An insane tax idea

Democrats love to tell anyone who'll listen that they're the defenders of "working families," a cynical euphemism that implies "the rich" don't actually work for their income, and therefore can be taxed to high heaven.

If House Speaker Nancy Pelosi has her way, "working families" -- the very people President Obama promised would be immune from tax increases under his big-spending administration -- will soon carry the same kind of tax burden that hammers middle-class citizens in the stagnant, socialist states of Europe.

Speaking with PBS personality Charlie Rose on Monday, Ms. Pelosi said the Democratic Congress will consider imposing a value-added tax to help erase an estimated $9 trillion budget deficit over the next 10 years.

"Somewhere along the way, a value-added tax plays into this," Ms. Pelosi said. "Of course, we want to take down the health care cost, that's one part of it. But in the scheme of things, I think it's fair to look at a value-added tax as well."

A VAT is kind of like a national sales tax, only much, much worse. Instead of being applied to a single, final retail transaction, the VAT applies to every level of production and service. The manufacturer pays the tax on what it buys from suppliers. The distributor pays the tax on what it buys from the manufacturer. The retailer pays the tax on what it buys from the distributor. Then the consumer effectively pays all those tax bills at the time of purchase.

It's an incredibly regressive, economically devastating levy that jacks up the cost of living for everyone, but especially for those who live paycheck to paycheck. It's no coincidence that the VAT is in place in almost every country with a nationalized health care system -- countries where far fewer people can afford a car or a house.

Ms. Pelosi has no reason to be shy about her taxing ambitions. Her San Francisco congressional district might be the most liberal in the country.

This is no bluff.

Democrats criticized Republican leadership and President George W. Bush for claiming to be fiscal conservatives while running up big budget deficits. The criticism was spot-on, and Republicans deserved to lose power for losing their way.

So Democrats -- President Obama in particular -- campaigned as fiscal conservatives in 2006 and 2008 to take control of Washington. But the solution to Republican overspending was to cut the budget, not double it and tax America out of any chance of economic recovery. The VAT, on top of the expiration of the Bush tax cuts in 2011, will bring more pain to Americans who already have suffered enough.