I will end today on taxes and move to health care next week but there is plenty more to say about tax policies and where global pols want to go. Yesterday I showed Obama and Clinton neo-liberals posing progressive in pretending raising the capital gains and dividend rate of taxation was MAKING THE RICH PAY THEIR SHARE. We saw how the rich have been allowed all the loopholes they need to pay any capital gains and dividends and Obama and neo-liberals know that. Why did they do that? Well, it was more than progressive posing-------they wanted to raise taxes on the working and middle-class having stocks as part of their 401Ks, pensions, and main street individual investors.
CLINTON/OBAMA NEO-LIBERALS WERE TAXING THE AVERAGE CITIZEN WHILE PROTECTING THE RICH FROM THESE SAME TAXES. THAT IS A VERY REPUBLICAN THING TO DO.
Obama is Reagan----a Republican neo-liberal and Reagan did to conservative Republicans and conservative Democrats----what Obama did to the Democratic base. Reagan sold the idea of needing to reform taxes to lower tax rates to free business to create jobs and voters fell for this. Reagan was always an extreme wealth and global corporate empire far-right pol----but it was his job to appeal to the Republican base of small and regional business owners and workers wanting jobs. Reagan's idea of tax reform was just like Obama's-----he made drastic cuts in the corporate tax rate and raised taxes on the average citizens. Conservative Republican voters loved this at first because huge US corporate monopolies turned global hadn't captured and killed the US economy-----which it did soon enough thanks to Reagan's Republican tag team Clinton. This is why taxation on the average person has gone up and up and up since Reagan----the rich and corporations are no longer paying taxes and are now being given our taxes to subsidize corporate profit.
THAT IS THE GOAL OF TAX POLICY FOR WALL STREET GLOBAL CORPORATE POLS.
'And like Reagan, Obama will be a transformative president.
The national media has tried so hard to allow a global corporate and extreme wealth neo-liberal look progressive NO ONE BELIEVES THIS STUFF. Obama is being painted what will be the next phase of TRANSFORMATIVE STRUCTURAL CHANGE IN THE US-----global corporate tribunal rule. They use Obama as a Democrat to start the idea of corporate socialism----
CORPORATIONS WILL TAKE CARE OF YOU SAYS A GLOBAL CORPORATE WALL STREET NEO-LIBERAL----AND THIS IS SUPPOSED TO BE LEFT-LEANING. GLOBAL CORPORATE CAMPUSES AND GLOBAL FOXCONN FACTORIES IN A US INTERNATIONAL ECONOMIC ZONE WILL INDEED HAVE AMERICAN WORKERS LIVING, EATING, SCHOOLED, AND WORKING 15 HOURS A DAY ON THAT CORPORATE PLANTATION.
11.04.08 6:34 AM ET
Obama Is the New Reagan
A former Reagan speechwriter says Obama is like The Great Communicator in his style, oratory, and temperament.Now Barack Obama has been elected, he can begin to work as the transformative president he said he wanted to be. When he declared that ambition on the primary trail, he found himself vilified by Hillary Clinton for comparing himself to Ronald Reagan.
But that comparison is apt, as is becoming evident by the hour. The inspiring, elevated, ambitious victory speech he gave in Chicago last night confirmed that he has taken on the mantle that Ronald Reagan laid down after two terms. Obama hopes to change the country for the better, as Reagan did, and already he seems heading in the right direction.
Effective government is what we need. Call it New Deal II. And Roosevelt’s oratory, his Fireside Chats, helped to inspire people to support his programs. Roosevelt, Reagan...Obama.
During the primaries, Obama said Reagan had set politics on a new trajectory, and that Bill Clinton, for example, had not. He was right, but was severely criticized by Democrats for saying something positive about Reagan.
In fact the two men have a great deal in common. Temperament, to be sure. And like Reagan, Obama will be a transformative president. And like Reagan, Obama is a Great Communicator, his oratory energizing people for change.
The first time most people became aware of Obama was when he made that great speech at the 2004 Democratic convention. We knew then we would hear from him again. He might prove to be the next great orator in American politics after Ronald Reagan. In a parallel way, most Americans became aware of Reagan when he made what came to be known as The Speech in 1964, supporting Barry Goldwater.
Effective government is what we need. Call it New Deal II. And Roosevelt’s oratory, his Fireside Chats, helped to inspire people to support his programs. Roosevelt, Reagan...Obama.
As it happens, early in 1968 I found myself in Sacramento working as a speechwriter for Reagan. William F. Buckley had been visiting Reagan at his place in Pacific Palisades, and it became evident that Reagan was thinking of running for the Republican nomination.
In 1962, following his narrow 1960 loss to Jack Kennedy, Richard Nixon had run for governor of California, losing to Edmund G. (“Pat”) Brown. Nixon gave his angry “last press conference.” In 1966, Reagan had defeated Brown by a million votes. Buckley persuaded Reagan that he needed me for a speechwriter, even though I had never written a political speech.
I quickly educated myself in what a political speech must do. It’s not primarily about information but about communion—with the target audience. But Reagan didn’t need a speechwriter. He was a good one himself. He wanted themes, paragraphs, memorable sentences. I did, however, help him a great deal on a speech about education.
In person, Reagan was a great deal like Obama, in his self-confidence and his equanimity under pressure. One morning, a member of staff asked the governor whether had read that day’s column by Herb Caen, a hostile San Francisco journalist. “Yes,” Reagan replied. “What’s the matter with that guy?” (Nixon, for whom I soon became a speechwriter, probably would have said, “We’ll get him. Put him on the list.”)
Reagan’s sense of humor disarmed even people who disagreed with him. At a press conference he was asked by a reporter, “Governor, have you seen all those anti-war pickets marching around the capitol?” Reagan asked, “Do you mean the ones carrying signs that say “Make love not war?” “Yes, governor.” Reagan: “Well, since you ask me, I don’t think they could do much of either.”
