[Marxism] VAT (was Debunking the Dumping-the-Dollar Conspiracy)

Shane Mage shmage at pipeline.com
Fri Oct 16 10:32:49 MDT 2009


On Oct 16, 2009, at 11:35 AM, Jim Devine wrote:
>
> I don't know about the "connivance of US authorities," but it's clear
> that various right-wing forces use the "fall of the dollar" to justify
> their current hobby-horses. Likely it won't be a VAT, but they're
> always pushing for a "flat tax."


The Right has always been horrified by the idea of a VAT.  The refrain  
has always been that VAT would raise so much money that the government  
would be able to spend meaningfully for social purposes.

And they were,  and are, 100% right.

The Dumbocratic Left has always been horrified by the idea of a VAT.   
The refrain has always been that VAT would be horribly regressive,  
raising money by taxing the subsistence necessities of the poor who-we- 
will-always-have-with-us.

And they were, and are, 100% wrong.

What is a VAT?  Not just a national sales tax, not just the most  
efficient, unevadeable  of taxes but in fact, if properly designed,  
the most *progressive* of all taxes.  How so? There exists a level,  
costed out annually by the BLS, of the expenses required to maintain a  
household at a basic level of health and decency (not just poverty).  
That expenditure is to be exempted from VAT by the simple measure of  
[p]rebating the tax on that level of consumption to every household in  
the country.  Because the incidence of the tax would be entirely on  
those consuming more than the basic health and decency level--while  
directly benefiting the poorest by the extent to which their [p]rebate  
exceeds the tax on their deficient level of consumption--it would fall  
directly on the wealthiest part of society.
The higher the tax rate, the more progressive.

VAT (as it should be) would also be in and of itself the fiscal  
resolution to the problem of budget deficits and mounting public  
debt.  Political debate would set the level of public expenditure and  
the desired macroeconomic levels of surplus or deficit and of savings  
raters--and here there's no substitute for a powerful Left-- but  
whatever those levels, the rate of VAT would adjust *automatically* to  
raise the requisite funds.

And of course, by applying to imported as well as domestic products,  
it would be a powerful stimulus to domestic production and employment.

So why is VAT so far "off the table?"

Because the Right has always been horrified by the idea of a VAT.  The  
refrain has always been that VAT would raise so much money that the  
government would be able to  spend meaningfully for social purposes.  
And the Dumbocratic Left has always been horrified by the idea of a  
VAT.  The refrain has always been that VAT would be horribly  
regressive, raising money by taxing the subsistence necessities of the  
poor who-we-will-always-have-with-us.



Shane Mage

> This cosmos did none of gods or men make, but it
> always was and is and shall be: an everlasting fire,
> kindling in measures and going out in measures."
>
> Herakleitos of Ephesos




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