Obama Eyes VAT Take Hike, IMF Proposes $300 Billion Tax on Financial Institutions

By: Mike_Shedlock

So much for the idea that Obama only wanted to raise taxes on the wealthy. He now is pondering raising taxes on everyone to pay for his bailout schemes and healthcare agenda.

President Barack Obama suggested Wednesday that a new value-added tax on Americans is still on the table, seeming to show more openness to the idea than his aides have expressed in recent days.

Before deciding what revenue options are best for dealing with the deficit and the economy, Obama said in an interview with CNBC, "I want to get a better picture of what our options are."

After Obama adviser Paul Volcker recently raised the prospect of a value-added tax, or VAT, the Senate voted 85-13 last week for a nonbinding "sense of the Senate" resolution that calls the such a tax "a massive tax increase that will cripple families on fixed income and only further push back America's economic recovery."

For days, White House spokesmen have said the president has not proposed and is not considering a VAT.

"I think I directly answered this the other day by saying that it wasn't something that the president had under consideration," White House press secretary Robert Gibbs told reporters shortly before Obama spoke with CNBC.

After the interview, White House deputy communications director Jen Psaki said nothing has changed and the White House is "not considering" a VAT.

In the CNBC interview, Obama said he was waiting for recommendations from a bipartisan fiscal advisory commission on ways to tackle the deficit and other problems.

When asked if he could see a potential VAT in this nation, the president said: "I know that there's been a lot of talk around town lately about the value-added tax. That is something that has worked for some countries. It's something that would be novel for the United States."

"And before, you know, I start saying 'this makes sense or that makes sense,' I want to get a better picture of what our options are," Obama said.

Wasteful Spending

Obama wants to cut wasteful spending. Yeah right. Please consider Obama's Preposterous "Partial Spending Freeze"

With loopholes big enough to drive a cement truck through, Obama will propose three-year spending freeze.

Exemptions

• The $154 billion jobs plan pending before Congress
• Medicare
  
• Social Security
• The $787 billion economic stimulus plan already being implemented
• Department of Defense
• Homeland Security
  
• Veterans Administration
  
• International operations.
  

What's Covered

• One eighth of the total annual budget

This is so ridiculous I don't know how the administration is not embarrassed to death to present it. Moreover "The freeze would be measured overall and would not be applied across the board." The freeze is only for three years.

How can anyone in the Administration expect to be taken seriously about budget deficits after presenting this ridiculous plan?

IMF Proposes $300 Billion Tax on Financial Institutions

The IMF is hopping on the higher tax bandwagon as well. Inquiring minds are noting IMF proposes tax on financial industry as economic safeguard.

The International Monetary Fund has proposed a set of broad taxes on the financial industry to guard against future crises, and the levies that would target "excess" profits and compensation as well as raise hundreds of billions of dollars in the United States alone.

In the agency's most detailed statement yet about how banks and finance companies should pay to offset their risk of failure, IMF staff outlined a possible "financial stability contribution" that would be based on the threat that a firm's collapse would pose to the economy. The levy, the IMF said, should raise an equivalent of at least 2 percent of a country's economic output -- around $300 billion in the United States -- and set it aside to underwrite the costs of putting failed institutions out of business.

A separate "financial activities tax" would impose taxes based on excess profit and perhaps pay, a proposal designed to discourage outsize executive bonuses and the sort of high-return but risky investments that helped drive the global economy into its worst recession in decades.

Pure Idiocy

The IMF proposal is pure idiocy. We need enforcement of fraud rules not taxes in advance to bail out the next fraud.

The best way to start is to indict Geithner, Paluson, Lewis, Fuld, and Bernanke. Please see Geithner and the NY Fed Accused of Willfully Ignoring Fraud and Covering Up Lehman's Bad Assets by Senior Regulator During the S&L Crisis

Public Unions Want To Raise Your Taxes Too

Please see 15,000 Illinois Protesters Chant "Raise My Taxes"; Unions Getting More Aggressive and Obnoxious for details.

The IMF, Obama, and his supporters all want to raise your taxes. You cannot do anything about the IMF directly, but you can vote out legislative representatives that vote for tax increases. More importantly you can decide in the next election to not vote for any candidate that has the backing of any public union.

Public unions have one and one mission: to raise your taxes so they can keep feeding at the trough.

I believe you have better uses for your money than throwing it at public unions who will use the money to lobby and protest for still more raises and benefits than those in the private sector will ever get. If you disagree, by all means vote for union sponsored candidates who will continue to ask for tax increases at your expense.

By Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

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Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management . Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Visit Sitka Pacific's Account Management Page to learn more about wealth management and capital preservation strategies of Sitka Pacific.

I do weekly podcasts every Thursday on HoweStreet and a brief 7 minute segment on Saturday on CKNW AM 980 in Vancouver.

When not writing about stocks or the economy I spends a great deal of time on photography and in the garden. I have over 80 magazine and book cover credits. Some of my Wisconsin and gardening images can be seen at MichaelShedlock.com .

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