Congeries of cross connected concepts
Both Brothers Judd and Extreme Wisdom have jumped on the bandwagon of a story from New Zealand which concerns lowering income taxes in exchange for raising the GST / VAT. I laugh at the concept. Tax cuts are temporary, new taxes and tax increases are permanent. Especially here, we might get a few years of a revenue neutral shift but soon enough the old tax would be raised back to the original level.
I would be more impressed if anyone could cite a place where this shift actually happened and lasted more than a decade. Certainly when we look around at other Anglospheric nations we see a common mode of failure in this regard. Why should we expect different results from the same actions in the future?
If, in exchange for a VAT, the 16&th& Amendment was repealed, I would be all for that.
| AVeryRoughRoadAhead Tuesday, 16 February 2010 at 02:31 |  |
The tax burden on Americans WILL be higher over the next twenty years than it was over the past twenty years. Period. End of story. (Although much of the increase might come in the form of inflation, rather than direct and overt levies.)
The burden will lessen again once economic productivity increases at a much higher rate than the historical average, (c’mon robotics, composite materials, bio- & nanotech!), OR once 75% of the Boomers have passed to their eternal reward. Whichever comes first.
Given that, I’d much prefer to see a consumption tax, such as a VAT, rather than an increase in income tax rates. The latter is a tax on productivity, which is EXACTLY the wrong prescription, comparable to the routine and incredibly damaging bloodlettings of past medical practice.
So I’m all in favor of adding a VAT on top of the current income-tax structure. If not, we’ll end up going back to pre-Reagan Federal income taxes.
