Senator Kent Conrad-D, North Dakota was on the floor of the senate this week, calling for a federal Value Added Tax (VAT) of 20-25% on all goods. The frightening part is not that this message was brought to the table, because it has been brought up many times before. The frightening part is that the senate was general receptive to the idea.  The further horror, is that unlike previous proposals to replace income tax with a VAT, this proposal would not do so.  It is simply another tax added on to all the others we already pay!

So, just what is a value added tax, one might ask? Unlike a national sales tax, which would add 20-25% of the item’s price onto the item at the checkout counter, it would instead add 20-25% of the item’s original price, putting it directly onto the listed item price, hiding the tax in the cost of the item itself. This is an effective means of camouflage to confuse gullible consumers into thinking that the item cost is simply what they see on the tag and that such is set by the manufacturer and retailer.

This means that if you have a power drill which now costs $100, the price tag will be changed to $125 and then the state sales tax (if your state has such) will be added on as a percentage of the $125. (Which means that unless the cash register adjusts for the VAT, you’re paying tax on a tax.)

Federal gasoline taxes works like this now. It is in the pump cost listed and only known to the consumer if you read the fine print labels on the pump.  (You didn’t honestly think that the money you’re spending on gasoline was just for the fuel, did you?)

First and foremost, what gall does Senator Conrad have? He wants us to pay an extra quarter on every dollar for all purchases! Where does the Constitution allow for a VAT or sales tax by the federal government?  25%?  The worst state sales tax I’ve heard of is around 9%.  Talk about greed!

Secondly, this is a tacit admission by the government that things are just as bad as we think they are. The federal government is broke with it’s monumentally stupid spending and now must seek measures to prevent complete collapse.

Third, if this doesn’t show the tax-and-spend mindset of the Democratic party, nothing does.

Take some time to figure out the impact on your life, if this becomes reality.

Start with your grocery bill. Take what you spend on groceries in a week and multiply it by 1.25. What’s the end result? Without changing your diet, your food is suddenly going to cost this much more.

How about just buying a can of pop from a machine, currently at $0.75. That can of pop just jumped to $0.93, which will most likely be rounded up to $1.

Let’s say you want a simple, economical car – such as a Honda Civic Coupe. Currently the starting list price on the vehicle, according to Honda’s Web site, is $15,305. If the VAT is passed at 25%, this starting list price will jump to $19,131.

Now factor in a house. Even if you’re looking for a small home at say, $65,000 – that price is going to jump to $81,250. A $250,000 home, like many selling here in the Salt Lake valley, has now jumped to $312,500.

Do you think that you’re saving money buying online?  A VAT bypasses sales tax issues and all online prices will jump up 25%.  That $150 iPod you’ve been thinking of treating yourself to, without adding additional features, memory or even changing the packaging: just changed to $188.  The federal government just took $38 from you because you want to listen to music.

Just keep doing the math yourself on the common things you buy. How about clothing? Cleaning products? Automotive supplies? Is gasoline going to be included in this as well, on top of the current federal fuel tax?  It’s as if you just got hit with a 20% net pay cut.

If you think you’re having a hard time making ends meet now…