The Potential VAT Tax and the Real "Voodoo Economics" of the Heath Care Bill

Krauthammer predicted a national sales tax earlier this week but has now provided a more concrete case explaining the specific economic pitfalls of the health care bill and why a value added tax will be necessary to plug the hole. As he put it, "Obamacare, when stripped of its budgetary gimmicks — the unfunded $200 billion­–plus doctor fix, the double-counting of Medicare cuts, the ten-six sleight-of-hand (counting ten years of revenue and only six years of outflows) — is, at minimum, a $2trillion new entitlement." So, which funds will be expended to expand Medicaid by adding 15 million new dependents as the debt grows exponentially, our bond ratings become more threatened and hyperinflation looms? Well, as Obama has intimated, his deficit-reduction commission will tell us AFTER the elections. And what will they tell us? If you're Krauthammer, you believe a 1% consumption tax is coming as "every 1 percent of VAT would yield up to $1 trillion a decade." According to Krauthammer, levying all the taxes in the world on the "rich," which is now defined as anyone making $200,000, is not nearly enough to cover the largest and most expensive entitlement in history. And as he points out, the VAT will only grow once instituted, just as was the case in Europe. ("Germany: 19 percent. France and Italy: 20 percent. Most of Scandinavia: 25 percent.") And, I'm betting he's right about this because it makes sense that "as we approach European levels of entitlements, we will need European levels of taxation."