(CNSNews.com) – Economist and former House Majority Leader Dick Armey (R-Texas) said he “always believed” the Democrats would impose a value added tax (VAT) on top of all existing, current taxes when they took control of the House, Senate and White House. Armey described the VAT as the most “insidious tax of all.”
In an exclusive interview with Armey on Capitol Hill, CNSNews.com asked, “Paul Volcker, a senior economic adviser to President Obama, and several members of Congress, including Speaker Pelosi, have floated the idea of the VAT tax being implemented on top of current taxes. Would you support something like that? Why or why not?”
Armey said, “Absolutely not. Look, in 1994, I studied – actually, starting in the fall of ’93 – I studied all tax options out there, and I, of course, settled on the flat tax as the best option for a lot of reasons. The Value Added Tax was always the most insidious tax of all, and I always saw that – I’d seen that back in ’77.”
“But, I always believed that when the Democrats got the majority in both the House and the Senate – and I’ve told this to people for years – when they get the House and the Senate and the White House, they’re going to add a Value Added Tax to the existing income tax,” said Armey.
“It’s not going to be a VAT instead of – it’s in addition to, and, of course, they are doing exactly what I predicted. Why? Because they’ve got gluttonous spending habits, and they want to spend more, and they need to raise money to do it, and they can’t raise the money out in front of God and everybody for the taxpayer to recognize what they’re doing,” he said.
“So they are looking at that best instrument to hide the tax from the taxpayer. And that’s why the VAT tax is attractive. The VAT tax has never been attractive to anybody except tax leviers,” Armey added.
The VAT is a general sales tax added to the price of goods and services at each step of production whenever value is added to those goods and services. According to the Tax Policy Center, the VAT was first imposed by France in 1948 and then by the European Community (EC) in 1968. To date, over 100 countries impose some form of a VAT except Australia and the United States.
Economist and best-selling author Thomas Sowell said that the advantage of a VAT, “from the standpoint of the officials who impose it, is that the total amount that the taxes add to the final price paid by the consumer is not apparent, as it is with a sales tax, for example. In general, the less visible a tax is, the more revenue can be collected without resistance or electoral retribution by the voters.”
Many European countries use a value-added tax as “a major source of revenues,” said Sowell.
Paul Volker has said the value-added tax "was not as toxic an idea" as it has been in the past. "If, at the end of the day, we need to raise taxes, we should raise taxes," he said.
House Speaker Nancy Pelosi (D-Calif.) told the “Charlie Rose Show” in October 2009: “Somewhere along the way, a value-added tax plays into this. Of course, we want to take down the health-care cost, that’s one part of it. But in the scheme of things, I think it’s fair to look at a value-added tax as well.”
Armey said the “flat tax” is the most honest tax.
“The first thing about a VAT is it’s not honest,” Armey told CNSNews.com. “It’s a dishonest effort to pick your pocket and disguise it from you. The straight income tax gives you a clear picture of what your tax liability is and what your neighbor’s tax liability is, and then you need to get rid of the corruptions that are in the tax code.
“The two great corruptions in the tax code are, one, the desire to redistribute income and, two, the desire to do such things as social engineering,” he said. “Get rid of that garbage. It’s not their job.”
Armey also said the Democrats will pass the VAT by arguing that it’s “an emergency.”
“Well, what they do is they pass the VAT, the Value Added Tax saying it’s an emergency – it’s necessary,” said Armey. “They pass it at a low level. Once they get it in place, they hide it, and the perception of the public, if they perceive it at all is, ‘Well, it’s only falling on the business people. Real people aren’t paying taxes.’
“What happened in England is they got the VAT, they got it as a gentle, minimal tax, and people thought that’s not very harmful,” he said, “but pretty soon it’s growing like a weed.”
White House Press Secretary Robert Gibbs said on Monday that the White House is not considering a Value Added Tax (VAT), but on Wednesday, when pressed by reporters, he would not say that the Obama administration is ruling out the idea.