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| I have uploaded a brief example of VAT on the website.
This is in effect a consumption tax & which has some positive aspects. However, the method requires detailed collection processes at each stage of production or manufacture (a lot more government jobs).
Let us take a bite into reality. Our obligations are now in the trillions with lackluster USA economic growth prospects. BUT...obviously in the BACK Rooms of Treasury & Fed negotiations to print paper the buyers most likely have received some assurances there will exist a cash flow stream to service the debt and to assure sufficient cash in the coffers to buy/sell the rollover of debt -otherwise who would buy our paper absent assurances from Timmy & Ben & Frank & Harry & Nancy. From what I have read, private assurances have already been extended to the Chinese & Japanese in regard to collecting sufficient taxes to service debt.
I noted in India the proposed VAT yields 16.75% to the government in VAT plus 4% in sales tax = 20.75%
There are many possible variations -point: WE ARE are going to PAY this giant bill in one form or another. The concern is 'the unintended consequences.'
How does this affect consumption? Would not appear to be growth oriented. Congress given an even larger stream of funds will, assuming the past is any guide to the future, will increase spending & by necessity will increase the welfare state. In most countries I have researched, wages are exempt--this would 'sell the wage earner on the idea' ...
In some respects it is a real pain. I recall the spouse making some purchases in London & such qualifed for a refund of the VAT -except it is a matter of more forms & as I recall in her case American Express screwed up the entire transaction which led to another argument & finally I just gave up and wrote it off to experience.
I envision about ten years of 'putting out fires' and do not have a clue as to how it will affect our incentive to succeed or produce.
Looks to me as though folks will be consuming more hamburger...eggs...and comminuted Poultry Meat (ground up chicken lips & odd parts reconstituted into variety meats)--SPAM would become a premium selection (no ground up chicken lips).
http://www.perspicuousrisk.com
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More on VAT (or more government Bureaucracy)
