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Boehner Has Obama by the Boondoggles

Written by Gary North on November 9, 2012

Gary North’s Reality Check (Nov. 9, 2012)

I begin with North’s law for dealing with political Keynesians: “When you’ve got them by the boondoggles, their hearts and minds will follow.”

On January 1, 2013, federal taxes will go up. There is no way around this. One way or the other, federal taxes will go up.

There are some questions associated with this forecast. First, which taxes will be going up? Second, who will wind up paying most of these taxes? Third, what effect will this tax increase have on the American economy?

Obama is beginning to sound as though he is ready to compromise in some way with John Boehner over some kind of substitute tax program. Boehner is making similar noises with respect to his willingness to compromise in some way to work out a deal with Obama. The problem is simple to state: (1) Boehner has said that he will not accept any tax revision that places additional taxes on the wealthy, and (2) Obama is philosophically opposed to anything that is going to raise taxes on the poor.


The tax that would really generate a great deal of revenue is the value-added tax. The VAT has been used for a generation in Western Europe to extract enormous wealth out of the taxpaying population, which is everyone.

The VAT has this advantage from the point of view of the government: there is no escape. The tax is imposed on all profitable transactions along the chain of sales. Any business that makes a profit is going to have to pay the VAT. There is no way to hide from the tax collector. He collects mostly from businesses, and businesses have detailed records of what they spend. The digits are easily available. So, there is no place to hide.

The other advantage of the VAT is that it is paid by everybody who makes a retail purchase. It is not exactly a sales tax, but it is close to it. If you buy a product, you pay your share of the tax that was imposed on the retailer. If you do not buy, the retailer is hurt, because he has paid the wholesaler. The wholesaler has to get his money back, because he already paid the tax when he purchased the item from the producer. The producer paid the tax when he bought raw materials in the open market.

From bottom to top, everybody pays on any profitable transaction. This means that it is a comprehensive tax, in a way that no other tax is. It is comprehensive in the sense that everybody who makes a retail purchase pays it, and also in the sense that no business can escape it. This is why it generates so much revenue.

The problem with the VAT for Obama is that it is a flat tax. The poor cannot escape from it. If they buy something, they pay this tax. Even worse from the point of view of Obama, everybody pays the same percentage. Rich and poor, middle class and lower middle class, everybody who makes a retail purchase is paying the same percentage of his income.

This is why the Democratic Party never comes out in favor of the VAT. The VAT is ideologically irreconcilable with the wealth distribution policy of the Democratic Party. The Democrats want the rich to pay a higher percentage of their income to the government than the poor man pays. With the VAT, everybody pays the same.

The big problem with the VAT is that Republicans would probably favor it over any other kind of new tax. Precisely because it is a flat tax, which means that, from the point of view of modern political rhetoric, it is a regressive tax, Republicans would be more willing to vote for this than for an increased percentage of extraction from the rich. Reverse this argument, and you have the Democratic Party’s view of the VAT.

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66 thoughts on “Boehner Has Obama by the Boondoggles

  1. In a democratic republic, in which each man, rich or poor, has only one vote, why should the rich pay more in tax than the poor? The poor man gets exactly the same vote that the rich man does.

  2. Hey kids, gather around – we are headed for a post WWI German economy.
    Isn't it great, like prices on necessary items are not high enough.
    The only good thing is the 50% gimme voters have to pay too. The bad thing is, they are paying with the money the other 50% has earned and had taken away from them.
    In the words of Charlie Brown, "we're doomed." And we have the Gimme 50% to blame.

  3. DockyWocky says:

    Boehner doesn't have Bronco Obama by any appendage, let alone a boondoggle. The head capitulator on the GOP side is a pushover for Bronco, and he'll be hog-tied and whining in the dirt sooner than he thinks as he plays a foil to Bronco's destructive influences.
    Its even hard to imagine Boehner as a leader.

  4. We have given our worst enemy the presidency for four more years. Mr Boehner has nothing. Obama has everything and he will work as fast as he can to destroy everything that remains.

  5. Admiral America says:

    The Republicans in Congress are a joke. They're some how neutered by Obama who keeps taking more power for himself. If they were for real they would have impeached Obama on numerous charges a long time ago.

