Tuesday, April 27, 2010

Actually...

Economists are now admitting what those of us that actually pay attention to reality knew when it was originally proposed: the stimulus didn't help.

In fact, if you look at the amount of debt it added, the way it allowed the government to insert itself into and try to further regulate free enterprise, businesses responding by trying to stay afloat and firing workers, you could probably easily defend the assertion that the stimulus has done far more harm than good. Especially since the government, instead of cutting spending (which would help reduce the debt load to possibly payable within our lifetimes, instead of impossible for even our grandchildren to pay off), has decided to further harm the economy by proposing a VAT.

And if you think a VAT wouldn't kill the economy, let me explain how it would.

Say you need a new pair of shoes. If the VAT goes through, a pair of shoes that would cost about $30 now will cost much, much more. The un-formed rubber imported for the soles would be taxed when the factory bought it. Then, taxed again when it's melted down and turned into shoe soles. The leather would be taxed when the calf was born, weaned, sold, butchered and the hide taken, when the hide was tanned, when the tanned hide was processed into shoe leather, when the leather was cut into the parts of the shoes. Then all of the parts would be taxed again when the shoe was assembled. All materials and steps of making the shoelaces would be taxed, too. Your $30 pair of shoes today will likely wind up costing $50-$75 after the VAT is all added in.

If that was the case, would you be buying new shoes when you needed them, or working to stretch your current shoes until they completely disintegrate? Now, imagine how much more expensive, complicated goods would cost, like a television, or a car.

The same goes for services. Would you be willing to spend enough to pay the taxes on eating out with every step of the manufacture of the food taxed?

I do believe I'm going to be starting a garden next year. And maybe starting to raise meat rabbits.

4 comments:

  1. Yeah, I'm seriously considering buying anything and everything I might need for the next few years - extra pairs of shoes, maybe a new washer and dryer, stuff like that. Maybe lots of dried beans, they keep almost forever.

    Sort of like going "Laura Ingalls Wilder" instead of going "John Galt" - going to the old general store as rarely as possible.

    Of course, when lots of people do that, the Obamites will claim that it's evidence that the recession is over and people are spending again.

    That said, we might see riots over $7 a gallon milk.

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  2. Precisely. And you know there's no way they'll give up the income tax.

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  3. I was stationed in England which has a VAT. We went to a MacDonalds in London where we were asked if we were going to eat our food on the premises. Eating the food on the premises subjected us to an additional VAT of about 15%. We took our food and ate it in the park across the street.

    BobF

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  4. I can think of one good possible effect from a VAT: Americans would get *truly* pissed, and be a *lot* more willing to can the congresscritters and fully change the status quo.

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