Conservative media have attacked Alan Krueger, President Obama's nominee to head the President's Council of Economic Advisers, for purportedly advocating a "value added tax." But the 2-year-old blog post they cite stated that he did so "only as a suggestion for serious discussion," adding that he was "not sure it is the best way to go."
Conservative Media, Pundits Push Idea That Krueger "Called For" A Value Added Tax
Cavuto: Krueger "Once Proposed That You Pay An Extra 5 Percent When You Buy Stuff At The Store." From Fox News' Your World With Neil Cavuto:
CAVUTO: All right, well, consumer spending up, and that helped stocks to more than just tick up, but is the president's pick to lead his economic team about to, well, knock both back down -- especially when people get a better idea of Alan Krueger and who he is? A guy who once proposed that you pay an extra 5 percent tax when you buy stuff at the store. Sort of like an big old value added tax, but without swapping it out for any other tax. So, Deneen Borelli says that our world economy would pay the price if Alan ever got his way. But you know, I'm wondering, Deneen, if all of a sudden he could. Obviously, by picking him, the administration is sending a signal. He could be a fan of that approach, right?
CAVUTO: I am curious, Deenen, what you make of this value added tax because a lot of Republicans are fans of it, a lot of conservatives are fans of it, just not as a pile-on, as a swap out. In other words, remove the income tax, replace it with a VAT or something like that. He does not appear to be saying something like that, it would be just an added revenue raiser, at least from my understanding of his work on this. [Fox News, Your World with Neil Cavuto, 8/29/11]
Big Government's Dan Mitchell: "I'm Worried About Krueger's Sympathy" For A VAT. From Andrew Breitbart's BigGovernment.com:
On a more serious note, though, I'm worried about Krueger's sympathy for a value-added tax (VAT). Here's what he wrote back in 2009.
To be fair, Krueger was very careful to leave himself some wiggle room, even going so far as to write that, "I'm not sure it is the best way to go."
But it seems rather obvious that Krueger, like other leftists, wants this giant new source of revenue. Heck, President Obama also has semi-endorsed a VAT, saying it is "something that has worked for other countries."
The President's assertion is especially foolish. After all, European nations imposed VATs about 40 years ago, which simply encouraged more spending and more debt -- and now several nations are on the verge of bankruptcy. [Big Government, 8/29/11]
CNS: Krueger "Has Supported" And "Called For" A Value Added Tax. From CNSNews.com:
President Barack Obama's nominee to chair the President's Council of Economic Advisors has supported a European-style consumption tax that taxes every stage of production for a good or service, a policy generally called a Value Added Tax, or VAT.
Alan Krueger, a Princeton University economist, called for the Value Added Tax in a commentary for the New York Times in January 2009. The White House, however, has said that President Obama would not consider such a tax. [CNSNews.com, 8/29/11]
IBD Editorial: Krueger "Popped Up As An Advocate For A Value-Added Tax." An Investor's Business Daily editorial stated: "Still more recently, Krueger popped up as an advocate for a value-added tax (VAT) or, as some call it, a consumption tax." [Investors.com, 8/29/11]
WSJ: Krueger "Favors A European-Style VAT." From The Wall Street Journal:
Mr. Krueger agrees with Mr. Obama on most issues, notably the need for higher taxes (he favors a European-style VAT), cap-and-tax to reduce global warming and a high minimum wage. We're also told he was an architect of cash for clunkers, the $3 billion subsidy that moved car sales from one month to another. Professor Krueger has his work cut out for him as a salesman for Stimulus II -- or is IV? -- but his confirmation hearing should at the very least be educational. [The Wall Street Journal, 8/30/11]
Hannity: Krueger "Wants A Value-Added Tax." From Fox News' Hannity:
STUART VARNEY (Fox Business host): Thank heavens. The new economic adviser is Alan Krueger. He's an academic. He likes --
SEAN HANNITY (host): Another one?
VARNEY: Yet another one. We didn't learn the first time, or the second --
HANNITY: Another genius who's going to lead us into economic turmoil.
VARNEY: He likes the VAT, the value added tax, a consumption tax.
HANNITY: Wait a minute, on top of. Not to replace.
VARNEY: On top of -- on top of income taxes.
VARNEY: The game-changer, which would really change things --
HANNITY: What would it be?
VARNEY: Tax reform. Lower tax rates, bring in more money. He'll never do it.
HANNITY: Well, wait a minute, this guy wants a value added tax -- wait a minute, value-added tax, which is the FairTax, as we call it, right? My buddy Neal Boortz wrote a book on the FairTax, value-added tax.
VARNEY: But that's in place of, it's not going to be in place of.
HANNITY: But wait a minute, in place of -- no, but they want to add a new tax, a national sales tax on top of --
VARNEY: Five percent to bring in $500 billion a year to spend on their social programs. [Fox News, Hannity, 8/29/11]
Krueger Wrote That VAT Proposal Was "A Suggestion For Serious Discussion," Not "Sure It Is The Best Way To Go"
Krueger: VAT Posed "Only As A Suggestion For Serious Discussion; I'm Not Sure It Is The Best Way To Go." In a January 12, 2009, post on The New York Times' Economix blog, Krueger wrote:
Here is a suggestion to address both the short-run and long-run problems. I pose it only as a suggestion for serious discussion; I'm not sure it is the best way to go. But here goes: Why not pass a 5 percent consumption tax to take effect two years from now? There are many different ways to implement a consumption tax, but for simplicity think about a national sales tax.
This analysis only scratches the surface. As I said, I propose the idea only for discussion at this stage, but it is worth considering. What do you think? [Economix, The New York Times, 1/12/09]
Right-Wing Media Blast Krueger For Wanting To Add VAT On Top Of Income Tax ...
CNS: "VAT Would Be A Levy That Adds To The Current Tax Structure." From CNSNews.com:
The consumption tax differs from a "Fair Tax" proposal or national sales tax proposal that has been considered in recent years by U.S. politicians who want to replace the income tax. The VAT would be a levy that adds to the current tax structure. [CNS News, 8/29/11]
IBD Editorial: Krueger "Pushed" For VAT "Not As A Replacement For Our Current Dysfunctional Income-Tax Code, But As An Addition To It." From an editorial in Investor's Business Daily:
Nothing wrong with [proposing a VAT], per se, unless you're pushing it not as a replacement for our current dysfunctional income-tax code, but as an addition to it.
But that's exactly what Krueger did, although to his credit he did write in a January 2009 New York Times piece that "the main downside of this proposal is that taxes reduce economic activity."
Darn right. Not only that, but unless you get rid of the income tax entirely when you impose a consumption tax, you end up with an overtaxed, stagnant mess. Don't think so? Look at Europe, where citizens are hit with both income tax and a VAT, and the two just keep marching higher. [Investors.com, 8/29/11]
... But He Suggested Using VAT To Lower Rates In The Long Run
Krueger: If Budget Picture Improves, "Income Taxes Or Corporate Taxes Could Be Reduced And The Revenue Replaced By The Consumption Tax." From Krueger's New York Times blog post:
The main downside of this proposal is that taxes reduce economic activity. But the government must make critical trade-offs, and a consumption tax could be the most efficient means to raise revenue to finance essential government functions. Over time, if the budget picture improved, income taxes or corporate taxes could be reduced and the revenue replaced by the consumption tax. [Economix, The New York Times, 1/12/09]