But he could also be steely, as in his confrontation with the air traffic controllers who were on strike, or in hitting Lybia’s Qaddaffi hard in the Gulf of Sidra affair. That was foreshadowed at a press conference. “Governor, the Black Panthers in Oakland are threatening a blood bath.” Reagan: “If they want a blood bath they can have a blood bath.”
Reagan’s “What’s the matter with that guy” came to my mind when Reagan destroyed Carter in a 1980 debate with “There you go again.” And in 1984 when he dismissed his age with a joke in a debate with Mondale: “I’m not going to hold my opponent’s age and inexperience against him.”
Reagan’s self-confidence enabled him to negotiate successfully with Gorbachev, even earning the Russian leader’s respect. The Soviet Union was crumbling economically, but Reagan gave it a push with the Star Wars missile defense shield (SDI), which the Soviets couldn’t afford even to test. Margaret Thatcher did exaggerate a bit, but she was essentially right when she said that “Reagan won the cold war without firing a shot.” In foreign policy Reagan set the country, and the world on a new trajectory by pushing the Soviets on the path to demise.
Domestically, he understood that marginal tax rates were too high. And as president he lowered marginal tax rates and stimulated the economy. But that didn’t mean that taxes should be lowered under any conditions. And Reagan understood that many federal programs were counter-productive. The Aid the Families With Dependent Children program actually encouraged the man to leave the household.
Today, our problems are not those Reagan faced, and today’s Republican party is not the party of 1980. It was irrelevant for John McCain to claim he had been a “foot soldier in the Reagan army.” The problems of the Republican party today demand entirely new thinking about what that party must be if it is to govern again. Symbolic of its problems is the fact that not since the 1920s has the theory of evolution been controversial in politics. The Republican party cannot be a tool of the evangelical movement, on evolution, stem cells and a host of other issues.
Obama arrives at a pivotal time for America. He faces problems at home and abroad that only someone who can carry the nation with him would be capable of solving.
Obama takes over from Bush, who has combined Lyndon Johnson with Herbert Hoover, two wars Bush couldn’t end and a recession reeling toward a global Depression. Iraq has cost a trillion dollars so far, and now ten billion a month, plus carnage, with a favorable strategic result unlikely. Almost certainly what will emerge is a Shiite Iraq allied with Iran.
Obama will have to look back to the transformative New Deal, which created millions of jobs building infrastructure—bridges, TVA, roads, tunnels—infrastructure now crumbling and often dangerous. Investment there will create jobs, as will the building of alternative sources of energy.
President Clinton once said, “The age of big government is over.” But not quite. Effective government is what we need. Call it New Deal II. And Roosevelt’s oratory, his Fireside Chats, helped to inspire people to support his programs. Roosevelt, Reagan...Obama.
This article does a great job for the younger adults disconnected from those of us having lived this history. It shows how Reagan was disconnected from a conservative Republican stance as he moved his attentions to global empire politics. He was the platform for Clinton who ran with deregulation and global corporate expansion and at each stage-----taxation rates for the rich and corporations fell, and fell, and collecting taxes on this group moved to an end. The payroll tax for Social Security was tripled for workers under the guise of protecting retirement----and Reagan sent our SS Trust to the US Treasury where it has been spent---Obama thinks he will end these trusts with a super-sized $20 trillion subprimed US Treasury and municipal bond debt fraud----If the Democratic base understand that a Clinton and Obama neo-liberal is the same as a Reagan neo-liberal and that neo-liberal policy is far-right Republican policy-----they will see how our people's Democratic Party was taken by right-wing rich politicians/Wall Street.
Extreme wealth pols will not stop taxing WE THE PEOPLE-----they will come for some kind of tax even if it is half of the products you manufacture because you earn little profit in your business. They are the Royal tax collector of the Dark Ages. When any Democratic primary candidate has a platform using all these neo-liberal terms of global markets, innovation, Wall Street leverage and bonds, public private partnerships----corporate tax breaks and subsidy to attract corporations----
YOU KNOW THEY ARE A FARM TEAM CLINTON/OBAMA NEO-LIBERAL OR IN BALTIMORE'S CASE-----A VERY NEO-CONSERVATIVE JOHNS HOPKINS/WALL STREET BALTIMORE DEVELOPMENT FARM TEAM.
'Reagan pushed for deregulation of industries, including banking; he slashed income taxes for the wealthiest Americans in an experiment known as “supply side” economics, which held falsely that cutting rates for the rich would increase revenues and eliminate the federal deficit'.
This is a long article but please glance through to the final tax policy issue.
Ronald Reagan: Worst President Ever?
February 6, 2014
From the Archive: Ronald Reagan, who was born on Feb. 6, 1911, ranks among the most honored U.S. presidents of modern times with his name etched into public buildings across the country. Even Democrats shy from criticizing his legacy. But is this Reagan worship deserved, Robert Parry asked in 2009.
By Robert Parry (Originally published June 3, 2009)
There’s been talk that George W. Bush was so inept that he should trademark the phrase “Worst President Ever,” though some historians would bestow that title on pre-Civil War President James Buchanan. Still, a case could be made for putting Ronald Reagan in the competition.
Granted, the very idea of rating Reagan as one of the worst presidents ever will infuriate his many right-wing acolytes and offend Washington insiders who have made a cottage industry out of buying some protection from Republicans by lauding the 40th President.
But there’s a growing realization that the starting point for many of the catastrophes confronting the United States today can be traced to Reagan’s presidency. There’s also a grudging reassessment that the “failed” presidents of the 1970s – Richard Nixon, Gerald Ford and Jimmy Carter – may deserve more credit for trying to grapple with the problems that now beset the country, despite their other shortcomings as leaders.
Nixon, Ford and Carter won scant praise for addressing the systemic challenges of America’s oil dependence, environmental degradation, the arms race, and nuclear proliferation – all issues that Reagan essentially ignored and that now threaten America’s future.
