The Unavoidable

“The years of debt and spending make this unavoidable,” said British Chancellor of the Exchequer George Osborne in defense of an increase to the Value Added Tax (“VAT”). So, rather than addressing the spending to alleviate the debt, the British government has decided to increase their reach into the pockets of the British people. This, of course, is the natural progression of oppressive government taxation: take and spend as much as possible until your level of spending forces you to take more. The value added tax, ironically, is the next revenue stream proposed by the current U.S. Congress.

In short, the current proposed U.S. VAT seeks to tax the final step in the process, consumption, on top of each other step (i.e. payroll, income, corporate, capital gains, sales, etc.). Even the title is misleading, since it implies that the tax is related to value, which it isn't. It is simply a creative way to suck more blood from the stone in order to keep the vote purchasing mechanism well greased.

As I am a small government Libertarian, I see the need to have some method for paying for government, albeit on a much smaller scale. What we must do is streamline the tax structure while eliminating the ability for bureaucrats to manipulate the system for vote generation. The answer to this is the Fair Tax, where all other methods of government funding are eliminated, replaced by a single consumption tax that is fixed (i.e. not vulnerable to increase to pay for government fiscal irresponsibility). By placing the burden of tax payment on all consumption, we eliminate loopholes currently exploited by illegal aliens, criminals and those wealthy enough to hide their taxable income in the most creative ways. In this way we also remove the power of taxation from the people who spend the money, forcing them to work within the constraints of available funds.

TANSTAAFL