July 23, 2014 SIGN IN | REGISTER

Forces Gearing Up to Battle Value-Added Tax

“As these guys want to have a federal takeover of health care in the United States and ... as they grow the government, they have got to fund the government,” Armey said of Democrats. “The fact of the matter is they’re going to be looking for additional tax revenues.”

Armey said his fight against health care reform proposals and a VAT or national sales tax will be intertwined.

“Their main object is to have the government in control of health care,” he said. “We believe that, quite frankly, we can stop the nationalization of health care. We stopped it in ’94, and we can stop it with Obama.”

When it comes to the tax, though, many lobbyists say it would be a long shot at best for passage.

Tax lobbyist Ken Kies, who served as chief of staff to the Joint Committee on Taxation in the 1990s, called VAT’s chances this Congress “pretty far out,” even though he wrote an article in May warning that a VAT proposal could be on the horizon because of the mounting fiscal deficit.

If government spending creeps up and the deficit continues to rise, “the administration is going to have to say we have a solution,” Kies said. However, he noted, “it could get serious if in a presidential campaign, one of the two candidates said we need to do this and whoever it was won. Unless you have a mandate from the people, then doing this is way too risky politically.”

One leading argument against a VAT or national sales tax is that it would disproportionately tax those at the lower income levels because they spend a greater percentage of their income than people at higher income levels.

Kies said there’s a way to get liberal groups on board by offering a refundable credit to people under a certain income and by exempting certain goods from the tax.

Toby Chaudhuri, spokesman for the progressive organization Campaign for America’s Future, said his group does not support the idea.

“Our tax code is already too regressive — with income from wealth taxed at lower rates than income from work, with lower top end tax rates and increased tax loopholes, with payroll taxes the most regressive of all,” he said. “We should be focused on progressive tax reforms — raising the top end rates, closing down tax havens, raising rates on capital gains, taxing speculation with a small financial transaction tax. A national sales tax is the worst of the alternatives.”

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