Obama Inches Closer to a Value Added Tax

In an interview with CNBC’s John Harwood on Wednesday, President Obama refused to rule out the imposition of a value added tax (VAT) on Americans.

On Tuesday, Obama's economic adviser Austen Goolsbee refused six consecutive opportunities to do the same when repeatedly questioned by journalist Mark Halperin.

In fact, the White House has never ruled out the possibility of a VAT, which may explain why the president is now attempting to alter the terms of his central campaign promise.

During his campaign, the president made a “firm pledge” that no family making less than $250,000 per year would see “any form of tax increase.” But in plain sight, Obama now claims his promise applied only to “income taxes.” In his April 10 Weekly Radio Address, Obama said:

“And one thing we have not done is raise income taxes on families making less than $250,000. That’s another promise we’ve kept.”

And in a speech on the evening of April 15, the truncated promise was repeated:

“And one thing we haven’t done is raise income taxes on families making less than $250,000 a year -- another promise that we kept.”

So why the abrupt change from “any form of tax increase” to only “income taxes”?

Pulling the wool over our eyes with an altered tax pledge and a complacent media would allow the Obama administration two significant -- albeit deceptive -- achievements. First, it would retroactively absolve Obama from his previous violations of the pledge. In the health care bill Obama signed into law, there were at minimum seven tax hikes that unquestionably hit families making less than $250,000 – from the individual mandate tax to the excise tax on indoor tanning sessions. And let’s not forget the pledge-breaking tax increase signed into law sixteen days into his presidency: a 156 percent hike in the federal excise tax on tobacco. Courtesy of his new claim that his campaign pledge applied only to income taxes, Obama could pretend he is in full compliance (But even with the goal posts moved, he would still be in violation due to Obamacare’s restrictions on medical itemized deductions). The ruse has certainly worked since its debut on April 10, with Obama escaping any specific scrutiny focused on the altered terms of his pledge.

Second, amending the pledge would clear the way for a VAT in the future. For the better part of a year, the Obama administration has been laying the groundwork for a VAT. This groundwork consists of one part federal government overspending and one part rhetoric becoming less subtle with time. On Feb. 19, Erskine Bowles, co-chairman of Obama’s deficit reduction commission, said, “A value-added tax -- I’ve looked at lots of them -- ought to be something that’s on the table.” On April 6, Obama advisor Paul Volcker said a VAT is “not as toxic an idea” as it has been in the past and, "If at the end of the day we need to raise taxes, we should raise taxes."

Because the president made the “any form of tax increase” promise to the American people, he has a responsibility to stand up and renounce all of the VAT flirtations of his advisors and appointees. During his Wednesday interview with CNBC, he had the ideal opportunity to bring the matter to a close once and for all. Obama was asked point blank by Harwood if Americans should think of his middle class tax promise “as lasting for the entirety of your presidency – you would never accept tax increases for that group? Or is it something for the initial phase of your presidency -- now you take account again of where the deficit is and make a different decision?”Instead of slamming the door shut on the very notion of a tax hike, Obama pivoted and concluded that he would “wait for the fiscal commission to provide me what their best recommendations are.”

Harwood then proceeded to ask Obama about the potential for a VAT. But once again, Obama failed to immediately dismiss the suggestion outright, or at all -- instead reverting to an indulgent filibuster deeming a VAT “something that would be novel for the United States.”

There should remain no mystery as to why the president is attempting to rewrite the terms of his tax pledge. Whether he gets away with it is another story.

John Kartch is director of communications for Americans for Tax Reform and a Fox Forum contributor.

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