Volcker: Consider Higher Taxes To Tame Deficit

The United States should consider raising taxes to help bring deficits under control and may need to consider a European-style value-added tax, White House adviser Paul Volcker said on Tuesday.

Read the whole story: Reuters

Comments

[notsostimulated]

05:22 PM on 04/09/2010

I am surprised by the absence of the comments from liberals on this page. I guess they have had to face the reality that THEY ARE WRONG!!!

The VAT tax issue proves the administration they so vehemently defend is incompetent and destroying this nation. They can't blame Bush anymore.

[Vaubon]

08:18 PM on 04/08/2010

Europeans hate the VAT tax. In the Uk there are many colorful metaphors which show its popularity. I do not totally agree that the VAT would suppress the economy. It all depends on which economy you are referring. The official one absolutely. The black market would be the real winner. Smuggled goods. Just think of the opportunity to make money by smuggling goods into the country then selling them at VAT rates without having paid the fees. Such things are done with cigarettes and gasoline but picture it on a national scale not just in a few large cities. Will be a beautiful thing. What will occur is that the smuggler will be the biggest winner. All he or she would have to do is get the product in the country then sell it at half of VAT price for cash. Small businesses will jump at the chance to pay half VAT then clean up on the rest of the fees. I am not saying small businesses are dishonest just that VAT taxes tend to force them into corners when it comes to survival or bankruptcy. If you think the system now is corrupt just wait for the big show. I cannot wait to watch it all unfold. Nothing like a good thriller.

[David Belkevitz]

10:19 PM on 04/11/2010

Vaubon, I don't know where you come from (geographically lol) but it's certainly not the UK. If you knew how tight things are there on contraband coming into the country, you would not make such a statement. And to you 'Notso stimulated' It was good ol' GW who signed the stimulus packages for the big bail outs, and YES we will blame Bush for his incompetence at running the biggest nation in the Western World into the ground after starting with a surplus. Even a blind republican can 'see' that. To release Bush from 95% of the US problems is not being realistic, his deregulation on the housing markets and his outrageous expenses on running two wars cannot be ignored.

[jak466]

01:54 PM on 04/08/2010

Once again, the lower and middle class will get crushed by those who claim to be working for them. The Democrats! Way to go!
That is what happens when you govern with your heart instead of your head.

"If you're not a liberal when you're 20, you have no heart. If
you're not a conservative when you're 40, you have no head."
Winston Churchill

[Janine547]

01:36 PM on 04/08/2010

Republicans are opposed to raising taxes, Democrats are opposed to paying them. Just ask Tom Dacshle, Tim Geithner, Charlie Rangle, Al Franken, Ron Kirk, Bill Richardson and Max Baucus.

[PLARENUTS]

12:38 PM on 04/08/2010

How does raising taxes get entitlement cost under control?

It is time to means test entitlements.

When my grandmother died her final hospital bill was 68K for just a couple of weeks.

Her estate was valued at 600K with 50% of that being cash.

Medicare paid that bill. She had the means.

[BananaJam]

09:50 AM on 04/08/2010

Why can't we just figure out how much money we need, and put a flat tax into effect?

[Hoosierbrad]

09:00 AM on 04/08/2010

Sorry Paul, but it makes too much sense, no Republican will go for it.

[nomoredead]

11:22 PM on 04/07/2010

Tax;
mega churches
soft drinks
junk food
bottle water
stock trades
etc.

Raise them for upper earners and private equity companies.

Tap OUR AMERICAN natural resources and have the bulk of the profits go into the government for direct deficit reduction...coal, oil, natural gas.
Why let big big corporations walk away with billions from american natural resources..
There are other ways besides raising payroll taxes.

[jak466]

01:35 PM on 04/08/2010

You have not had many economics classes.

[sandiegoconservative]

10:58 PM on 04/07/2010

A few years back, I lost my job from a business owner who got tired of being taxed more and more, so he laid off 20 workers and went to work for someone else. So I and another person from the company decided to open our own business. We were successful, but eventually got tired from increased taxes, so we closed up shop, laid off our workers and went to work for another firm.

