A newsletter I receive had a small notice about an article in Fortune magazine which really caught my attention as I hope it will yours. The article which headline included that “America is moving towards a tax increase for the middle class”, was making a case for VAT, and in doing so shared some valuable if scary statistics—because a value added tax it claimed would raise more money than any other means. According to the CBO, Congressional Budget Office, federal spending will jump from $4.45 billion in 2019 to $7,375 billion in 2029. Although revenues are projected to grow, expenses are projected to outgrow the revenues collected from taxes. This means that the federal deficit which was $984 billion last year will grow to $2.156 trillion in 2029. The US would be borrowing 25 cents for every dollar it spends. The federal debt would rise to $29.6 trillion or 104% of national income when last year it was 79%. The gap between revenues and expenditures would be so wide that taxing the rich alone would not suffice. In this article the author claims only a VAT might help, a tax which would begin at the manufacturing level, make prices rise and be hard on most wage earners. It’s a tax some in Washington may be led to consider but it need not be the only solution.
The CBO’s numbers are sobering, distressing and frightening, at a time when no presidential candidate is addressing the issues they speak to and when another round of tax cut is possible. Yet we need not be experts to realize this looming fiscal quagmire (the author’s words) needs to be at the very least acknowledged. Policy makers’ silence and ignorance need not be ours.
Yes it would be helpful if democrat candidates would stop attacking each other and address this looming key financial issue as well as others. Excellent article and timely.
indeed Miriam it would certainly be more productive if the candidates were to deal with key issues whether or not they are popular.