Moronmeter.com

Speaker Pelosi reviews new guests arriving at Congressional Fantasy Island with Harry Reid.

Move over Mr. Roarke, Speaker of the House Nancy Pelosi (D-CA) is gunning for your job.

Yesterday, The Hill’s succinctly titled blog item, Pelosi says new tax is ‘on the table’, talked about Madame Speaker’s Monday appearance on the Charlie Rose show (the site was running very slowly and I couldn’t find a relevant clip on YouTube, so I couldn’t review her comments myself, but feel free to give it a go, if you are so inclined).

What new tax does Nancy Pelosi say is ‘on the table’?

Why, a VAT (value-added tax).

You might be asking yourself, ‘What is a “value-added tax”?’

Good question.

Here is how The Hill summarizes it:

The VAT is a tax on manufacturers at each stage of production on the amount of value an additional producer adds to a product.

So, every manufacturer pays a vig along the way, until we get to the final consumer, who pays for the whole product.

Why would we want to add a VAT to the U.S. tax mix, other than to just give Congress more money to spend?  Madame Speaker Pelosi provides a great rationale:

Pelosi argued that the VAT would level the playing field between U.S. and foreign manufacturers, the latter of which do not have pension and healthcare costs included in the price of their goods because their governments provide those services, financed by similar taxes.

“They get a tax off of that and they use that money to pay the healthcare for their own workers,” Pelosi said, using the example of auto manufacturers. “So their cars coming into our country don’t have a healthcare component cost.”

You might think, “But isn’t that VAT just passed on to the consumer?”

Well, there is one detail missing – most VAT countries don’t apply their VAT to exports (or they refund/credit it to the manufacturer).

So, in a way, Madame Speaker Pelosi is right.

What that doesn’t account for is the fact that many ‘foreign’ cars are produced, at least in part, in the U.S. and those workers do have some sort of health and retirement benefits, which are included in the price of those cars.  I’m looking for updated numbers, but I did find a reference stating that in 2000, 50% of the components used in Honda and Toyota cars sold in the U.S. were made in the U.S, so it isn’t an insignificant number.

Also missing?

The fact that, according to everyone pushing for the Democratic Health Care Insurance Reform packages in Congress, the ‘Public Option’ wouldn’t replace health insurance as it currently stands, so those U.S. companies would still be paying for health benefits (not to mention pensions).

So, any VAT would be an additional tax.

Unless, of course, Congress also changed the Health Care Insurance System again, which they haven’t even finished changing this time.

However, if you are alarmed at the thought of yet more taxes being proposed by Congress, never fear.

The Speaker also emphasized that any reworking of the tax code would not result in an increase in taxes on middle-class Americans.

Riiight.

Just like Cap and Trade won’t increase costs on just about everything middle-class Americans purchase?

Just like Health Care Insurance Reform is not only going to lower costs, it will also increase coverage and quality of service?

As near as I can tell, the only place these plans and promises will work as advertised is if they are implemented on Fantasy Island.

Related posts:

1. Nancy Pelosi Says She’ll Keep Blaming Bush As Long As She’s Speaker of the House
2. CNN’s Jack Cafferty Calls Out President Obama and Nancy Pelosi Over Health Care Reform Transparency
3. Senate Democrats to U.S. Workers: If You Want Tax-Free Health Benefits, Go Union
4. President Obama on Health Insurance Requirement: This Apple is Like that Orange
5. Ramblin’ Joe Takes on Health Care Reform.