Sen. Manchin Floats a VAT to Pay for Federal Spending Binge

Efforts to tarnish the federal government’s response to the pandemic largely center on the lack of federal “stimulus” and intervention in state affairs. 

One question has escaped many of our elected officials: how do we pay for all of this spending? 

Senator Joe Manchin recently acknowledged this in a discussion about a possible federal spending initiative on infrastructure, and he’s come up with a solution few will be thrilled with. According to POLITICO:

Manchin, a critical vote in the evenly-divided Senate, acknowledged the difficulty of selling the prospect of new taxes — “nobody likes taxes, I know that” — but said it would be crucial for Congress to pay for the legislation. He again did not rule out a hefty $4 trillion package.

“A VAT tax, basically, for infrastructure might be the only tool. Now if the public believe that the politicians will keep their hands off of it and not rob it, it might have a chance,” Manchin said on a virtual American Council for Capital Formation event. “If you want to do a $4 trillion infrastructure bill over 10 years — you want to do a perpetual one — you’re going to have to have an infrastructure bank that states and communities can work out of … and match down.”

Merely hiking a gasoline or fuel tax is “not going to do what we need” and Congress needs to look “much broader” for options, he said.

In the same conversation, Senator Manchin noted that the national debt sits at around $28 trillion and is “getting unmanageable.” To his credit, the Senator from West Virginia notes that without nuclear energy, “forget about climate – you’re not real.”

A value-added tax (VAT) is essentially a sales tax on steroids – a “consumption tax placed on a product whenever value is added at each stage of the supply chain,” according to Investopedia. VATs are commonly found in Europe. The Tax Policy Center notes that VATs are regressive “because lower-income households spend a greater share of their income on consumption than higher-income households do.” Additionally, there is evidence to suggest “that the VAT is passed along to consumers via higher prices.” Aside from the regressive, cost-raising nature of a VAT, this proposal seems dubious as the United States recovers from the Pandemic and the subsequent economic recession.

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