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Coalition Warns Against US VAT,
by Mike Godfrey, Tax-News.com, Washington
Friday, December 11, 2009
The Center for Freedom and Prosperity (CF&P) Foundation, joined by 21 free-market and
taxpayer groups, has sent a letter warning President Obama, Treasury Secretary
Timothy Geithner and top Congressional leaders about the "fiscal and economic
risks" of a value-added tax (VAT) in the US.
The Coalition for Tax Competition letter is in response to a growing push for
the implementation of a VAT in the US in order to raise more tax revenue.
The coalition argues that there has been a "failed history" of VATs
being applied in Europe and suggests that such taxes have traditionally been
associated with large increases in the overall tax burden and level of government
spending.
The letter concludes that "the United States should not repeat the mistakes
of Europe … bigger government and higher taxes would mean sluggish economic
performance and lower living standards."
"VAT's have historically resulted in massive increases in the overall
fiscal burden," said Andrew F. Quinlan, President of the CF&P Foundation.
"The massive expansion of government in Europe over the last thirty years
was made possible in large part by the VAT."
Dan Mitchell, a fiscal policy expert at the Cato Institute, remarked: "The
interest groups and politicians pushing for the value-added tax want a new tax
to finance more government spending."
Grover Norquist, President, Americans for Tax Reform, a member of the coalition,
cautioned: "Unless we want to end up with the economic stagnation of Western
Europe, we have to avoid a VAT at all costs."
Talking on the subject of tax reform on PBS's Charlie Rose show in October,
House Speaker Nancy Pelosi, a California Democrat, said that "somewhere
along the way, a value-added tax plays into this," before going on to add:
"Of course, we want to take down the health-care cost, that's one part
of it. But in the scheme of things, I think it's fair to look at a value-added
tax as well."
John Podesta, an Obama advisor, has also suggested that VAT is worth looking
at, in a "small and progressive" way.
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