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Is there Bipartisan Support in the House for Obama’s VAT?

By: Jeff Emanuel (Diary)  |  May 3rd, 2010 at 12:30 PM  | 

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As income taxes creep towards their highest rates in decades, five Republicans are reportedly cosponsoring a bill to make you may pay more tax in the checkout line, as well.

The Hill is reporting that Rep. Bill Pascrall (D-NJ) has found five Republicans to go along with his proposal to impose a “Value-Added Tax” on products imported from countries that also have a VAT — a list which currently includes Mexico, India, and the entire European Union, along with many others.

The Hill reporter Walter Alarkon couldn’t be bothered to include a bill number or name in his piece (raising the question of what – if anything – he actually knows about this legislation), so I’ve done the leg work for him.  The bill in question is HR 2927, or the “Border Tax Equity Act of 2009.”

§4491 of the bill, titled “Imposition of Tax,” states:

    `(a) General Rule- There is hereby imposed a tax on imports of goods and services from any foreign country that employs an indirect tax system and grants rebates of indirect taxes paid on goods or services exported from that country.
    `(b) Amount of Tax- The amount of the tax imposed by subsection (a) on an imported good or service shall be an amount equal to the excess of–
    `(1) the indirect taxes that are rebated or not paid on the good or service upon its export, over
    `(2) any indirect taxes imposed on the good or service at the border of the United States.

Rep. Walter Jones (R-NC), one of the bill’s GOP co-sponsors, has called on people to “let experts to analyze various tax reform plans before judging them” — including the VAT, which President Barack Obama (D-IL) and one of his chief economic advisers, Paul Volcker, have spoken favorably of as a way to decrease the administration and Democrat Congress’s record deficits.

Just two weeks ago, 85 Senators voted in favor of a Sense of the Senate resolution opposing the VAT, which called it “a massive tax increase that will cripple families on fixed income and only further push back America’s economic recovery.”

Read the legislation for yourself. Is this a VAT, or is it “simply” a tariff? To me, even if it’s the latter, if that cost is passed along to the end consumer here, then it’s the equivalent of a VAT. Either way, it sure sounds like a case of protectionism.

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COMMENTS

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  • IJB

    He’s awful. On nearly every issue.

    There’s two people running against Jones in the primary – one of them looks like a Party switcher (unless Politics1.com just has the party label down wrong for that guy).

    Anyway, I urge NC residents in NC-03 to take a long look at Bob Cavanaugh, and determine whether he shouldn’t be the one to vote for in NC-03 primary tomorrow. Because Jones sure doesn’t deserve it.

    As for Pascrall – did he (or the article) name all 5 Republicans? No?! Then Pascrall’s *lying*. (How do you know when a Demcorat’s lying?… Etc.)

  • The_Rebel

    but in any case, why are Republicans in NC, SC, and GA rushing to support this? Is there something in the water down there? Also, Alan Simpson is a traitor to his own party, and I wouldn’t trust anything he comes up with as co-chairman of Obama’s fiscal commission.

    • lineholder

      I’m a conservative living in NC. I can’t provide you with answers as to why some southern politicians from this area of the country might be supporting something that even remotely resembles a VAT, but I can tell that the greater majority of us would rather have molars pulled with no anesthesia than to leave ourselves wide open to even more government intrusions into our lives.

      • The_Rebel

        I could understand it if those five Republicans were from the northeast, where I am, although I would still castigate them.

        • lineholder

          Their behavior raised a red flag and you questioned it. I can respect that.

    • JamesSmith130

      a strong protectionist sentiment in the Carolinas in recent years, especially for the textile industry. Jesse Helms, for one, opposed almost all trade agreements. And Strom Thurmond fought for tariffs on the textile industry.

      I’m not at all surprised that Republicans in these areas would support

    • utahrepublican

      I don’t know enough about the issues to judge fully, but I can see some reasons for what they are doing, namely jobs and “fairness.” At present, the manufacturer’s interest on American goods sold in Europe are double taxed (American income tax on the manufacturer’s profit and VAT on the article), whereas European goods sold in America are tax free (neither income tax or VAT apply). The net result is foreign manufacturers have an advantage over American manufacturers in ALL markets. Add in government regulation, lawsuits and environmentalists, and the only reason [yes, its hyperbole for effect] there are any manufacturing jobs left in America is that European unions and government regulation are (incredibly) worse.

