Saturday, September 26, 2009

All Things European Are Superior

Clintonista-Obamanoid John Podesta notes that an American value-added tax is more likely to become reality when American deficits are enormous. This outcome is to be celebrated in Mr. Podesta's view, as it would "bring a balance" between the American economy and its Japanese and European counterparts.

For those who wonder, a value-added tax is like a sales tax, only more insidious. Americans presently pay state and local sales taxes, which are added to the cost of a purchase when one pays for the purchase, calculated as a percentage of the retail price and clearly listed on a sales receipt. Value-added taxes, by contrast, are assessed more furtively. When raw materials are made into goods, a percentage of the "value added" to those materials at each stage of production is calculated and recorded. Those taxes are paid finally by the consumer, who forks over a retail price that adds a predetermined percentage of the pre-calculated "value added." The tax is thus entirely opaque to the buyer, who simply grumbles at how high prices are and blames the rapacious retailer for his unseemly greed.

How Mr. Podesta thinks that an additional tax that raises retail prices will bring the American economy into "balance" with other economies in a way that benefits Americans is not exactly clear, but that's not our point. Certainly Japan and Europe have had such taxes for some time, which is more to our point.

Our point is to ask why the left always thinks that European approaches are superior to American ones. As a frequent visitor to Europe and one-time expatriate resident of an EU member country, we appreciate many aspects of European life and culture. Europe is scenic, friendly, artsy and tasty. But we fail to see what is inherently superior about its mode of governance.

Moreover, we think it's obvious why so many Europeans, the SWNIDish ancestors among them, left the Old Country for the New World. The spirit of individual initiative and opportunity that has historically attracted immigrants to these shores continues, despite various moves away from its nurture, to exist in a measure that is palpable when one compares other industrialized countries, most particularly in Europe. It has its upside as well as its downside, certainly, but it is nevertheless a key ingredient in the growth in prosperity and sharing of opportunity that have been the hallmark of the American republic and continue to distinguish it from its competitors in the eyes of still-teeming immigrants to the American republic.

So why is it that lefties think that the mantra "Europe does it" is sufficient to imply, "So should we"? These days the politics of Europhilism applies in American discourse to such far-flung matters as taxes, trains and health insurance. Why?

We're not going to quote stats on employment, economic growth or social mobility to make our case. We aren't going to note how often and expensively in the last century the American part of "the West" came to the rescue of its European counterpart. We are simply wondering why, mostly having left Europe long or not so long ago, Americans now want to go back, and not just to see 23 cities in 25 days.


Anonymous said...

VAT pay as you go is the final answer. Only if Huckabee wins with enough oomph to get it passed. A fantasy but at least its something to think about.

Jon A. Alfred E. Michael J. Wile E. SWNID said...

Anon, search the blog for prior comments on the so-called "fair tax." The fantasy is not simply to imagine that it could pass but that it could reduce the infrastructure needed to collect taxes or the amount of taxes evaded. Income taxes require rules to determine what counts as income; sales taxes require rules to determine what counts as a sale. Income taxes prompt tax evaders to hide income; sales taxes prompt tax evaders to hide sales. Everyone who imagines that drug dealers and prostitutes will pay their fair share with the so-called fair tax needs to remember that such will be true for the providers of such goods and services when they spend their money but not for the consumers of such goods and services when they pay for them. We hate to point out the obvious, but it seems to be the SWNIDish calling.

Anonymous said...

Anon again - point is that it is a simpilar (can be) system. No illusion that it eliminates evaders - just look at those that buy from the internet in Ohio and don't report thier slaes tax every year - same deal.

The effeciency is the issue - as one who has to defer to an accountant every year for my personal/business accounting - my opinion is that if done correctly the econimic cost savings in application and adherance would be a boost to the economy.

Anonymous said...

maybe i should spell check those comments oops!

Jon A. Alfred E. Michael J. Wile E. SWNID said...

Anon, efficiency is exactly the issue, and the view of most with a direct involvement in finance and taxes is that replacing income tax with sales tax simply shifts the complexity from defining and auditing income to defining and auditing sales. To most who imagine such a scenario, it's simply a "grass is greener" matter.

Note also that a VAT is not just a federal tax on retail sales. It is a tax on the "value added" throughout the manufacturing process. This is much more complicated to calculate and can be said to penalize economic productivity just as much as an income tax does.

We cite the issue of evaders specifically because that issue has been a selling point for the so-called fair tax. Promoters want us to think that a VAT will catch the underground economy. It won't.

Don't let the easy, country charm of a Mike Huckabee, coupled with anger against the IRS, convince you that the other side of the fence has a healthier lawn. Easy answers demand hard questions.