Despite egregious abuses of power, Nixon helped create the Environmental Protection Agency; he imposed energy-conservation measures; he opened the diplomatic door to communist China. Nixon’s administration also detected the growing weakness in the Soviet Union and advocated a policy of détente (a plan for bringing the Cold War to an end or at least curbing its most dangerous excesses).
After Nixon’s resignation in the Watergate scandal, Ford continued many of Nixon’s policies, particularly trying to wind down the Cold War with Moscow. However, confronting a rebellion from Reagan’s Republican Right in 1976, Ford abandoned “détente.”
Ford also let hard-line Cold Warriors (and a first wave of young intellectuals who became known as neoconservatives) pressure the CIA’s analytical division to begin exaggerating the Soviet menace, and he promoted a new generation of hard-liners, including Dick Cheney and Donald Rumsfeld, into key government jobs.
After defeating Ford in 1976, Carter injected more respect for human rights into U.S. foreign policy, a move some scholars believe put an important nail in the coffin of the Soviet Union, leaving it hard-pressed to justify the repressive internal practices of the East Bloc. Carter also emphasized the need to contain the spread of nuclear weapons, especially in unstable countries like Pakistan.
Domestically, Carter pushed a comprehensive energy policy and warned Americans that their growing dependence on foreign oil represented a national security threat, what he famously called “the moral equivalent of war.”
However, powerful vested interests – both domestic and foreign – managed to exploit the shortcomings of these three presidents to sabotage any sustained progress. By 1980, Reagan had become a pied piper luring the American people away from the tough choices that Nixon, Ford and Carter had defined.
Cruelty with a Smile
With his superficially sunny disposition – and a ruthless political strategy of exploiting white-male resentments – Reagan convinced millions of Americans that the threats they faced were: African-American welfare queens, Central American leftists, a rapidly expanding Evil Empire based in Moscow, and the do-good federal government.
In his First Inaugural Address in 1981, Reagan declared that “government is not the solution to our problem; government is the problem.”
When it came to cutting back on America’s energy use, Reagan’s message could be boiled down to the old reggae lyric, “Don’t worry, be happy.” Rather than pressing Detroit to build smaller, fuel-efficient cars, Reagan made clear that the auto industry could manufacture gas-guzzlers without much nagging from Washington.
The same with the environment. Reagan intentionally staffed the Environmental Protection Agency and the Interior Department with officials who were hostile toward regulation aimed at protecting the environment. George W. Bush didn’t invent Republican hostility toward scientific warnings of environmental calamities; he was just picking up where Reagan left off.
Reagan pushed for deregulation of industries, including banking; he slashed income taxes for the wealthiest Americans in an experiment known as “supply side” economics, which held falsely that cutting rates for the rich would increase revenues and eliminate the federal deficit.
Over the years, “supply side” would evolve into a secular religion for many on the Right, but Reagan’s budget director David Stockman once blurted out the truth, that it would lead to red ink “as far as the eye could see.”
While conceding that some of Reagan’s economic plans did not work out as intended, his defenders – including many mainstream journalists – still argue that Reagan should be hailed as a great President because he “won the Cold War,” a short-hand phrase that they like to attach to his historical biography.
However, a strong case can be made that the Cold War was won well before Reagan arrived in the White House. Indeed, in the 1970s, it was a common perception in the U.S. intelligence community that the Cold War between the United States and the Soviet Union was winding down, in large part because the Soviet economic model had failed in the technological race with the West.
That was the view of many Kremlinologists in the CIA’s analytical division. Also, I was told by a senior CIA’s operations official that some of the CIA’s best spies inside the Soviet hierarchy supported the view that the Soviet Union was headed toward collapse, not surging toward world supremacy, as Reagan and his foreign policy team insisted in the early 1980s.
The CIA analysis was the basis for the détente that was launched by Nixon and Ford, essentially seeking a negotiated solution to the most dangerous remaining aspects of the Cold War.
The Afghan Debacle
In that view, Soviet military operations, including sending troops into Afghanistan in 1979, were mostly defensive in nature. In Afghanistan, the Soviets hoped to prop up a pro-communist government that was seeking to modernize the country but was beset by opposition from Islamic fundamentalists who were getting covert support from the U.S. government.
Though the Afghan covert operation originated with Cold Warriors in the Carter administration, especially National Security Adviser Zbigniew Brzezinski, the war was dramatically ramped up under Reagan, who traded U.S. acquiescence toward Pakistan’s nuclear bomb for its help in shipping sophisticated weapons to the Afghan jihadists (including a young Saudi named Osama bin Laden).
While Reagan’s acolytes cite the Soviet defeat in Afghanistan as decisive in “winning the Cold War,” the counter-argument is that Moscow was already in disarray – and while failure in Afghanistan may have sped the Soviet Union’s final collapse – it also created twin dangers for the future of the world: the rise of al-Qaeda terrorism and the nuclear bomb in the hands of Pakistan’s unstable Islamic Republic.
Trade-offs elsewhere in the world also damaged long-term U.S. interests. In Latin America, for instance, Reagan’s brutal strategy of arming right-wing militaries to crush peasant, student and labor uprisings left the region with a legacy of anti-Americanism that is now resurfacing in the emergence of populist leftist governments.
OH, THAT IS WHY SO MANY LATINO IMMIGRANTS HAD TO COME TO THE US---TO ESCAPE RIGHT WING NEO-LIBERAL MILITARISM.
In Nicaragua, for instance, Sandinista leader Daniel Ortega (whom Reagan once denounced as a “dictator in designer glasses”) is now back in power. In El Salvador, the leftist FMLN won the last national election (and led the first round of balloting in the 2014 election). Indeed, across the region, hostility to Washington is now the rule, creating openings for China, Iran, Cuba and other American rivals.
In the early 1980s, Reagan also credentialed a young generation of neocon intellectuals, who pioneered a concept called “perception management,” the shaping of how Americans saw, understood and were frightened by threats from abroad.
Many honest reporters saw their careers damaged when they resisted the lies and distortions of the Reagan administration. Likewise, U.S. intelligence analysts were purged when they refused to bend to the propaganda demands from above.