      It appears to me from the brief summary that the bill wants to subject foreign imports to at least one tax (American exports will still have two taxes). That is not only more fair (it only equals their domestic tax burden while American manufactures still have a double tax burden), it should also help save American jobs, which as a conservative I tend to support.

      I also don’t see it as “triggering a trade war.” The Europeans have been doing the protectionist VAT trick to American goods for over a half century, and it is fully approved by the WTO (not that I have any trust in the WTO, but just that the WTO can’t call it “unfair”).

      I don’t know that these benefits are sufficient to overcome all other issues, but they at least show that there are usually both good and bad trade-offs in everything. That’s why I don’t like to react too quickly to screams about only one side of any issue I haven’t studied.

  • DirtyDave

    Tariff, Vat, what’s the difference? Hoot Smalley tanked a very shaky economy in the last century and this sort of economic thinking will tank it in the current century.

    Everything our government does in the name of improving the economy is making it worse. I would say these clowns have no clue, but my fear is that they do.

    Either way, we are really doomed.

    • http://jeffemanuel.net Jeff Emanuel

      “Everything our government does in the name of improving the economy is making it worse.”

      5.

      • http://beaglescout.wordpress.com Beaglescout
    • Frank Zaber

      Bachmann kinda stepped in it when she referenced Smoot-Hawley incorrectly.. she should have known the “progressive” bloggers will be all over any mistake any conservative makes for the next 6 months.

  • partyof1

    many more Republicans than just this five (if there are five who admit it) want a VAT. Just like many want Obamacare. Both of these increase government power, and Republicans are part of government. Their problem is that most of them can’t admit to these things.

    I’m just saying that we should hope for the best but assume the worst and make sure they know that we, the base, oppose a VAT and favor a spending cut instead.

    • IJB

      Sorry, you’re going to have to do better than “many more Republicans than just this five (if there are five who admit it) want a VAT. Just like many want Obamacare. Both of these increase government power, and Republicans are part of government.”

      Especially considering that *every* Republican voted against ObamaCare.

    • WoodstockRedCat

      lots of it..I mean A-LOT.

    • http://www.hakubi.us/ Neil Stevens

      Do you have evidence or are you just making this up?

      Not one Republican voted for final cloture or passage of Obamacare.

  • smitch61

    I think we all know that had it not been for the tea party protests, the GOP would have assisted in socializing medicine right along with the Democrat party. If we are fortunate to stop this at some level in November, we better protest in larger numbers to remind the GOP what we expect.

  • partyof1

    That leads to disaster. And the GOP gets technical credit for voting against Obamacare but considering the strong anti-Obamacare sentiment of the base and the caustic path that Dems chose to cram it down, that vote wasn’t really a tough political call.

    In a brief chat with the Huffington Post on Tuesday, National Republican Senatorial Committee chair John Cornyn (R-Tex.) implicitly acknowledged that Republicans are content with allowing some elements of Obama’s reform into law.

    The same Cornyn who endorsed Charlie Crist.

    Senate sources confirm to me this evening that Senator Mitch McConnell and his leadership team are trying to scuttle Republican efforts to force a vote on repeal of the entire health care legislation during the reconciliation process. I?m told reliably that moderate Republican senators who voted against Obamacare in December do not want to vote against it again because it would just be ?symbolic?. McConnell agrees and is not inclined to push Republicans to go along with any effort to force a vote on repeal during reconciliation, despite David Vitter offering up an amendment to do just that and separate stand alone legislation being offered by Senator Jim DeMint with a host of Republican co-sponsors.

    -Posted by Erick on March 24th.

    So for the closet big government Republicans, this is Nirvana. They get the credit for voting against it, political traction from blaming Obama for it, can fund raise off of it, but still get to wield the new power derived from it. I’m not saying they planned it exactly this way, frankly I don’t think they’re smart enough to have it turn out just so. But I think many of them will take it.

