Obama Administration Mulling National Sales Tax

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obama1A taxing development surfaced today.  White House economic advisor Paul Volcker is calling for a new national sales tax — a value added tax or “vat” — to help close the deficit.  But as CBS 2 HD found out area residents are saying “vat chance.”

Talk about starting a tax revolt. Volcker’s call for a new national sales tax — on top of the state and local sales taxes we pay now — got a loud Bronx cheer from just about everyone.

“That’s crazy. That really is crazy. Why would need any more taxes than we already have?” said Kathy Merritt of Watchung, N.J.

“It’s a bad idea. New Yorkers are struggling as it is already. We don’t need that. We need incentives, breaks, jobs,” East New York’s Lee Santiago said.

“They’re trying to make those of us who have a few bucks poor so everyone will be poor and everyone will be the same,” added Charlotte Wein of Midtown.

Here’s what the former mayor of Yonkers said when CBS 2 HD into him on the street:

“The Obama administration continues to be extremely out of touch with mainstream America. We’re over-taxed so it’s just a continuation of his far left, extreme left, agenda and I think it’s a disaster for New York and actually the rest of the country, too,” John Spencer said.

The new so-called value added tax would come on top of state and local taxes. Economists say the tax would also be imposed on manufacturers and producers.

“You don’t need a PhD in economics to figure out that what the producer is going to do is pass this along to the customer,” said Ken Goldstein of The Conference Board.

So if the vat is 10 percent, that sweater you pay $31.50 for today would have and additional:

*50 cents in taxes added on by the yarn supplier

*$1 in taxes added on by the manufacturer

*50 cents added on by the wholesaler

*$1.50 added on by the retailer

Now the sweater costs $35 plus state and local sales taxes, which is 8.75 percent in New York City.

One thing that may keep the Obama administration from imposing the tax this year is that every member of Congress is up for election come November. But next year, all bets are off.

Jose Barro, an economist for the Manhattan Institute, told CBS 2 HD that the vat might work if the government agreed to reduce personal income and corporate taxes at the same time.

{WCBSTV/Noam Amdurski-Matzav.com Newscenter}


  1. Sorry there is no sales tax on clothing under $110.00 in New York City. So there will be no 8.75% tax on “that sweater”.
    Don’t get me wrong, I am against such a tax, but the article is off.

  2. Shalom aleichem from the over-taxed European Unon!

    We have had a Value Added Tax (VAT) since 1973. It started off at 8%, which was added at every stage of a transaction, i.e. from raw materials, through manufacture, and right on to the final purchaser. However, it replaces purchase tax, or “sales tax” as you know it in the U.S.

    This tax has been raised over the years to 17.5% (in the United Kingdom) and 20% (in France). In the UK the VAT was temporarily reduced to 15% las year in an attempt to kick start the local economy, but it was raised again to 17.5% in January 2010.

    Not everything is liable for VAT, however: many raw food items are exempt. Children’s clothing is also exempt, as are books and newspapers.

    It could (repeat: could) be beneficial to US consumers – but only if the state and city sales taxes are repealed.

    Good luck!

  3. Great idea from someone so out-of-touch with real America! The answer is to cut spending! Or maybe, better yet, there will be a VAT REBATE for those eligible under the new relief plan…

  4. “Comment from dc
    Time April 7, 2010 at 10:53 PM

    Sorry there is no sales tax on clothing under $110.00 in New York City. So there will be no 8.75% tax on “that sweater”.
    Don’t get me wrong, I am against such a tax, but the article is off.”

    Obviously “dc” has A.D.D. The VAT tax will be placed on the manufacturers, which will increase the PRICE of the sweater before it ever gets to the consumer, regardless of whether tax is applied at the time of sale.


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