To marginalize dissent, Reagan and his subordinates stoked anger toward anyone who challenged the era’s feel-good optimism. Skeptics were not just honorable critics, they were un-American defeatists or – in Ambassador Jeane Kirkpatrick’s memorable attack line – they would “blame America first.”
Under Reagan, a right-wing infrastructure also took shape, linking media outlets (magazines, newspapers, books, etc.) with well-financed think tanks that churned out endless op-eds and research papers. Plus, there were attack groups that went after mainstream journalists who dared disclose information that poked holes in Reagan’s propaganda themes.
In effect, Reagan’s team created a faux reality for the American public. Civil wars in Central America between impoverished peasants and wealthy oligarchs became East-West showdowns. U.S.-backed insurgents in Nicaragua, Angola and Afghanistan were transformed from corrupt, brutal (often drug-tainted) thugs into noble “freedom-fighters.”
With the Iran-Contra scandal, Reagan also revived Richard Nixon’s theory of an imperial presidency that could ignore the nation’s laws and evade accountability through criminal cover-ups. That behavior also would rear its head again in the war crimes of George W. Bush. [For details on Reagan’s abuses, see Robert Parry’s Lost History and Secrecy & Privilege.]
Wall Street Greed
The American Dream also dimmed during Reagan’s tenure. While he played the role of the nation’s kindly grandfather, his operatives divided the American people, using “wedge issues” to deepen grievances especially of white men who were encouraged to see themselves as victims of “reverse discrimination” and “political correctness.”
Yet even as working-class white men were rallying to the Republican banner (as so-called “Reagan Democrats”), their economic interests were being savaged. Unions were broken and marginalized; “free trade” policies shipped manufacturing jobs abroad; old neighborhoods were decaying; drug use among the young was soaring.
Meanwhile, unprecedented greed was unleashed on Wall Street, fraying old-fashioned bonds between company owners and employees. Before Reagan, corporate CEOs earned less than 50 times the salary of an average worker. By the end of the Reagan-Bush-I administrations in 1993, the average CEO salary was more than 100 times that of a typical worker. (At the end of the Bush-II administration, that CEO-salary figure was more than 250 times that of an average worker.)
Many other trends set during the Reagan era continued to corrode the U.S. political process in the years after Reagan left office. After 9/11, for instance, the neocons reemerged as a dominant force, reprising their “perception management” tactics, depicting the “war on terror” – like the last days of the Cold War – as a terrifying conflict between good and evil.
The hyping of the Islamic threat mirrored the neocons’ exaggerated depiction of the Soviet menace in the 1980s – and again the propaganda strategy worked. Many Americans let their emotions run wild, from the hunger for revenge after 9/11 to the war fever over invading Iraq.
Arguably, the descent into this dark fantasyland – that Ronald Reagan began in the early 1980s – reached its nadir in the flag-waving early days of the Iraq War. Only gradually did reality begin to reassert itself as the death toll mounted in Iraq and the Katrina disaster in 2005 reminded Americans why they needed an effective government.
Still, the disasters – set in motion by Ronald Reagan – continued to roll in. Bush’s Reagan-esque tax cuts for the rich blew another huge hole in the federal budget and the Reagan-esque anti-regulatory fervor led to a massive financial meltdown that threw the nation into economic chaos.
Love Reagan; Hate Bush
Ironically, George W. Bush has come in for savage criticism (much of it deserved), but the Republican leader who inspired Bush’s presidency – Ronald Reagan – remained an honored figure, his name attached to scores of national landmarks including Washington’s National Airport.
Even leading Democrats genuflect to Reagan. Early in Campaign 2008, when Barack Obama was positioning himself as a bipartisan political figure who could appeal to Republicans, he bowed to the Reagan mystique, hailing the GOP icon as a leader who “changed the trajectory of America.”
Though Obama’s chief point was that Reagan in 1980 “put us on a fundamentally different path” – a point which may be historically undeniable – Obama went further, justifying Reagan’s course correction because of “all the excesses of the 1960s and 1970s, and government had grown and grown, but there wasn’t much sense of accountability.”
While Obama later clarified his point to say he didn’t mean to endorse Reagan’s conservative policies, Obama seemed to suggest that Reagan’s 1980 election administered a needed dose of accountability to the United States when Reagan actually did the opposite. Reagan’s presidency represented a dangerous escape from accountability – and reality.
Still, Obama and congressional Democrats continue to pander to the Reagan myth. In 2009, as the nation approached the fifth anniversary of Reagan’s death, Obama welcomed Nancy Reagan to the White House and signed a law creating a panel to plan and carry out events to honor Reagan’s 100th birthday in 2011.
Obama hailed the right-wing icon. “President Reagan helped as much as any President to restore a sense of optimism in our country, a spirit that transcended politics — that transcended even the most heated arguments of the day,” Obama said. [For more on Obama’s earlier pandering about Reagan, see Consortiumnews.com’s “Obama’s Dubious Praise for Reagan.”]
Despite the grievous harm that Reagan’s presidency inflicted on the American Republic and the American people, it may take many more years before a historian has the guts to put this deformed era into a truthful perspective and rate Reagan where he belongs — near the bottom of the presidential list.
I we know the goal of global corporate pols we know when they are posing progressive on tax policy. Those involved in moving Trans Pacific Trade Pact forward are as well negotiating with foreign leaders a global tax policy and when we hear Obama and Clinton neo-liberals along with Republicans saying WE NEED TAX REFORM-----this is from where they will get these policies---the global corporate tribunal. They are not coming to you and me. The global tax policies being considered are
VAT ----value-added tax.
This mirrors 'EVIDENCE-BASED HEALTH CARE' providing value====the value comes from the global corporation maximizing profit by soaking citizens. The value with corporate pols is always market-based profit and not value for society or people.
