April 13, 2005
Hidden taxes, and the politicians who love them

This entry at QandO started me thinking about taxation (reasonably enough, since it is on the subject of a VAT), and two links at the end of the column discuss the ups and downs of various consumption-oriented taxes.

In this post, the second of the two links, Dale Franks points out that a VAT is a form of a hidden tax, since it is integral to the retail price, rather than tacked on after the purchase has been made. It is similar, then, to taxes on items such as liquor, cigarettes, and gasoline, which have various federal, state, and local taxes built in, before the effects (if any) of a sales tax are factored in, and ridiculous taxes tossed into your phone, electric, and cable bills.

I don't care much for the idea of a VAT, because of the potential for abuse. However, Franks agrees with columnist Froma Harrop that the US is going to have a VAT, sooner or later, which is what kicked my brain into gear, with my desire for government transparency. There oughta be a law...

What I propose is a law that requires all retailers to display the cost of goods with both the price and the amount of the price that is the direct result of tariffs, excise taxes, "sin taxes", or any other type of revenue generation. (Note that I'm not addressing indirect cost increases, such as over-regulation or payroll taxes, only direct and easily identified "revenue enhancers".) This would only affect a few items now; with a VAT, it would be far more extensive. In any case, if people realized how much of their expenditure is going towards hidden taxes, in addition to sales taxes (state, county and local), income taxes (federal, state, and local) and property taxes (state and local), perhaps we'd see a greater cry for reigning in the bureaucracies in Washington, DC and in the various state capitals. I doubt the bill would gather enough support in congress to pass, but one of the more ardent budget hawks might propose it and see who scrambles to kill it. It might be interesting to see some of the alleged anti-tax types or the self -styled good-government advocates jumping through hoops to make sure such a bill never makes it to the floor for a vote.

posted on April 13, 2005 05:47 PM


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