  6. Bush murdered the Constitution and Obama was put in the White House to bury it.

  7. Th VAT Tax is a bad idea. The real solution to what ails America is The Fair Tax.

  8. Boehner does NOT have obama by anything. Boehner has not used his power effectively the last 2 years, else we wouldn't be seeing obama for a 2nd term.
    I travel in europe. no one advertises the vat other than retail stores. tourists can get the vat back if they apply for it.
    . it is a pain in the butt. in one restaurant that DOES list the vat ie, a 14.50 euro meal, 4.55 was VAT!!!
    all politicians LOVE taxes, they get to spend your money on what they like, mainly things that pay off friends and things that get them reeelcted. WE need to put a stop to both. Oh, and add to that the campaign promises that get them elected. The low intelligence types always listen to the promises of freebies and we get some of the worst scum to 'represent' us in politics.

    Next? How to get rid of the 'electoral college'. Time for that to go. I think we are all tired of seeing a few states get their hind ends kissed every election and those few states decide what thing gets to represent us the next 4+ years.

  9. We can't afford another 4 years of Boehner!

  10. The poor aren't paying any taxes, Obama, ou scumbag. And Boehner, resign and let somebody will with balls take the helm.

  11. Boehner is an idiot and Obama stooge. He will do whatever he is told to do. In fact, Boehner just declared that Boehner: Obamacare Is 'Law of the Land'. This country is no more.

  12. Here is a huge problem. If the VAT is put in affect then the middle class and the poor pay the most. The tax will be added each time a trnsaction is done to recoup the loss from the first and this just increases the price of goods and goes downhill to the poor and guess who pays the Most. It doesn't take a genius to figure it out.The only way to stop it all is for the government to stop spending and borrowing and giving to other countries. We can be self sufficient and self supplied. The middle east gets a horrible amount of money from the USA and so does the UN.

  13. Austrian economist says:

    The "republic" no longer has sway. It is the number of votes–pure democracy. At its worst.

  14. Curtis Neil says:

    There are some basic concepts, which should be followed in designing any Tax system.
    1. One of which is Transparency, that is the one paying the tax, should be able to see what it is, in total. A Sales Tax is Great for this, a VAT is not, in that it place on inside the process of bring a Item to Market.
    I would they by prefer a Sales Tax to a VAT.
    Yes, a VAT is much harder to escape, witch is a good thing in the design of a tax.
    2. A Sales Tax and a Vat are by there nature, more fair than a Income tax. A Income tax needs Deductions and exemptions, because of the way it naturally punishes Thrift , Savings and Investment. Where as With a Income Tax or Vat, Taxes are only collected when spent, and Investments , Thrift and Savings are handled only by accessing the “Fruits” od such endeavors.

  15. My issue with the flat tax is 1) The Dems don't want to give up on the IRS, so the other tax plan will never go away, they will still be using the IRS to extort money from the tax payers. 2) The vat will hurt the economy since when times are tough, most people limit their purchases to food and gas. If a vat were in place on them, then people who don't have a 'safety net' don't buy anything they can't afford. Some of us don't use credit. 3) Yes, the poor can be disproportionately hurt, however, most of them get money from the public coffers, so that just means the rest of us who work (the 53%) will lose more money to taxes. Money represents FREEDOM: of choice, of association, to do what we want with our lives, to live and work where we wish. When the government takes a HIGHER amount, there is less freedom. Memphis has, 35 years later, a temporary wheel tax. That was to have been for just a couple of years for 'education'. 35 years later, it's still here and they are not talking about getting rid of it. No tax exer goes away, they just build on to it.

  16. Curtis Neil says:

    Seconded Question, Constitutional, not just Legal, but in ailment to Principles.
    On this Question, ANY FORM of direct Taxation, be it a Income tax, a National Sales Tax or a VAT, placed upon the Citizens by the Federal Government is wrong.
    Instead, A Amount, determined by the Federal Government, be it as a percentage of GDP, or as a Percentage of the Population, which is determine to be sufficient to cover the operation expenses of the Federal Government to preform it duty’s, but should not be design to generate excessive amounts , nor be used for activity’s out side it area of responsibility, as the allocated responsibility of each State, who then in turn have the responsibility to Gather it, by which ever means it see’s as Fair with in it borders.

  17. A consumption tax is fairer than any income tax. The rich are going to pay more because they purchase more expensive things. There should not be an income tax. An income tax is complete theft.