The other taxation considered is the FLAT TAX. Everyone pays 10% for example. In this case the move is to tax the poor as well---ending US Constitutional and Maryland Constitutional tax claims that the poor will not be taxed. Believe me, it was only that US Constitutional statement that has kept Republicans from taxing the poor----today, if you are ignoring the US Constitution----taxing the poor is now seriously considered. That is where tax policy goes when all Americans are pushed to the lowest wage----even the professional class is poor. If all are poor---then the poor must be taxed. This is the discussion by US global pols---we already know the developing nation workers tied to Trans Pacific Trade Pact are impoverished.
'The VAT is a sort of turbo-charged national sales tax on goods and services that is applied at each stage of production, not merely on retail transactions'.
The Global VAT Craze
A new study shows how the value-added tax is rising world-wide.
March 20, 2015 6:56 p.m. ET It’s the hottest trend among tax collectors, raising a gusher of revenue for spendthrift governments worldwide. We refer to the value-added tax (VAT), and a new report from accounting firm Ernst & Young says that VAT “systems are spreading” around the world and “rates are rising.” Americans, be warned.
Remember----this is being considered today because of the intent of installing US International Economic Zones as in Baltimore with global FOXCONN factories manufacturing products. Those factories will not pay tax----but everyone down the line will.
The Global VAT Craze
Anonymous. Wall Street Journal, Eastern edition [New York, N.Y] 21 Mar 2015: A.10.
The VAT is a sort of turbo-charged national sales tax on goods and services that is applied at each stage of production, not merely on retail transactions. [...]Italy still also suffers from one of the highest corporate tax rates in Europe at roughly 31%. Because VATs are embedded in the price of products, they can often rise unnoticed by the consumer, which is why NEO- liberals love them as a vehicle for periodic stealth tax hikes.
It's the hottest trend among tax collectors, raising a gusher of revenue for spendthrift governments worldwide. We refer to the value-added tax (VAT), and a new report from accounting firm Ernst & Young says that VAT "systems are spreading" around the world and "rates are rising." Americans, be warned.
The VAT is a sort of turbo-charged national sales tax on goods and services that is applied at each stage of production, not merely on retail transactions. Politicians love it because it is the most efficient revenue-raiser known to man, and its rates can be raised gradually to finance new entitlements or fill budget holes. The VAT is typically introduced with a low rate but then moves up over time until it swallows huge chunks of national economies.
E&Y finds that rates have been rising again, especially since the financial panic and recession. E&Y says standard VAT rates now average a knee-buckling 21.6% in the European Union, up from 19.4% in 2008. Average standard rates in the industrial countries of the Organization for Economic Cooperation and Development have climbed to 19.2% from 17.8% in 2009.
Japan is another example of the VAT upward ratchet. The NEO-Liberal Democratic Party tried to introduce the tax for years and finally succeeded with a 3% rate in 1989. Eight years later the shoguns raised it to 5%. Last year it climbed to 8%, whacking consumption and sending the economy back to negative growth. The rate was scheduled to hit 10% later this year, though the government has delayed it until 2017. Rest assured the 10% rate is still coming. And it will keep climbing.
We say "standard" rates because while VAT systems are often presented as models of simplicity that theoretically treat all goods and services alike, politicians can't resist picking winners and losers, creating higher or lower rates for industries at their whim. "The politicians always start running with exemptions," says E&Y's Gijsbert Bulk.
In Luxembourg, renovation of rented dwellings triggers a relatively low 3% VAT, though the country's standard rate has recently moved to 17% from 15%. Following a court fight in Ireland, the VAT exemption for golf greens fees has recently been expanded to cover visitors at nonprofit clubs. Meanwhile, cleanliness is now more expensive in Spain, as E&Y reports that the VAT rate on "certain sanitary products" has been lifted to 21% from 10%.
As of 2014, 164 countries had made the big VAT mistake -- an all-time high, according to E&Y. The number of VAT countries has tripled since 1990. And the report clarifies how unkind such tax regimes can be to taxpayers. Some economists promote VATs as efficient replacements for corporate or personal income taxes. But Mr. Bulk reports that "most of the time a VAT is introduced it is in addition to other taxes," not as a replacement.
Take Italy. E&Y reports that the standard VAT rate will rise to 24% in 2016 from 22% if Italy fails to meet certain financial targets "with further potential increases planned" in 2017 and 2018 that could take the rate beyond 25%. But Italy still also suffers from one of the highest corporate tax rates in Europe at roughly 31%.
Because VATs are embedded in the price of products, they can often rise unnoticed by the consumer, which is why liberals love them as a vehicle for periodic stealth tax hikes. While retail sales taxes applied by states and localities in the U.S. are generally made explicit to the consumer, it is customary in many VAT jurisdictions overseas to prohibit shoppers from seeing the portion of their bill that goes to funding government.
This is why Ronald Reagan and Milton Friedman often said that the best taxes were those that taxpayers could feel so they would be difficult to raise. We miss those guys.
NEO-Liberals also love the VAT because of the way it makes every business an aggressive tax collector. Businesses pay the tax when they buy things, and then collect it from the next purchaser in the supply chain. The businesses get a rebate on the portion they paid when they remit to the government the sums they collected, so the system motivates all companies to ensure taxes are paid in full.
The U.S. is a rare industrial nation that doesn't have a VAT, though don't think it can't happen here. Liberals campaign on soaking the rich, but they know there's only so many rich to soak. To finance the growing entitlement state, they need a new broad-based tax that hits the middle class, where the big money is. That means either a VAT or a new energy tax, like the BTU tax Bill and Hillary Clinton proposed in 1993 or the cap-and-tax scheme that President Obama wanted.
We'll think about supporting a VAT when liberals vote to repeal the 16th Amendment that allowed the income tax. Barring that, like the rest of the world, Americans would get a VAT in addition to the countless taxes they already pay. We can see where that leads.
Republicans never supported VAT taxes until we hit the age of global corporations and monopoly. It is OK to talk VAT as a Republican because VAT are built specifically to protect the producer of products from taxation----ergo, the global corporation. They call this a 'progressive tax' because the taxes get PROGRESSIVELY higher down the consumption chain with WE THE PEOPLE buying the product paying the highest tax. Of course-----that lower tier is always the one with tax rate increases.