    Even if I do not I post a cited quote from any Republican standing up loud and proud in favor of a VAT, that would just be words, and actions speak louder. When Republicans were in power for six years, they neither cut spending nor reduced the size of government. That virtually guarantees new taxes.

    And now they’ll be throwing up their hands in mock exasperation saying we’ve got to “do something” and be “responsible” (code word for taxes). As if this problem just landed here from Mars today and is not the result of themselves not being good fiscal stewards for decades. Funny how being responsible never means making the government do with less.

    I’m hopeful that the Stutzman’s and the Rubio’s and the Djou’s will do better. But I don’t think I’m breaking new ground to say that the GOP as a whole has not been as conservative in action as it has been in words.

    • http://jeffemanuel.net Jeff Emanuel

      to reply to comments in the future

      • partyof1

        :-(

  • gamechange11two

    Every republican in D.C. needs a stern reminder that the people who vote for republicans are in no mood to send more money into that black hole known as the federal budget. Obummer’s sham committee has it wrong. Out here in the precincts everything is NOT on the table.

    The only thing we’re bringing to the next election is this: After nearly fifty years of runaway federal spending, devaluation of our currency, inflation, and a national debt never before seen in the entire history of our species STOP SPENDING OUR MONEY!

    Nobody who votes republican believes a single dime of any new revenue stream will ever be applied to any debt relief.

    Oh, and out here in fly-over country “bipartisanship” is not a word that tests well in focus. To us it means “complicit in the long slog towards socialism”. (See also,”We won. We’ll write the laws.)

    So stop playing footsies with the people on the other side of the table. They only think of you as useful idiots. We, on the other hand, think of you as the only thing standing between us and command-and-control. And it isn’t a very comforting thought right now.

    Like the sign said,”I can see November from my house.” Give us a reason to open our front doors on election day and get to our precincts. Give us a difference. Give us real change.

  • ciscoguy

    Don’t get me wrong – I would root for a filibuster on any VAT bill, but if it were to go through anyway on a party line vote (unlikely now with 41 nay’s), it would allow us to laugh at all of the low-wage Obamatons who never thought they were going to have to “spread the wealth”. It would erase any remaining false perception that democrats stood for the “little guy”. Politically speaking, it would be a boon for Republicans for a very long time.

    Of course, this is only a silver lining to the certain economic paralysis that would ensue, which obviously makes it a deal-breaker.

    • gamechange11two

      Let’s see if we can set some qualifying guidelines. I mean really. What’s another 2400 pages of tax code, give or take?

      • ciscoguy

        .

      • http://jeffemanuel.net Jeff Emanuel

        Remember the Boortz/Linder “prebate”? It was in one of their FairTax books — either the original, or the second one they had to write to correct all the gross errors and miscalculations they put in the first.

  • acslater

    “As income taxes creep towards their highest rates in decades”

    What are you even talking about? I mean, yeah, there’s a chance that the dems will let a piece of the Bush tax cuts expire, but that would bring them up to the highest level in, one decade. And it would be a tie for the highest level.

    I’ll assume that you’re referring to state income taxes, but that’s meeting you more than half way.

    • http://www.marklaiminger.org Lammo

      for the former junior senator from the state of illinois. :-)

  • Raven

    The democrat is saying Tim Burns is supporting this bill.

  • mindset

    Can someone help me out? What’s wrong with matching the import tariffs of other countries? Seem’s like it would encourage folks to make things here rather than there. Heck, why not tax stuff coming in at a rate that off-sets some of the lower pay that foreign workers make? I for one would be willing to pay a bit more at walmart for shoes if it meant that a factory sitting idle in CA were to start up again.

    What’s wrong with protectionism?

    Again, I’m fairly new to being interested in politics in general, about 6 years, but this is something I’ve not understood about Conservatives, which I consider myself to be. Why on Earth would we support free trade? I see why Liberals would…to help their little minority brothers and sisters, but why do we?