Nonbinding Senate Vote Condemns Value-Added Tax

April 15, 2010 - 6:36 PM
It's official: The Senate doesn't like the idea of a value-added tax, which would be similar to a national sales tax.
Washington (AP) - It's official: The Senate doesn't like the idea of a value-added tax, which would be similar to a national sales tax.
 
The Senate voted 85-13 Thursday to pass a nonbinding "sense of the Senate" resolution that calls the value-added tax "a massive tax increase that will cripple families on fixed income and only further push back America's economic recovery."
 
The issue came up because White House adviser Paul Volcker told a group in New York last week that taxes might have to be raised to bring budget deficits under control. He added that the value-added tax "was not as toxic an idea" as it had been in the past, according to a report by the Reuters news service.
 
The White House has distanced itself from the remarks, with officials saying that Volcker was not speaking for the Obama administration. Volcker was chairman of the federal reserve under former Presidents Jimmy Carter and Ronald Reagan. He has been an economic adviser to President Barack Obama.
 
Many academics - as well as some Republicans - have said over the years that a value-added tax would be a good way for the federal government to get its finances in order. The idea, however, is not popular on Capitol Hill.
 
Nevertheless, Volcker's remarks gave Republicans in Congress a convenient boogeyman to rail against as the deadline to file federal tax returns passed on Thursday. Sen. John McCain, R-Ariz., introduced the resolution condemning the tax.
 
"Instead of offering proposals to reform the system and ease the burden on our citizens, some are suggesting creative ways to impose new taxes on Americans and even further complicate our tax code," McCain said. "While there is no official proposal to impose the VAT, I think it is necessary for my colleagues to be on record on this onerous new tax."