A Commentary by J. D. Longstreet
Occasionally, someone who really knows what he or she is talking about actually speaks. Such is the case in the article by Timothy P. Cahill formerly the Democratic state treasurer of Massachusetts. (He is now running for governor as an independent.)
Finally, Mr. Cahill says this: “There is still time to repeal and replace this bill before it is implemented. That's exactly what we have to do-before it is too late. You may read the entire article HERE.
In an article at The Washington Examiner entitled: “Slow-growth Europe, here we come” author Irwin Stelzer makes the following statement: “His (Obama) fiscal plan is to raise taxes; his political calculation is that Americans will come to love their new entitlements and rank him with Franklin Delano Roosevelt in their pantheon of heroes.”
The widget is sold wholesale to a widget retailer for $1.20, making a gross margin of $0.20.
The widget retailer then sells the widget to a widget consumer for $1.50, making a gross margin of $0.30.
With a 10% sales tax:
The manufacturer pays $1.00 for the raw materials, certifying it is not a final consumer.
The manufacturer charges the retailer $1.20, checking that the retailer is not a consumer, leaving the same gross margin of $0.20.
The retailer charges the consumer $1.65 ($1.50 + $1.50x10%) and pays the government $0.15, leaving the gross margin of $0.30.
With a value added tax:
With a 10% VAT:
The manufacturer pays $1.10 ($1 + $1x10%) for the raw materials, and the seller of the raw materials pays the government $0.10.
The manufacturer charges the retailer $1.32 ($1.20 + $1.20x10%) and pays the government $0.02 ($0.12 minus $0.10), leaving the same gross margin of $0.20.
The retailer charges the consumer $1.65 ($1.50 + $1.50x10%) and pays the government $0.03 ($0.15 minus $0.12), leaving the gross margin of $0.30 (1.65-1.32-.03).
OK – Complicated enough for you? The bottom line is this: There will be a humongous increase in the price of everything you purchase, which is covered by a VAT tax. It ain’t gonna be pretty.
Yes, America is now a socialist state very much like the old Soviet Russia was and the modern European states are today.
J. D. Longstreet