If you hadn't noticed, a Value Added Tax has hit the mainstream, even before Greg Mankiw's excellent op-ed piece in the New York Times yesterday. I want to propose an incredibly optimistic conspiracy theory: The VAT talk is a head fake.
Cash for clunkers has hit the wall. Stimulus cash flows no more. Interest rates remain at the lower limit. Still, consumer spending flounders. What's a politician to do? Convince the consumer that if they don't buy soon, prices will rise!
Stop with Mankiw's 10% example. By Congressional proclamation, all VAT examples henceforth shall use 23% as examples. That way, people really see the impact of the price rise coming in the near future. They'll more likely buy now!
If we'd all just buy a whole lot more stuff now, maybe we can restore our ridiculous consumer debt to peak bubble standards and save the economy at the same time...and then we won't need the VAT...America, start your credit cards!
Such a relief to know that I'm doing my part by keeping my credit card debt at a volutptuous size.
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