Our managing partner has indicated that if things head where he thinks they are heading, he's going to close up shop and go work for someone else to avoid the risk of running a business. Do you see the trend here?

People would be more in favor of raising taxes if the taxes were found to go for a need for essential programs, instead of waste. If the government cut all unnecessary programs and then said here, we can do nothing more, we need to raise taxes, then that would make sense. This does not.

[ipogo]

09:59 AM on 04/08/2010

Having also lost my business I can sympathize with your viewpoint. Government should be large enough to provide the services and regulatory oversight that is necessary, no more.

I would disagree that raising taxes in this instance makes no sense. Deficits have to be paid for eventually, and we all pay interest on that "borrowed" money. Paying interest provides no direct services to anyone. Our current income tax structure makes no sense. Why tax middle income individuals at 35%, and upper income individuals at 17%?

"Jaansmoor" made a valid point in a letter to another blog. If corporations paid a higher percentage in taxes, they would likely try to avoid those taxes by investing in capital improvements, or machinery. Both would help our struggling economy.

A great many middle class jobs in the U.S. have been "outsourced" to other countries. Personally I would like to see taxes for multinational corporations tied to unemployment rates. The higher the unemployment rate, the higher corporate taxes. Provide an "incentive" to keep jobs in America.

I think the real problem in America is "bigness". Big Business, just like Big Government, has an unfair advantage, and gets bigger by driving out smaller competition. That works to the detriment of us all.

[sandiegoconservative]

05:35 PM on 04/08/2010

The upper class is not taxed at 17%. They choose to take advantage of other areas to minimize taxes. Thus, some end up paying at 17%, some more. But they start out at a higher rate. I am in an upper tax bracket, but I get a break because of school loans, some investments, a break on my house, medical expenses, deductions for work-related activities, children, etc. People who use illegal items to minimize their taxes should be punished. However, what people fail to accept is that many of these tax breaks and shelters are perfectly legal and allowed. Why would someone NOT take advantage of a savings?

Deficit spending has to be stopped. Why would anyone want to pay on a deficit when you could avoid the deficit altogether? That's like saying you need to make more to spend money on entertainment items and also to pay interest on your credit cards, as opposed to cutting your cards up and paying down the debt. It won't happen overnight, but it can happen. Since we HAVE to pay on deficit money now, let's minimize the amount of principal we have to pay interest on first so in the long run, the interest payments are less.

[sandiegoconservative]

05:35 PM on 04/08/2010

The idea of capital improvements and machinery certainly could work, but like a person, the corporation is going to first protect their own pockets before spending more in capital improvements, for a potential tax savings. When their "own" is covered and the income is there, then they expand on a greater scale. Which is why we see Ford, who did not go into debt, expand, while GM has contracted as they have debt to pay off.

[rbchilds]

05:05 PM on 04/07/2010

The problem with raising taxes will be it will not go to the deficit but will go for more government spending. Not a political party issue, both parties would raid the new revenue.

[twhiting9275]

09:08 PM on 04/07/2010

Exactly.
Teach them to stay within budget and not spend more than they take in.

[Hoosierbrad]

09:02 AM on 04/08/2010

So, which federal prisoner do you want released in you backyard, since the federal bureau of prisons will have to close all of the federal prisons, Homeland Security will close its doors, all air traffic will stop, because no money will be available to pay air traffic controllers, etc.

[Janine547]

01:17 PM on 04/08/2010

Agrees, Someone gets it !

[Disdain]

04:13 PM on 04/07/2010

Bring on the 20% European style VAT tax on top of the healthcare tax increases and we'll be longing for the good ole days of 10% unemployment rate.

[David Belkevitz]

04:41 PM on 04/07/2010

Again, you quote wrongly, VAT in UK and most European Countries is under 20%, in the UK it has dropped from 17.5% to 15%.
But let's take a look at Europe against America. better infrastructure, health care, (regardless of what you read) Education is much higher and the many other things that are subsidised through taxes allows Europe much better benefits than the average American, like pregnancy, you keep your job and still paid throughout your layoff, up to 6 months in many countries. If unememployed, through no fault of your own, the govt pay your interest on your mortgage. They have systrms put in place that would shame Capitalist America.

