Lynn Westmoreland co-sponsoring a Value-Added Tax bill

Update: Icarus has added some info on this in the comments, saying, “I just spoke to Westmoreland’s office. The Hill article doesn’t have a bill number. Lynn does not support a Value added tax, and will have more to say on the subject shortly.”

The bill in question is HR 2927, or the “Border Tax Equity Act of 2009.” Section 4491 of the bill, titled “Imposition of Tax,” states:

    `(a) General Rule- There is hereby imposed a tax on imports of goods and services from any foreign country that employs an indirect tax system and grants rebates of indirect taxes paid on goods or services exported from that country.
    `(b) Amount of Tax- The amount of the tax imposed by subsection (a) on an imported good or service shall be an amount equal to the excess of–
    `(1) the indirect taxes that are rebated or not paid on the good or service upon its export, over
    `(2) any indirect taxes imposed on the good or service at the border of the United States.

HR 2927’s cosponsors do include Westmoreland.

As income taxes creep towards their highest rates in decades, you may soon be required to pay more tax in the checkout line, as well.

The Hill is reporting that Lynn “Three Commandments” Westmoreland (R-GA), my former Congressman, has jumped on board a proposal by New Jersey Democrat Bill Pascrell that would impose a Value-Added Tax on products imported from countries that also have a VAT — a list which currently includes Mexico, India, and the entire European Union.

Rep. Walter Jones (R-SNC), another co-sponsor of the VAT bill, has called on people to “let experts to analyze various tax reform plans before judging them” — including the VAT, which President Barack Obama (D-IL) and one of his chief economic advisers, Paul Volcker, have spoken favorably of as a way to decrease the administration and Democrat Congress’s record deficits.

Just two weeks ago Georgia’s two Senators, Johnny Isakson and Saxby Chambliss, voted in favor of a Sense of the Senate resolution opposing the VAT, which called it “a massive tax increase that will cripple families on fixed income and only further push back America’s economic recovery.”

25 comments

  1. ByteMe says:

    Always easy to be against taxes. Hard to actually figure out how to reduce our with structural deficits related to low income tax rates and the promises we made to past generations that we would provide a social safety net for their retirement years.

    But, hey, it’s a Republican site. Of course they’re going to blame anyone else but themselves for this mess even if their party did help create it.

    • Doug Deal says:

      Byte,

      From my reading of the OP, it looks to be more about protectionism since it only applies to imports from VAT countries. It’s nothing more that a VAT tariff.

      • ByteMe says:

        There are often two reasons for any new tax: to increase revenue and/or to change behavior (e.g., a carbon tax). Considering that our imports continue to be greater than our exports and the size of our structural deficits given our unwillingness to directly tax ourselves, I’m guessing that this tax is targeting both reasons.

        So anyone know how this will affect our largest trading partner… CANADA?

  2. Holly says:

    This could be one of the classic Member got caught on the floor by another Member who didn’t represent well what the bill was about incidents. They happen.

    Also, Jeff, not to be nitpicky, but Walter B. Jones is from North Carolina. 🙂

  3. Icarus says:

    O.K., now that there’s some text to work with, I’m not sure it’s a Value Added Tax, but instead appears to be a tarriff.

    Not that I want us to go all Smoot-Hawley, but collecting the same amount of VAT that the foreign country exporting it would have collected appears to be an attempt to level the playing field against our labor system that embeds FICA taxes. A similar logic is used for supporting the almighty FairTax.

    Again, not in favor, but calling this a VAT doesn’t seem appropriate either.

    • Jeff Emanuel says:

      It’s protectionism either way; the issue — and what makes it the equivalent of a VAT, even if one chooses not to strictly define it as such (as The Hill did) — is whether that cost is passed along to the consumer here.

      • Icarus says:

        How is a VAT protectionist?

        And it is not the “equivalent” of a VAT. A VAT would tax all stages of domestic production too. This is a tariff, which is protectionist, versus a VAT, which is a broad based revenue producing tax.

        The fact that you don’t like either doesn’t make them equal.

      • John Konop says:

        Jeff Emanuel,,

        It is not protectionism according to the father of the free market system Adam Smith. Smith was clear that in capitalism the worker and the employer must have the same equal rights! He was a leading abolitionist of his time and the concept of life liberty and the pursuit of happiness were coined from Adam Smith.

        He also supported retaliatory tariffs for violators. And it is clear that countries like China not only violate the laws and spirit of human rights for workers they have violated many aspects of the trade deals via currency manipulation, product dumping……

        If someone cheats on a trade deal you think we should do nothing and that is protectionism?

    • PaulRevere says:

      That was my impression of it as well, Icarus. Looks like a case of “Ready. Fire! Aim.” by Emanuel. I’m going to look over the rest of the text of the bill over lunch to make sure I’m reading it properly.

  4. Junius says:

    You can spin this as a VAT tax but, as noted above, it is a really just a protectionist measure. This is a point I feared Richardson and other populist Republicans would get to. The GOP should remain steadfast in its determination to cut corporate tax rates and not be seduced by the protectionism being peddled by the Dems. The impact of bills like this, ie. Obama’s tariff on the Chinese tires, will only feed a round of escalating reprisals and negatively impact the fragile world economic recovery. This at a time when the US economy is actually benefiting, for the first time in a long time, from exports.

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