    There would be no question of "capital gains" or any of that. The more money you earn and are allowed to keep, the more you can spend on items that are taxable. The more you spend, the more people are needed to produce the items you are purchasing.

    The same works in reverse, as we have seen. Keep money out of the pockets of the people, the less they spend, the fewer people are needed to produce and distribute.

  18. Curtis Neil says:

    Correct, Moving to any Flat Tax, any Vat by the Federal Government needs to be tied to the Elimination of Income Tax completely. Principles, you do not Tax both Fore and Aft at the same time.

  19. So, with the VAT tax every time something is bought at any level the tax is paid?
    A retailer would be paying tax on products that he might not sell? And the wholesaler, and manufacturer would have already paid taxes on the products?
    It seems to me that this would suppress business and make items much more expensive at the retail level. Would that be an incorrect assumption?

  20. [In a democratic republic, in which each man, rich or poor, has only one vote, why should the rich pay more in tax than the poor? The poor man gets exactly the same vote that the rich man does.] Paying taxes does not buy you the right to vote – citizenship does. Even the non-citizens will be paying the VAT. Even zillionaires that are raping the country with the stock market will be paying it too.

  21. nope. that would be a correct assumption! so, obama promises not to tax the poor. but he raised my health care payments over $200 a month last year. going up 30% this year. payroll taxes are going up. child deduction cut in half. what has happened to those promises now?

  22. In Ireland, they exempt food and children's clothes to make VAT less regressive.

  23. oh I wish you are wrong, but probably not.

  24. Seminole Katz says:

    Businesses already pay an " inventory tax " so they only have the bare minimum available for sale. Ever try to get a part and they have to order it ? With the " Value Added Tax " invertories will be even smaller. Business will buy the item with the VAT included and won't be reimbursed until the item is sold. If the taxed item is not sold, the business is "stuck" with the item AND the tax money already paid. NOW IF they reduce the business tax and Eliminate the Income Tax, they would have something positive. If we had a " Capitalist " President, that would be great, too !



  27. Seminole Katz says:

    @ wayno : The Electorial College has formulated by our Founders so that small States were not " run over " by the larger States. It works on X number of Electorial Votes per X number of people. Your Government School probably did not explain the E.C. adequately in Civics Class, IF you were even taught Civics ! If this is true, it is not your fault. If you don't work to change our dumbed down school system, that will be your and my fault.

  28. a vat tax is not good because all taxes are passed down to the next buyer so the only one paying taxes are the poor at the bottom of the chain

  29. I'd like to know how everyone is paying their fare share when you have people not paying any tax at all and or not equal compared to the rich. I would like to see everyone stop paying their in-come tax that will bring the government to it's knees if not have a flat tax which is by far fare.

  30. Watchdogman says:

    AS i understand the first in the chain passes his vat tax on to the next entity in the chain…in the end the end consumer has paid not only the vat tax at his level he was charge the vat tax pass along from the original in the chain??? is that correct?

  31. Everyone don't forget that the vat tax will be subject to increases especially with this fraud.

  32. Here is a better plan. Cut the pay of all elected officials to say, 50 grand a year. They can only have, lets say 10 thousand in savings and another say, 80 grand in real property. Put them all on OhBummer care, give them a cell phone and now the are living in the real world. Watch all the rats jump ship. They could redistrubute their wealth to the poor out of their own pockets.

  33. And this is exactly why there's such a huge income disparity between the rich and the poor. The rich – being rich, as they are – should feel obligated to contribute more to society, because they're earning more. Simple as that. They are able to afford it without it hurting them or their lifestyle in any way. Asking the poor to pay more is likely to keep them from eating, or paying for a place to live. It keeps them subjugated and dependent on the rich, which is apparently something you're okay with.

  34. One more thing – a non-partisan report found ZERO evidence that higher taxes on the rich affects economic growth in any way. And you know what? GOP tried to suppress the study because it didn't suit their interests. Your point is moot.

  35. The house GOP need to vote for a new majority leader — but they won't.

  36. Southern Girl says:

    Once a VAT tax is imposed there's no turning back as with everything else that gets passed. Plus, they would probably raise income tax as well. The only argument for it would be that the so called "poor" do not pay taxes on their "income" therefore it would be the only way to get anything from them. Sickening that most of them are so good at scamming the welfare system that they make six figure incomes and certainly more than they would by working. And, they conduct classes on how to teach others to do it. Poor? I think not. I don't know what the answer is – damned if we do, and damned if we don't.

