FROM CNN's Jack Cafferty:
The idea of a national sales tax as a way to reduce deficits - which could total $4 trillion over the next 5 years - and pay for health care seems to be picking up steam.[cnn-photo-caption image= http://i2.cdn.turner.com/cnn/2009/images/05/28/art.manillavat.gi.jpg caption="Protestors in Manilla show anti-VAT signs in 2006. A value-added tax may be gaining traction with lawmakers in the U.S."]
The Washington Post reports that some lawmakers and experts suggest such a tax is one of the only ways to right our financial ship. A "Value Added Tax" or VAT is a tax on the transfer of goods and services - that would include everything from a gallon of milk to a visit with a lawyer. This kind of tax is used in more than 130 countries, and ranges from 5% in Japan to 25% in Hungary and parts of Scandinavia.
One downside is that a national sales tax would fall more heavily on the poor, but supporters say that could be offset by using the proceeds to pay for health care for every American.
Other potential advantages are that this kind of tax is hard to dodge and it punishes spending rather than saving, which the Obama administration wants to encourage. Also, some economists say the threat of a VAT could help pull the country out of a recession sooner by making consumers spend before the tax hits. Depending on what percentage the VAT tax would be, it could exempt millions of Americans from paying income tax and lower the top income bracket for wealthier people.
Top government officials from Former Fed Chairman Paul Volcker to the chairman of the Senate Budget Committee have expressed interest in exploring the idea.
Here’s my question to you: Is a national sales tax the answer to reducing deficits and paying for health care reform?
Interested to know which ones made it on air?
Susan from Sequim, Washington writes:
Sales tax is the ultimate unfair tax. For the poor, it taxes every penny. For the rich, it's a flea bite. Sales tax is the way the rich control the poor. And the middle class is getting pinched in between. This tax would be a big mistake!
A national sales tax would be a great idea. No loopholes for anyone, whether for yachts or clothes. And illegal aliens who have never paid for schools and medical care would have to contribute also. A fair tax. Exemptions for food and housing could be made.
If a VAT is created to replace the current tax code, then please do it tomorrow. Except for H&R Block, IRS employees, and possibly the makers of Xanax, does anyone like dealing with April 15th? Regardless of the income tax rate, the current tax system will always be unfair to the people who cannot afford to pay a CPA to do their taxes.
Molly from Los Angeles writes:
A thousand times no! Here in California, we at least get some state tax relief in the categories of groceries. My blood would boil if those basic necessities were suddenly taxed, too. And let's face it... these taxes would start at a low percentage and then just keep going up.
The Value Added Tax (VAT) is a great idea. I'm an American living in Heidelberg, Germany. The Germans have a VAT and it seems to be working fine. I gas up my Ford GT Mustang once a week and it costs me about $86 to fill the tank… If you want to bail out companies and create social programs, someone has to pay. The Americans wanted change; enjoy.
David from Texas writes:
Jack, Since I'm filthy rich, will you give my accountants time to figure out if I can avoid this tax before I answer?