Most European countries levy all of the dozens of taxes the US imposes on our workers and job creators; they do have one tax that the U.S. has successfully avoided so far.  The Value Added Tax (VAT) is a stealth tax that while it often goes unnoticed by the consumer, it drives up the cost of every good and service that they buy. 

At every stage of production a portion of the tax is added.  Calculating this correctly is time consuming and expensive for small businesses and mistakes can leave them exposed to fines or other actions by the government.  Once in place, politicians find this tax much easier to raise than an income, property or sales tax as its insidious costs aren’t directly seen by most voters.

Economists caution that this tax could be making the trip across the Atlantic very soon.  With our nation facing annual deficits of over $1 trillion for the foreseeable future, a massive new health care bill that we cannot afford, lower confidence in our Treasury Bond ratings, and a President and Congress completely unwilling to rein in spending,  prospects of a massive tax hike are growing.  One of the President’s main economic advisors, Paul Volcker, said as much in a recent speech.

I think that tax hikes are a bad idea; and raising taxes at a time when 15 million Americans are out of work and there is continuing uncertainty about the economy’s future is  an even worse idea.  If President Obama and the Democrats in Congress want to take this next step towards becoming a high-tax, low-growth economy, they will do it over my tireless and vocal opposition. 

The Heritage Foundation’s Curtis Dubay has a great discussion of some of the other problems with the VAT.