Higher Taxes Are Coming - We Have No Choice

No one wants higher taxes, but the reality is the only way to pay for the huge bailouts we are putting on the Treasury’s credit card is with tax dollars.

According to a recent article for the online edition of Fortune, the most likely choice for increasing tax revenue is the value added tax or VAT.

The VAT system is used in many, if not most, other developed countries.

It is like a sales tax, but instead of being imposed when an item is sold, the VAT is charged on each level of production.

Consumers ultimately pay the tax, but because it is hidden in the product’s cost, it enjoys a lower profile than a sales tax.

We’re facing a tax increase (and would be in the same boat if John McCain had won the election) and there is no way to avoid it.

Thanks to the greed that drove the economy into the toilet, we will all be paying higher taxes.

Right now, the most important thing is to get the economy going again, regardless of federal deficits. If we don’t jump start the economy, our problems will be greater than any tax increase might bring.

Please spare me the “cut spending and government waste” arguments. Unless we shut the government down for a couple of years, we won’t save enough to make a difference.

It sounds great, but the public won’t stand for service cuts that must happen.

A huge deficit will ultimately raise interest rates and squash the economy. The only realistic way to pay off a deficit is to increase revenue.

Why not tie any tax increases to the deficit so that when the deficit reaches a certain level, the tax is suspended until the deficit goes back up.

The Congress could also tie revenue from the tax (or a large percentage of it) to reducing the deficit.

Taxpayers would know that the higher prices that will follow a VAT are leading to a reduced deficit.

The big question remains if there are enough politicians willing to put the best interest of the country before scoring points with voters.

I have my doubts.