increase at the 2001 level. The middle-class will get the tax breaks but not the rich; a reversal of current positions.

There are some issues ahead and the reluctance of the GOP to permit the middle class to get a tax cut and the desire to continue to subsidize the rich is one of them.

A lot of politics are starting to fly right now and after the 2010 election the flack will increase.

Yet something has to be done to pay the nation’s bills. For example we have an Army that needs a payday once a month.

How to raise the needed income?

We owe Social Security a lot of money. How do we pay back Social Security as Baby—Boomers line up for their Social Security checks? Medicare is another case in point; also, entitlements for healthcare insurance for the poor need to be paid for.

A lot of studies have been done and the two articles that appear today concerning the Value Added Tax (VAT) report on the findings of some of those studies. They recommend adoption of a VAT tax and if adopted that will silence all on the matter of the Bush Tax Cuts. If we adopt a VAT the Bush Tax Cuts will become moot, un-needed, and unnecessary.

What the VAT does is to end tax filings for American workers. There is no longer an income tax to fill out for individuals or for corporations. April 15th is just another day in paradise. The tax on your paycheck also ends.

Like a sales tax there is a tax on every transaction made and it is paid by individuals and corporations and it’s on their profits for that transaction. It has many similarities to a Sales Tax but one major difference. A Sales Tax is paid on the amount of the transaction while a VAT is paid on the profit made at each step in the value chain thus companies are not tax exempt. It is a proven method of collecting taxes and 150 nations use it successfully. It is largely transparent at the cash register when you buy something for it is so small. Everybody has to pay it without exception. It is being readied for a proposal to be evaluated right at the height of this debate over the Bush Tax Cuts. When a VAT is passed all of the old tax laws become history and they are thrown out. All that remains is the VAT. Since businesses add value the tax falls mostly on them.

You can read the two articles that I mentioned in the early part of this article.

The first article can be read by clicking HERE.

The other article can be read by clicking HERE.

You can also read an excellent Wiki article on the subject at this link:

http://en.wikipedia.org/wiki/Value_added_tax

We hope that you will take a moment out to educate yourself on a topic that you will be soon hearing a lot about.

The VAT Tax is coming to the USA; it’s not a matter of IF but rather a matter of WHEN.