Haven't We Learned Anything?

In a recent op-ed piece, Fritz Hollings (former senator from South Carolina), touted that we should stop trying to save money in order to pay for Medicare. Instead, his brilliant solution is to create a VAT tax. Just 1% tax - what could be the harm...? Oh, and another 2% to pay down the debt.

History lesson - Our first income tax was only 7% (top bracket). Forty years later it was 92%.

Economics lesson - VAT taxes, tariffs, etc, do in fact increase the price of imported goods. It is not a "free lunch."

A 3% VAT tax would only open up yet another floodgate of government spending at our expense. Instead, I have a nifty idea: Cut government spending.

_____________________________________________________

"We shouldn't be wasting time waiting to see whether we can save $500 billion from Medicare. The 1 percent VAT can guarantee that health care reform can either be paid for or the extra money used to pay down the debt. Then the other 2 percent VAT should be dedicated to paying down the debt.

For those nervous about taxes, let's vote. Any voting against this approach will be voting against paying for health care, against paying down the debt, against relieving Corporate America of income taxes, against promoting exports by 32 percent, against stemming the flow of off-shoring jobs, and voting against middle-class jobs and saving the economy of the United States."

- Ernest "Fritz" Hollings

Read the entire op-ed here.