Monday, May 03, 2010

Hold the VAT -- Taxpayers May Prefer Spending Cuts.

The Obama Democrats' stealth strategy for increasing the size and scope of the federal government is well under way, despite huge voter backlash. Federal spending has been increased from a 30-year average of 21 percent of gross domestic product to 25 percent, and a bipartisan commission tasked with reducing the deficit may recommend tax increases. Presidential economic adviser Paul Volcker has already called for a value added tax, a form of national sales tax, and presidential press secretary Robert Gibbs has declined to rule it out.

The assumption in some quarters is that a tax increase is inevitable and that the public won't allow any significant decrease in public spending. But there's reason to question that assumption.

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