Dan Popp
Cruz' cowardly VAT
By Dan Popp
November 30, 2015

Taxation without representation is tyranny. – James Otis

Senator and Presidential candidate Ted Cruz is surely one of the most courageous people on Capitol Hill today. Of course, that's a distinction akin to "best tasting light beer," but it's not nothing. Agree or disagree with him, no one should be calling Ted Cruz a coward.

But his tax plan is cowardly. And evil. And un-conservative. It contains that most devious of all barbarian confiscation ideas: a Value-Added Tax.

Here are the salient details, provided by the Tax Foundation. According to this analysis, the Cruz proposal would "replace the corporate income tax and all payroll taxes with a 16 percent 'Business Transfer Tax,' or subtraction method value-added tax." This is something I would expect from Comrade Sanders or Comrade Kasich – not from Ted Cruz. Rand Paul gets in on the act, too.

I have three moral objections to a Value-Added Tax. First, it runs afoul of the righteous (and quintessentially American) principle of "no taxation without representation." Since I don't think Senator Cruz is proposing to allow businesses to vote, we'll still have no right to tax them.

But even if we had no moral basis to stop taxing businesses, we'd have plenty of practical reasons. Economist Milton Friedman said that the corporate tax should be abolished. It reduces productivity and gums up the gears of industry. And a VAT is the worst for this because every time a business buys a part or an assembly from another business, it has to work out whether "value" has been "added" according to the law, who has already paid the tax, who is exempt, etc. If you woke up tomorrow saying, "How can I destroy some jobs today?", you might come up with a VAT.

The second moral objection to the Value-Added Tax is that it is a hidden tax. This is why I call it "cowardly"; the person who's really being taxed is never notified. "Businesses do not pay taxes," thank you, Ronald Reagan. They only pass the taxes on to you, the buyer of their products, in the form of higher prices. That's wrong. It's chicken. It's deceptive. Senator Cruz, Senator Paul, if you want to continue the assault on private property and confiscate 50%, 60%, 70% or more of what everyone makes, have the guts to do it all at once, out in the open. Let's have one bill from the government for all the taxes I owe, due and payable on April 15th of each year. No weasely "withholding," no business taxes on top of sales taxes on top of income taxes. Be a man about it. Let me see exactly how much you think I owe, all summed up in one number.

The fact that politicians will never do that is evidence that they know honesty would end their political careers – at the very least. So dishonesty and demagoguery reign.

The final ethical reason to detest a VAT is that it's a regressive tax. It hurts the poor most. If Joe Taxpayer finds himself with money to save or money to give, that money won't go to pay a business tax. It's the person who spends every nickel that comes into his hands who pays the VAT on everything. This principle, by the way, deflates the common fallacy that X% of Americans don't pay income taxes. They do pay income taxes – they merely pay someone else's income taxes. The word for that is "socialism."

As Europeans have realized, once a Value-Added Tax has been jammed into the machinery of commerce, politicians find ways to add to it. They hide it in more layers. They make it more subtle and complex. They find more ways to reward their contributors and punish bogeymen. This comes at everyone's expense, and hardly anyone knows. A VAT is the perfect lever for a weasel in high office to work his weaselry without good people finding out.

What is the most evil tax? Some might say it's a poll tax, because poll taxes were once used in this country to keep blacks from voting. But a poll tax directly ties taxation to representation – it doesn't tax anyone who can't vote. And a poll tax is right out there in the open – not pretending to be a tax on someone else. So in those two ways, at least, the detested poll tax is more upright than a VAT.

[By the way, if you're curious as to what I would advocate as a tax policy, you can read my outline here. It contains no poll taxes or VATs. Sorry, barbarians.]

This leaves a nagging question: Why would courageous conservative Ted Cruz propose such a cowardly, lying, ungodly, Marxist, destructive tax? That's a question his supporters should ask him, very pointedly, right now.

© Dan Popp


The views expressed by RenewAmerica columnists are their own and do not necessarily reflect the position of RenewAmerica or its affiliates.
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