Numbers: Geithner, Gitmo and VAT
Seemingly random things.
A new Harris Poll out this week gives a not-so-stunning impression of Obama’s cabinet. You will recall reports ad nauseam during the transition about how genious each pick was, how each and every cabinet selection was inspired. How Obama was picking a team of rivals, not unlike, dare I say, [whisper] Lincoln.
You’re more likely to find someone who believes that Gitmo has weakened our safety than someone who thinks Timmah is doing a good job.
Well, not as advertised. Captain Indispensable, for whom an entire metric ton of tax law was set aside, is, with a 16% approval rating, less popular than Nancy Pelocchio (21%). Indeed, you’re more likely to find someone who believes that the terrorist detention facility at Gitmo has weakened U.S. safety than someone who thinks Timmah is doing a good job. (Incidently, the 14% recidivism rate of Gitmo detainees quoted by the Pentagon last week seems remarkably low. Perhaps it is a testament to the professionalism and dignity with which they are treated that Gitmo detainees are more than four times less likely to return to their illegal activity than criminals in U.S. prisons.)
Back to Timmah, and the fact that he’s flatly laughed at when he’s trying to reassure China that American currency is stable. But, it’s not like China is a reserved culture or anything. It all makes you wonder why it is that Captain Indispensable was so valuable that we needed to throw our integrity out the window and beg him, tax dodger that he is, to run Treasury and the IRS. I’m sure Obama has a carefully crafted, silky smooth answer. But who cares.
This would pay for health care, the bailouts, unicorn feed and kumbayah songbooks in Farsi
Anyway, all of this talk about Timmah, taxes and poll numbers gave me an idea. Last week, the Obama administration, through the Pit Bull’s brother, floated a lead balloon of an idea: let’s enact a Value Added Tax. (I have some experience with this monster, as I do a lot of commercial legal work in Europe.) The push-pull from the left was (i) this would pay for health care, the bailouts, unicorn feed and kumbayah songbooks in Farsi, but (ii) the peasants will never go for it, and Obama did promise not to raise taxes on anyone making less than $250,000 per year.
Of course, promises to Obama are like unicorns to the rest of us. They’re imaginary creatures that belong in fairy tales; not something to be relied on in real life. Nonetheless, as critics on the right have pointed out, you don’t raise taxes in a recession. And also, you don’t raise taxes in a recession.
You would have a flat tax regime for all but the top 5% of Americans.
But here’s my thought: let Obama enact his 10% VAT tax, and offset it with a broad income tax exemption for anyone who makes less than $250,000 per year. Combine this with the death of the Alternative Minimum Tax. Think about what we would have: no income tax, no complicated forms or calculations. Not loopholes or frustration on April 15 for huge swaths of Americans. In effect, you would have a flat tax regime for all but the top 5% of Americans.
Now, I’ve never been a soak-the-rich kind of person. The top 5% of Americans will, of course, be paying the 10% VAT tax on top of the income tax. This is a problem that needs to and should be fixed. I would suggest a flatter (and lower) tax bracket system, along with tax reform. But if you take a large portion of the population out of the labrynthe that is the US tax code, reform will be a lot easier.
In addition, unlike Obama’s plan to make the tax code more progressive, a VAT tax is regressive. It includes more people in the scope of the term “taxpayer” and, often therefore “informed voter” and therefore “angry.”
Of course, the whole thing falls apart when you realize that Congress will only keep its hands out of your pockets for so long. In a few short years, the broad income tax exemption will start creeping in at the margins until we’re Britain, paying both income tax and VAT. Well, it was fun while it never lasted.