Maryland Comptroller Franchot-----ever the corporate Democrat-----has pushed this in the Maryland Assembly using the fuel industry chain. The timing in Maryland comes as Maryland moves towards exporting natural gas and crude oil. Imagine this same chain for every industry product.
*The corporation extracting crude oil/natural gas pays no tax because they are the original producer. All fracking and oil in the US are global corporations.
* The company hired to refine this oil or natural gas for transport or sale pays a small tax.
* The company that transports this oil/natural gas pays a small tax
* The gas station or home energy company selling the oil or gas to consumers pays a larger tax.
*The citizen consumer buying the gas/oil for car or home pays a larger tax.
This has been used in Europe and nations around the world with one difference---VAT worked fine when the corporations at the top of this chain were national---because they paid other taxes as well. This global VAT tax will eliminate all other taxes on corporations and we have watched as the VAT rate grows and grows on the citizen consumers at the end of this chain.
THIS IS WHAT MARYLAND IS ALREADY MOVING TOWARDS AND THIS IS WHAT CONGRESSIONAL CLINTON/OBAMA NEO-LIBERALS AND REPUBLICANS ARE MOVING TOWARDS.
You can bet they will pose progressive in making this sound as if everyone was in and nobody out in this tax scheme----they will not explain the global corporate producer will pay no tax or that the companies higher on this chain pay less than the small business selling to the consumer. THIS KEEPS THE TAXATION HEAVIEST ON THE SMALL BUSINESS OWNERS AND CITIZENS.
Global VAT rates on the increase – review the major changes‹›
November 23, 2012adminEuropean News
Since 2007, European VAT rates and international VAT rates have risen rapidly to help cope with the financial crisis. As governments have taken on increasing levels of debt through bank bail outs and collapsing tax revenues, VAT and GST increases have been the order of the day.
Average EU VAT rate raised from 19.1% to 21.6%In 2007, Germany was the first country to implement a major recent VAT increase, raising its standard VAT rate from 16% to 19%. This enabled it to cut labour employment charges, and help improve its productivity relative to other EU countries. Since then, there has been a rash of similar rises. Major changes include:
- Spain VAT increased from 16% in 2009 to 21% by 2012
- UK Raised VAT 2.5% to 20% in 2011
- Italy increased VAT 1% to 22% 1 October 2013
- Greece VAT rose from 19% to 23% by 2010
- Hungary Hit the EU record high of 27% VAT by 2012
- Netherlands Increased VAT from 19% to 21% in 2012
- Germany imposed a 3% rise in VAT to 19% in 2007
- Finland Increased VAT to 24% by the start of 2013
- Cyprus will raise VAT 2% to 19% by 2014
- France Will raise its standard VAT rate from 19.6% to 20% in 2014
- Luxembourg will raise VAT from 15% in Jan 2015
- Slovenia raised VAT from 20% to 22% in July 2013
- Montenegro raised VAT 2% in July 2013
- Croatia increased VAT 2% to 25% in 2012
You can review all current European VAT rates in our EU VAT Rate briefing.
It goes beyond the European Union
Raising VAT rates is not limited to Europe.
Over 150 countries around the world have a VAT or similar Goods and Services Tax (GST).
As with Europe, many of these countries have been raising their consumption tax rates to help cope with ballooning sovereign debt piles. Examples include:
- Israel increases VAT 1% to 18% in 2013
- Japan To double consumption tax to 10% by 2015
- New Zealand Increased GST from 12.5% to 15%
- Canada Raising GST in most Provinces
- Mexico VAT raised 1% to 16% in 2010
- Pakistan increased GST 1% June 2013
This just leaves the US an the only major economy not to operate a VAT system.
Why do countries raise VAT?
Raising taxes on consumers, voters, is a big political gamble. So why do governments do this rather than use other taxes?
- VAT is a tax on consumption, rather than on savings which helps fund investment and future growth
- If is fast and cheap to collect as it is the role of the companies
- VAT rises fund reductions in corporation taxes, which helps attract global industry
- With nervous funding markets threatening to increase borrowing rates, raising consumer taxes is a clear sign of countries’ intent to take on difficult deficit management decisions
Both of these tax reform policies are Republican and both include TAXING THE POOR. The above tax on consumption hits everyone buying something and even the poor owe their lives to the company store.
This flat tax would make permanent a tax code that would never be progressive-----ie----making corporations pay more. Remember, FDR installed a 90% tax rate on the rich and corporations after the last massive Wall Street fraud and Great Depression attack on the US economy-----what Republicans and Clinton/Obama Wall Street global corporate neo-liberals are saying is THAT REDISTRIBUTION AND DOWNSIZING OF MONOPOLY CORPORATIONS AND WEALTH WILL NOT HAPPEN.
That is what a Congressional pol pushing either of these tax reforms are saying. This is why Obama and Congress gave the American people no justice in any of the tens of trillions of dollars in corporate fraud and allows it to continue to today.
Bernie Sanders runs as a social Democrat with the intention of downsizing banks using progressive taxation to do it----as is CINDY WALSH FOR MAYOR OF BALTIMORE.
This will play out more so in US International Economic Zones like Baltimore because-----our local economy will be completely that global economy. If these global corporations are paying no taxes----who is?
WE THE PEOPLE NO LONGER HAVING ANY RIGHTS AS CITIZENS BUT NOW SERFS TAXED TO DEATH.
This is to where all Maryland pols are moving especially Baltimore City Maryland Assembly and City Hall pols---they are all global neo-liberals and/or global neo-cons------GET RID OF THESE GLOBAL POLS AND WE CAN REVERSE THIS!
ALL CONGRESSIONAL POLS AND BALTIMORE CITY HALL POLS HAVE DEMOCRATIC CHALLENGERS-----VOTE FOR A CHALLENGER WHO IS NOT A FARM TEAM WALL STREET POL!
