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October 6, 2009 By Fausta

Whack economics: Pelosi and the upcoming healthcare VAT

The VAT, that bane of European manufacturing that makes their consumer goods more expensive than elsewhere in the world, is headed our way to pay for Obamacare. But Nancy Pelosi believes that “any reworking of the tax code would not result in an increase in taxes on middle-class Americans.”

Really.

Via James Pethokoukis, Pelosi says new tax is ‘on the table’

A new value-added tax (VAT) is “on the table” to help the U.S. address its fiscal liabilities, House Speaker Nancy Pelosi (D-Calif.) said Monday night.

Pelosi, appearing on PBS’s “The Charlie Rose Show” asserted that “it’s fair to look at” the VAT as part of an overhaul of the nation’s tax code.

“I would say, Put everything on the table and subject it to the scrutiny that it deserves,” Pelosi told Rose when asked if the VAT has any appeal to her.

The VAT is a tax on manufacturers at each stage of production on the amount of value an additional producer adds to a product.

Now comes the abject ignorance part:

Pelosi argued that the VAT would level the playing field between U.S. and foreign manufacturers, the latter of which do not have pension and healthcare costs included in the price of their goods because their governments provide those services, financed by similar taxes.

“They get a tax off of that
and they use that money to pay the healthcare for their own workers,” Pelosi said, using the example of auto manufacturers. “So their cars coming into our country don’t have a healthcare component cost.

It’s all coming from what, then?

“Somewhere along the way, a value-added tax plays into this. Of course, we want to take down the healthcare cost, that’s one part of it,” the Speaker added. “But in the scheme of things, I think it’s fair look at a value- added tax as well.”

Pelosi said that any new taxes would come after the Congress finishes the healthcare debate consuming most lawmakers’ time, and that it may come as part of a larger overhaul to the tax code.

The Speaker also emphasized that any reworking of the tax code would not result in an increase in taxes on middle-class Americans.

A couple of points worth noting:
1. The Speaker doesn’t realize/pretends not to realize that any cost is passed on to the consumer, regardless of the consumer’s income level.

2. You don’t “get a tax off of that”; you get a tax on that.

3. As for the “leveling the playing field,” Ace has the logical outcome for her reasoning: Nancy Pelosi Assumes That ObamaCare Will Destroy Private Insurance and Put Everyone on Government Insurance. Ace explains:

Got that? American products currently include in their cost the cost of providing health insurance for the workers making the products.

This puts them at a competitive disadvantage with foreign products, she asserts, where health insurance is provided by the government and thus not included in the price of a product.

So: If we merely impose a Value Added Tax on everything, we can use that money to pay for health insurance for everyone, and companies will not have to pay for health insurance. It will be provided by the government, paid for through the VAT.

Assumption not-well-hidden in that: All US companies will stop paying for employee insurance and instead let the government provide it.

That assumption is needed for her claim. For, if any company continues providing health insurance, their prices will go up — as they are paying double for health insurance, once directly for their own employees, twice indirectly to cover everyone else through the VAT — and thus would be a competitive disadvantage against all other US companies (and foreign companies) relying on government-provided insurance, and not paying for insurance out of their own pockets.

Pelosi assumes, then, that all US companies will drop private employee coverage like a bad habit and let everyone go on the government system, rather than bankrupting themselves to pay double health care costs.

And she’s right in that assumption.

4. One more thing to point out is Pelosi’s own statement that any new taxes would come after the Congress finishes the healthcare debate, and that it may come as part of a larger overhaul to the tax code. They’re saving this for after the government takes over 17% of the American economy.

Foretold, forewarned.

—————————————————

Watch the Senate Doctors show, who don’t need to wear white coats.

By the way, when was the last time you saw an M.D. wearing a white coat, unless you were hospitalized?

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Filed Under: Barack Obama, business, economics, economy, health care, healthcare Tagged With: Fausta's blog, Value Added Tax, VAT

Comments

  1. Pat Patterson says

    October 6, 2009 at 8:15 pm

    “Let’s put everything on the table!” Which is what Titus Andronicus said right before serving Tamora and Emperor Saturninus the sons of Tamora, Chriron and Demetrius, in meat pies. In this case I think it is the taxpayers that are being served up in easily digestible slices.

  2. Pete says

    October 6, 2009 at 10:06 pm

    As an ex-pat Brit, I can assure you that any imposition of VAT WILL increase your taxation, however hard your Government tries to deny it. And VAT is classless, so it will hit the lower-paid harder.
    Been there…seen it…felt it…

  3. elixelx says

    October 8, 2009 at 7:12 am

    ….Whereas our genius Socialist PM, Zapatero, not content with looking and behaving like a nincompoop Mr. Bean; not particularly ashamed of his goth daughters’ obvious obesity and his wife’s anorexic chic; not satisfied with 20% unemployment, has enacted–Lord save us!–a 2% hike in VAT from 16% to 18% on all consumer goods and food products–on the, for him, inarguable premise that Spain will not be able to pay down its deficit by taxing the rich–€30,OOO p.a. and up–and hence must ask for more sacrifice from EVERYBODY….
    Maybe you guys will be able to hold Crazy Nancy at bay, because as we well know, once the head of the “camel” is inside the tent, premature ejaculation is always a possibility!

  4. Cindy says

    October 8, 2009 at 4:23 pm

    Now that you mention it, I’ve never seen an MD with a white coat on. I’ve been hospitalized several times, too. My docs always seem to be wearing business or business/casual attire. Or scrubs in the OR during my C-section. No white, though. Hmmmm

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