The Poor Woman and the VAT

[Luke 21:1] As he looked up, Jesus saw the rich putting their gifts into the temple treasury. [2] He also saw a poor widow put in two very small copper coins. [3] "I tell you the truth," he said, "this poor widow has put in more than all the others. [4] All these people gave their gifts out of their wealth; but she out of her poverty put in all she had to live on."

Usually, those who hear this story interpret it as someone giving their all being more generous than those who give just what they can afford. In truth, that's the idea that's being pursued, but there's a much deeper lesson for the taxpayers and citizens of this country.

Faced with a massive deficit and burdened with the costs of the new Health Care program, the administration and Congress (both of whom like the "and spend" portion of "tax and spend" so they must do the "tax" portion as well) are seriously looking into a European style Value Added Tax (VAT). What's that? Well, put simply it turns a "tax" into a "fee".

What happens is that a good or service, instead of being taxed at the time of sale, is taxed all along the line from the point where its created to the point when its delivered. That is, each time "value" is "added", there's a tax. This, then, becomes "hidden" in the cost of the item. So let's say you go to McDonald's for their (damn you, Ronald) highly addictive Iced Coffee. It costs $1.49, plus tax (I disavow all responsibility for knowing this). So, in Wisconsin, that's 5% sales tax. I see $1.49 on the menu and I have to pay $1.56.

In Europe, I'd see $1.56 on the menu, instead.

This is insidious for a couple of reasons.

• What you don't see, you don't think about. That means that you just "see" the $1.56. You don't realize that there's a tax in there. When the price goes up, you don't know if its the Cost of Business, if it's materials, if there's a coffee bean farmer's strike, or if Congress just voted themselves another pay raise.
• That is, this gives Congress a silent, perpetual bank account in the form of the consumer's pocket. They can levy whatever taxes they want and keep up their spendthrift ways without much repurcussion against them. They don't have to blatantly raise taxes that you feel on April 15. Instead, they can just quietly do what they want and you'll think, "Hmm... guess my coffee's a bit more expensive, now."
• Also, bear in mind that this is additional to, not instead of, state and local taxes. Yup, that's right, if this goes through, you'll not only be paying Uncle Sam on April 15th from your wages, you'll also be paying him for nearly everything you buy for your day to day living. And remember that the states, themselves, are facing huge budget deficits of their own, for which they will be raising taxes.
  

The administration and Congress know that there's not nearly enough money for them to fund not only the programs they've already put in place and mandated, but the ones they're now floating like the Dodd Plan. So they have to come up with an "inexhaustable supply" of cash (other than Obama's Stash) and this is their proposal for doing just that. As Jack Welch (former GE CEO) said on his April 15th Twitter,

Don't fall for a VAT tax plan "to get us out of hole"..It is a politicians dream PIGGY BANK

But one has to ask if it does, in fact work, then why not use it? For the answer, let's look at what happens in Europe. It turns out that Europe's VAT, the model for the U.S. lawmakers, is being used exactly as Mr. Welch predicted (and as any reasonably logical person would predict) -- it's a neverending stream of income that depends on subtly and constantly increasing rates.

But JT, what does this have to do with the "Poor Woman" parable?

Well, that's another of the insidious points to this -- it hurts exactly the people its proponents like to say they're helping. But then, this is nothing new. Already, the President has reneged on his pledge to not increase taxes on those making $250k per year. He has to. There's no money left.

But I digress. Remember the mantra of the administration and Congress that all these entitlement programs, including the Health Care bill are "for the poor"? Not so much. You see, a VAT is not a progressive tax. Its an across the board tax that taxes everyone based on their consumption.

I know this can be hard to follow, so let's take it back to the McDonald's analogy.

If I pay $1.56 for a cup of coffee, which includes 5% VAT (in my example), I do it out of $10 in my pocket. If someone not as well off as me, with say $2 in their pocket pays $1.56 for a cup of coffee, they have paid 4% of their available money in tax whereas I've paid less than 1%. They have, in effect, paid four times more than me because they have less to begin with.

A VAT therefore discriminates against those who have less to spend. Like the "Poor Woman", its a larger percentage of her available money than those who have more to spend.

And, in many ways, a VAT is nothing but a trough (excuse the applicable pun). It is, as I've pointed out earlier, a way for the government to go on an eternal feeding frenzy.

Our government has learned the hard way that taxes are a hotbutton issue. They have seen that We the People get a might testy when they tax us. But they need more feed in the trough, so their solution is to hide the source of the feed. Once again, they have attacked the symptom, not the cause. The cause, as so eloquently pointed out and proved by Eisenhower and Reagan, is spending.

Until and unless We the People demand, by ousting the hogs from the trough, an end to the spendthrift ways of our legislature, we will continue to be taxed. And now, we will be taxed without even being aware of it.

I, for one, am sick and tired of this endless cycle. And so, as I've said before, I've come to the conclusion that those who feed and feed and feed at the public trough are through. Using the guidance of our Founding Fathers, I am working actively to oust the incumbents -- all of them regadless of party -- who believe that "tax and spend" is their "right" and have failed to insure the blessings of liberty.

This is what I'm doing. What are you doing?

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