The Global Flat Tax Revolution
By Daniel J. Mitchell
In the early 1990s, Rep. Dick Armey (RTX) proposed a flat tax. He would have junked the Internal Revenue Code and replaced it with a system designed to raise revenue in a much less destructive fashion. The core principles were to tax income at one low rate, to eliminate double taxation of saving and investment, and to wipe out the special preferences, credits, exemptions, deductions, and other loopholes that caused complexity, distortions, and corruption.
The flat tax never made it through Congress, but it's been adopted by more than a dozen other countries since 1994.
It's unfortunate that the United States is missing out on the tax reform revolution. Instead of the hundreds of forms demanded by the current tax system, the Armey flat tax would have required just two postcards. Households would have used the individual postcard to pay a 17 percent tax on wages, salary, and pensions, though a generous family-based allowance (more than $30,000 for a family of four) meant that there was no tax on the income needed to cover basic expenses.
Taxes on other types of income would have been calculated using the second postcard, which would have been filed by every business regardless of its size or structure. Simply stated, there would have been a 17 percent tax on net income, which would have been calculated by subtracting wages, input costs, and investment expenditures from total receipts.
While the simplicity and low tax rate were obvious selling points, the flat tax also eliminated various forms of double taxation, ending the bias against income that was saved and invested. In other words, the IRS got to tax income only one time. The double tax on dividends would have been completely eliminated. The death tax also was to be wiped out, as was the capital gains tax, and all saving would have received "Roth IRA" treatment.
Another key feature of the flat tax was the repeal of special tax breaks. With the exception of a family-based allowance, there would have been no tax preferences. Lawmakers no longer would have been able to swap loopholes for campaign cash. It also would have encouraged businesses to focus on creating value for shareholders and consumers instead of trying to manipulate the tax code. Last but not least, the flat tax would have created a "territorial" system, meaning that the IRS no longer would have been charged with taxing Americans on income earned—and subject to tax—in other jurisdictions.
Proponents correctly argued that a flat tax would improve America's economic performance and boost competitiveness. And after Republicans first took control of Congress, it appeared that real tax reform was possible. At one point, the debate was about, not whether there should be tax reform, but whether the Internal Revenue Code should be replaced by a flat tax or a national sales tax (which shared the flat tax's key principles of taxing economic activity only one time and at one low rate).
Notwithstanding this momentum in the mid-1990s, there ultimately was no serious legislative effort to reform the tax system. In part, that was because of White House opposition. The Clinton administration rejected reform, largely relying on class-warfare arguments that a flat tax would benefit the so-called rich. But President Clinton wasn't the only obstacle. Congressional Democrats were almost universally hostile to tax reform, and a significant number of Republicans were reluctant to support a proposal that was opposed by well-connected interest groups.
The Flat Tax around the World
One of the stumbling blocks to tax reform was the absence of "real-world" examples. When Armey first proposed his flat tax, the only recognized jurisdiction with a flat tax was Hong Kong. And even though Hong Kong enjoyed rapid economic growth, lawmakers seemed to think that the then--British colony was a special case and that it would be inappropriate to draw any conclusions from it about the desirability of a flat tax in the United States.
Today, much of the world seems to have learned the lessons that members of Congress didn't. Beginning with Estonia in 1994, a growing number of nations have joined the flat tax club. There are now 17 jurisdictions that have some form of flat tax, and two more nations are about to join the club. As seen in Table 1, most of the new flat tax nations are former Soviet republics or former Soviet bloc nations, perhaps because people who suffered under communism are less susceptible to class-warfare rhetoric about "taxing the rich."
Flat Tax Lessons
The flat tax revolution raises three important questions: Why is it happening? What does the future hold? Should American policymakers learn any lessons?
The answer to the first question is a combination of principled leadership, tax competition, and learning by example. Flat tax pioneers such as Mart Laar (prime minister of Estonia), Andrei Illarionov (chief economic adviser to the president in Russia), and Ivan Miklos (finance minister in Slovakia) were motivated at least in part by their understanding of good tax policy and their desire to implement pro-growth reforms. But tax competition also has been an important factor, particularly in the recent wave of flat tax reforms. In a global economy, lawmakers increasingly realize that it is important to lower tax rates and reduce discriminatory burdens on saving and investment. A better fiscal climate plays a key role both in luring jobs and capital from other nations and in reducing the incentive for domestic taxpayers to shift economic activity to other nations.
Moreover, politicians are influenced by real-world evidence. Nations that have adopted flat tax systems generally have experienced very positive outcomes. Economic growth increases, unemployment drops, and tax compliance improves. Nations such as Estonia and Slovakia are widely viewed as role models since both have engaged in dramatic reform and are reaping enormous economic benefits. Policymakers in other nations see those results and conclude that tax reform is a relatively risk-free proposition. That is especially important since international bureaucracies such as the International Monetary Fund usually try to discourage governments from lowering tax rates and adopting pro-growth reforms.
The answer to the second question is that more nations will probably join the flat tax club. Three nations currently are pursuing tax reform. Albania is on the verge of adopting a low-rate flat tax, as is East Timor (though the IMF predictably is pushing for a needlessly high tax rate). A 15 percent flat tax has been proposed in the Czech Republic, though the political outlook is unclear because the government does not have an absolute majority in parliament.
It is also worth noting that countries with flat taxes are now competing to lower their tax rates. Estonia's rate already is down from 26 percent to 22 percent, and it will drop to 18 percent by 2011. The new prime minister's party, meanwhile, wants the rate eventually to settle at 12 percent. Lithuania's flat rate also has been reduced, falling from 33 percent to 27 percent, and is scheduled to fall to 24 percent next year. Macedonia's rate is scheduled to drop to 10 percent next year, and Montenegro's flat tax rate will fall to 9 percent in 2010—giving it the lowest flat tax rate in the world (though one could argue that places like the Cayman Islands and the Bahamas have flat taxes with rates of zero).
