Obama's New 'VAT-trick'

Charles Krauthammer had an op-ed in last weekend's Washington Post that predicted a national sales tax, known as a VAT (Value Added Tax) will be recommended to pay for the trillions in debt racked up by this administration. Obama passed the buck to a newly anointed commission to solve his fiscal problems. It's report is due in December, long after November elections.

Popular in Europe, the VAT is a hidden tax, rolled into the price of goods or service. Make no mistake--this sales tax will not replace the income tax(es), but be added to the income tax. (Plus any state/county/city sales taxes!)

Said Krauthammer, "That's where the value-added tax comes in. For the politician, it has the virtue of expediency: People are used to sales taxes, and this one produces a river of revenue. Every 1 percent of VAT would yield up to $1 trillion a decade (depending on what you exclude -- if you exempt food, for example, the yield would be more like $900 billion).

It's the ultimate cash cow. Obama will need it. By introducing universal health care, he has pulled off the largest expansion of the welfare state in four decades. And the most expensive. Which is why all of the European Union has the VAT. Huge VATs. Germany: 19 percent. France and Italy: 20 percent. Most of Scandinavia: 25 percent."

Obama said of the panel, "everything is on the table." Some see this as a signal Obama is willing to abandon yet another promise of no taxation of families making over 250K. A VAT tax would hit middle and lower classes like a sledgehammer. And considering that 70% of the GDP is consumer spending, such a tax will drive down spending and open a HUGE black market and off-the-books barter system.

So far, this country has survived for over 230 years through wars and hard times. But will it survive the next 3 years of this administration?