Here in the Rust Belt we have a saying when you’re looking for the cure to a bad hangover. You need a little bit of the hair of the dog that bit you, which is to say that you need to drink some of whatever you were drinking the night before. The problem with this “cure” is that you just end up drinking more and you have another hangover the next day, so it’s not really much of a cure at all.
Discussing the idea of a value-added tax (VAT) once again being floated by those brilliant Beltway insiders, Ed Morrissey (Hot Air) makes the same analogy. Saying that a VAT is a “cure” for the deficit is “akin to saying that a Harvey Wallbanger is a ‘cure’ for hangovers.” He points out that the real cure for the deficit is to cut spending.
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The way a VAT works is that it imposes a tax on goods and services at every step of the process, whenever value is added. This differs from the national sales tax often proposed by conservatives and libertarians in at least two major ways (as Morrissey also points out). First, it does not have the simplicity of a flat sales tax. It would require more bureaucracy, and thus more spending, to implement and enforce it. Second, while conservatives and libertarians propose a national sales tax to replace the income tax, liberals and socialists are of course proposing the VAT in addition to the income tax.
A value-added tax is in no sense progressive, giving the lie to the liberal/socialist claim that they are looking out for the working class and their families. The VAT is a good way for government to make sure that it’s spreading a little of everyone’s wealth around by ensuring that all Americans pay a tax whenever they buy anything. And you can bet that the new financial burden on both producers and consumers will create a perfect economic storm, with producers continuing to employ fewer people and consumers continuing to spend less.
Of course, since President Obama promised there would be no tax increase on the middle class, there’s no need to worry. Surely we can expect him to veto a value-added tax, which certainly would constitute a tax increase on the middle class. Right?
Democrats have thrown a huge party with our tax dollars, and now in the face of a rising deficit and a public fed up with deficit spending they’ve got a bad hangover. But they think they can cure their hangover by taxing us more and continuing to engage in more irresponsible spending. There is a problem with the “hair of the dog” analogy, though. They’re not curing their hangover by taking a little bit of the hair of the dog that bit them. They’re taking a little bit of the hair of the dog that bit you.