[jak466]

01:39 PM on 04/08/2010

15% VAT on top of their HIGHER payroll tax.

And David, you don't mention NATO. Europe is part of NATO but the U.S. pays the lions share and provides more manpower. Dont believe me just look at Denmark on Wiki.

[jak466]

01:41 PM on 04/08/2010

And have you ever wondered why MOST famous Canadians and Euros move to the U.S?

[David Belkevitz]

04:46 PM on 04/07/2010

Sorry for the typo's, I got excited and my medicine's from Canada hasn't arrived yet!!!

[Disdain]

05:13 PM on 04/07/2010

That's quite alright. When I see the direction of the country, I wish I could just take a pill to make it go away! On a serious note, you are comparing apple and oranges. 50% of Americans pay no income tax due to the various credits and exemptions in our tax code. You have a small percentage of the nation paying for all services that benefit everyone. You can never tax this group enough to cover the cost of all of our entitlements. Let's take England as an example since you mentioned them. They have a 15% VAT tax and everyone family making 37,000 pounds and over pays between 40 to 50% income tax on top of it. In spite of all these taxes, the UK recently had to increase the top bracket to raise revenues. In America most people want every benefits but expect someone else to pay for it.

[Orphe D]

04:01 PM on 04/07/2010

Why are good Americans dissatisfied with their standard of living? Answer: Taxation/Big government Read on http://wp.me/pPdcm-1F

[trebor0927]

03:23 PM on 04/07/2010

Sure. Why not actually stop spending? Novel concept. When I don't have enough coming in I don't tell my boss he has to give me more. All of you realize that this money would come out of the pockets of people who work right? How many taxes are enough? Property tax, Income Tax, Sales Tax, excise tax, gas tax, FICA tax, federal communications tax (phone, cable, internet, cell phone), it goes on and on.

[David Belkevitz]

08:10 PM on 04/07/2010

Dis you ask Bush that question when he took the American economy to the verge of bankruptcy?

[trebor0927]

08:57 PM on 04/07/2010

yes. I never wanted TRAP.

[twhiting9275]

09:10 PM on 04/07/2010

You seem to insist that the repubs are the only ones spending like there's no tomorrow, but the dems are doing this on a much, much grander scale.

Bush cut spending in a number of ways while in office, including removing secret service for ex-presidents (starting with himself) after X # of years. This means that less money is used for that. Maybe that's the only one he did make (I haven't exactly read through everything he did), but Obama's done nothing but spend, spend, spend since he got in office

[Haditup2here]

01:52 PM on 04/07/2010

How about a more progressive (yet universal) tax reform system

60% Marginal rate for over a million
50% Marginal rate for $500,000-100,000
40% Marginal Rate for $250,000-$500,000
30%Marginal Rate for $100,00-$250,00
20% Marginal Rate for $50,000-$100,000
10% Marginal Rate for $20,000-$50,000
0% Marginal Rate for < $20,000

No maximum deductions, No exemptions, No exceptions.

[hellboundtrain]

02:30 PM on 04/07/2010

Yes! The very special upper-uppers can't keep getting everything for near nothing.

[Watermark0n]

07:24 PM on 04/07/2010

Such a system would probably take in too much in taxes. It's essentially our system with a 50% and 60% rate. Removing the exemptions would be a biggie, and a 60% rate could lead to capitol flight.

I agree with something along these lines, but you'll probably need lower middle and lower class taxes to make up for the lack of exemptions.

[Rayme]

09:57 PM on 04/07/2010

Throughout history, whenever a government taxed it's people more than 30%, the people rose up and killed their leaders.

[Haditup2here]

10:23 PM on 04/07/2010

A 60% and 70% tax rate has been employed before and at lower incomes:

http://www.truthandpolitics.org/top-rates.php

[addisonsteele]

01:42 PM on 04/07/2010

Given that the US economy was at its healthiest when the top marginal rate was somewhere around 98%, it is certainly worth considering.