13 Senators, 12 Democrats and 1 Republican wage a war on the American middle class!

Posted on April 21, 2010 by

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Two weeks ago, senior White House economic advisor Paul Volcker uttered words that no one wanted to hear:  “If, at the end of the day, we need to raise taxes, we should raise taxes!”  Mr. Volcker was referring to the leviathan US government debt caused by the administration’s out of control discretionary spending that results in yearly deficits.  Mr Volcker recommended a Value Added Tax (VAT).  The VAT would be a type of national sales tax, like the one adopted in most western European countries in the 60’s. The VAT is a tax on the consumption of all goods and services.  Although a VAT would be a tremendous revenue generating machine, the European experience shows that instead of using the VAT revenues to balance their budgets, the VAT simply encouraged more government spending (higher deficits, higher debt as a percentage of GDP).  The VAT was a terrible idea.  The VAT would  impose a higher tax burden on the middle class and the poor.  An additional sales tax on the rich would not have the same crippling effect than it would on a low earning household. The best way to deal with the federal debt is to cut government spending and to encourage investment domestic and foreign through low taxation which would result in increased economic activity, higher output and therefore higher tax revenues.

Last week Senator John McCain introduced a resolution stating: “…the VAT is a massive tax increase that will cripple families on fixed income and only further push back America’s economic recovery”.  Senator McCain was absolutely right.  In the current economic climate plagued by high unemployment (so many Americans took pay-cuts and some don’t even have an income anymore), a VAT would be disastrous.  It is important to realize that a VAT discourages consumption, which could jump start a snowball effect of rapid deflation and drive us back into a recession.

The Senate voted 85-13 against the destructive VAT tax initiative and the Wall Street Journal published the list of the 13 senators, one Republican and twelve Democrats who were in favor of a VAT (Value Added Tax).  These senators showed no concern for the middle-class Americans and the poorest among us.  These politicians seem to have chosen to wage a war on the middle class, in order to continue to encourage unrestrained spending in Washington DC.

The list is as follows:

Republican George Voinovich of Ohio

Democrat Carl Levin (Michigan)

Democrat Daniel Akaka (Hawaii)

Democrat Jeff Bingaman (New Mexico)

Democrat Tom Udall (New Mexico)

Democrat Sherrod Brown (Ohio)

Democrat James Webb (Virginia)

Democrat Robert Byrd (West Virginia)

Democrat Ben Cardin (Maryland)

Democrat Byron Dorgan (North Dakota)

Democrat Ted Kaufman (Delaware)

Democrat Jack Reed (Rhode Island)

Democrat Sheldon White (Rhode Island)

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