VAT

The balloon has been floated. The debt is so bad and so out of control that the US may need to institute a Value Added Tax, basically a national sales tax, in order to raise sufficient revenue to stave off bankruptcy. Amazing. Didn't Obama promise not to raise taxes on anyone earning less that $250K a year? A VAT will raise everyone's taxes, no one exempted. Prices for everything will go up, even items supposedly exempt from the tax. For example, let's say apples are exempt. The trucks that deliver them aren't, nor will the gas that fuels the trucks be. As transport costs rise, the price of tax-exempt apples will go up. What happens when prices go up? Demand falls?

One should think of the economy as a race horse and the government as the jockey. The heavier the jockey (government taxes/regulation), the slower the horse (economic growth). Most of Europe has the VAT and look at the economic growth and unemployment numbers. It is not an example that the US should follow.

If you want more of something, subsidize it. If you want less of something, tax it.