Sunday, April 18, 2010

The VAT

Writing in the Washington Post, George Will warns of the dangers of the value-added tax. While hardly a thrilling thing to read about, Americans ought nevertheless be aware of it.
Because a VAT potentially taxes everything, it would be riddled with exemptions. This is because it maximizes the political class's opportunities for showing favoritism -- by, for example, exempting certain "green" goods. It also widens that class's scope for the pleasure of being bossy. For example, it could reduce a VAT's regressiveness -- like rain, a VAT falls equally on the rich and the poor, but the poor devote a larger portion of their income to consumption -- by exempting most foods but not those that the nanny state disapproves: "Put down that sugary soda and step away from the vending machine!"

Money is time made tangible -- the time invested in the earning of it. Taxation is the confiscation of the earner's time. Although some taxation is necessary, all taxation diminishes freedom. Adding a VAT without subtracting the income tax would constrict Americans' freedom much more than the health-care legislation does. Because the 16th Amendment will not be repealed, adoption of a VAT would proclaim the impossibility of serious spending reductions and hence would be the obituary for the Founders' vision of limited government.

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