The continuing shift to flat tax systems and lower rates is rather amusing since an IMF study from last year claimed: "Looking forward, the question is not so much whether more countries will adopt a flat tax as whether those that have will move away from it." In reality, there is every reason to think that more nations will adopt flat tax systems and that tax competition will play a key role in pushing tax rates even lower.
NOTICE HOW THEY ARE EMPHASIZING FLAT TAXES GOING DOWN AS THE ARTICLE ABOVE SHOWED TAXES ARE GROWING?
Could It Happen Here?
For American taxpayers, the key question is whether politicians in Washington are paying attention to the global flat tax revolution and learning the appropriate lessons. There is no clear answer to this question. Policymakers certainly are aware that the flat tax is spreading around the world. Mart Laar, Andrei Illarionov, Ivan Miklos, and other international reformers have spoken several times to American audiences. President Bush has specifically praised the tax reforms in Estonia, Russia, and Slovakia. And groups like the Cato Institute are engaged in ongoing efforts to educate policymakers about the positive benefits of global tax reform.
But it is important also to be realistic about the lessons that can be learned. The United States already is a wealthy economy, so it is very unlikely that a flat tax would generate the stupendous annual growth rates enjoyed by nations such as Estonia and Slovakia. The United States also has a very high rate of tax compliance, so it would be unwise to expect a huge "Laffer Curve" effect of additional tax revenue similar to what nations like Russia experienced.
It is also important to explain to policymakers that not all flat tax systems are created equal. Indeed, none of the world's flat tax systems is completely consistent with the pure model proposed by Professors Robert Hall and Alvin Rabushka in their book, The Flat Tax. Nations such as Russia and Lithuania, for instance, have substantial differences between the tax rates on personal and corporate income (even Hong Kong has a small gap). Serbia's flat tax applies only to labor income, making it a very tenuous member of the flat tax club. Although information for some nations is incomplete, it appears that all flat tax nations have at least some double taxation of income that is saved and invested (though Estonia, Slovakia, and Hong Kong get pretty close to an ideal system). Moreover, it does not appear that any nation other than Estonia permits immediate expensing of business investment expenditures. (The corporate income tax in Estonia has been abolished, for all intents and purposes, since businesses only have to pay withholding tax on dividend payments.)
Policymakers also should realize that a flat tax is not a silver bullet capable of solving all of a nation's problems. From a fiscal policy perspective, for instance, the Russian flat tax has been successful. But Russia still has many problems, including a lack of secure property rights and excessive government intervention. Iraq is another example. The U.S. government imposed a flat tax there in 2004, but even the best tax code is unlikely to have much effect in a nation suffering from instability and violence.
With all these caveats, the flat tax revolution nonetheless has bolstered the case for better tax policy, both in America and elsewhere in the world. In particular, there is now more support for lower rates instead of higher rates because of evidence that marginal tax rates have an impact on productive behavior and tax compliance. Among developed nations, the top personal income tax rate is 25 percentage points lower today than it was in 1980. Similarly, the average corporate tax rate in developed nations has dropped by 20 percentage points during the same period. Those reforms are not consequences of the flat tax revolution. Margaret Thatcher and Ronald Reagan started the move toward less punitive tax rates more than 25 years ago. But the flat tax revolution has helped cement those gains and is encouraging additional rate reductions.
Moreover, there is now increased appreciation for reducing the tax bias against income that is saved and invested. Indeed, Sweden and Australia have abolished death taxes, and Denmark and the Netherlands have eliminated wealth taxes. Other nations are lowering taxes on capital income, much as the United States has reduced the double taxation of dividends and capital gains to 15 percent. And although the United States is a clear laggard in the move toward simpler and more neutral tax regimes, the flat tax revolution is helping to teach lawmakers about the benefits of a system that does not penalize or subsidize various behaviors.
The flat tax revolution also suggests that the politics of class warfare is waning. For much of the 20th century, policymakers subscribed to the notion that the tax code should be used to penalize those who contribute most to economic growth. Raising revenue was also a factor, to be sure, but many politicians seem to have been more motivated by the ideological impulse that rich people should be penalized with higher tax rates. If nothing else, the growing community of flat tax nations shows that class-warfare objections can be overcome.
Building a High-Tax Cartel
Although the flat tax revolution has been impressive, there are still significant hurdles. Most important, international bureaucracies are obstacles to tax reform, both because they are ideologically opposed to the flat tax and because they represent the interests of high-tax nations that want tax harmonization rather than tax competition. The Organization for Economic Cooperation and Development, for instance, has a "harmful tax competition" project that seeks to hinder the flow of labor and capital from high-tax nations to low-tax jurisdictions. The OECD even produced a 1998 report stating that tax competition "may hamper the application of progressive tax rates and the achievement of redistributive goals." In 2000 the Paris-based bureaucracy created a blacklist of low-tax jurisdictions, threatening them with financial protectionism if they did not change their domestic laws to discourage capital from nations with oppressive tax regimes.
The OECD has been strongly criticized for seeking to undermine fiscal sovereignty, but its efforts also should be seen as a direct attack on tax reform. Two of the key principles of the flat tax are eliminating double taxation and eliminating territorial taxation. These principles, however, are directly contrary to the OECD's anti-tax competition project—which is primarily focused on enabling high-tax nations to track (and tax) flight capital. That necessarily means that the OECD wants countries to double tax income that is saved and invested, and to impose that bad policy on an extraterritorial basis.
The OECD is not alone in the fight. The European Commission also has a number of anti-tax-competition schemes. The United Nations, too, is involved and even has a proposal for an International Tax Organization. All of those international bureaucracies are asserting the right to dictate "best practices" that would limit the types of tax policy a jurisdiction could adopt. Unfortunately, their definition of best practices is based on what makes life easier for politicians rather than what promotes prosperity.
Fortunately, these efforts to create a global tax cartel have largely been thwarted, and an "OPEC for politicians" is still just a gleam in the eyes of French and German politicians. That means that tax competition is still flourishing, and that means that the flat tax club is likely to get larger rather than smaller.