  37. Obama is just continuing policies that were started by Dubya and a Republican Congress (endless war, domestic police state, new bureaucracies). Who do you think dreamed up Homeland Security and the TSA? What rock have you been living under?

  38. Bryan76016 says:

    BO says one thing and does as he pleases. It pleases him to see Christians standard of living destroyed. I don't see any republicans doing anything to stop him. If you are willing to accept facts then BO is not a natural born citizen, in fact it appears that he is not a legal citizen at all.

    He will do what he can to destroy our constitution and set himself up as dictator. He bought his way back in office with our money. Not one peep was heard form anyone in congress.

  39. Doug Rodrigues says:

    I spent three years in France. Can you imagine going to the bank to deposit money into your account and having to pay a tax to do that? That's what's going to happen here.

  40. Boehner is NOT a leader, never has been one and most likely never will. He hasn't stood up to Obama these last four years, what makes anyone think he will now. It almost seems that they are actually working together. Dumbed down America comes to mind. With all the supposed mistakes and foul-ups of Obama, the question might be why is this man still in office?

  41. Did you ever have the feeling the ENTIRE government is working against us? And fools that we are, give them permission to do so?

  42. Four more years. He knows he has been able to get away with everything and anything for there is no way he could be impeached, not with a democrat senate. He is going to be able to do anything he wants, continuous lies, cheating, stealing, anything. Like it or not, four more years of dissolving a free enterpirse system, converting it to a muslim communist state.

  43. Gloria Wedemeyer says:

    If the republicans stand firm on no new taxes on anyone and not support any kind of amnesty right now, I will be happy to some extent. How can we be ready to go off a fiscal cliff and allow millions more people that have no right to be here to help make us poorer. The House can say if and when the economy improves GREATLY, then they will talk but not before.
    I heard a rumor today that O is going to release all the inmates at GITMo. The people should be outraged. Some of the worse ones of his adm are leaving but I wish to they would take Bernanke with them. If we keep pressure on Eric Holder on Fast and Furious, I also think he will go. The house should tell Obama and the Senate they are not coming to the table until every bill that the house has passed is voted on by the senate which has laid dormant for almost this whole year. If the republicans vote for any tax increases on the wealthy, I will no longer vote republican again. I will write in Goofy on my ballot.

  44. i read these posts on this and other articles regarding our ecomony and current administration and House and Amercians are just as guilty of passing blame and denying responsibilty as those they condemn. How many times did we see II Chronicles 7:14 in posts – e-mails – in church – in conversation? But has America REPENTED, the most criticle word in that scripture? We still talk with trash vocabulary, smoke, drink, gossip, lie, cheat, covet our neighbor and his wife, use the Lords name in vain, deny Him in fear we'll be ridiculed – why would He put a good man in office – we don't deserve His mercy or His grace. And umtil we ALL take a look in the mirror, nothing in this country is going to change – He's waiting for His children to start actly like His children – He can take Obama out of office just as easily as He put him in if His children would just repent, seek His face, and pray – He will hear from heaven and heal our land.

  45. Frederick Stoll says:

    When you talk about the "flat tax", doesn't that included milionairs Harry Reid, Nancy Pelosi and our great leader Obama? And how about all our millionaire athletes, actors, etc.. Please tell me they are going to pay also.

  46. Which goes to prove that it is taxes that are keeping the poor from advancing, not the evil rich people. Point, game, match.


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  48. Fed up Lady says:

    You have that right CatTurbo; My country of origin has VAT and it is killing their economy. Starts out at around 2% or 3% , then it goes up and ip and up. I think they are currently at 29% and their economy is holding, but definitely not for long now that obummer has been reelected.

  49. Fed UP Lady says:

    Curtis: Do you think they will abolish Income Tax? Hell NO they wont. They will just make us pay more and more. These greedy, arrogant THUGS Congress AND obammy, want MORE MONEY TO SPEND ON THEMSELVES. It doesn't matter whether it is VAT tax or a Sales Tax. They are both the same really.

  50. Fed Up Lady says:

    Exactly right. That is why so many businesses will go OUT OF BUSINESS. That is what happened in Britain, and that is what happened in Australia.

  51. Fed Up Lady says:

    Correct Watchdogman.

  52. Fed Up Lady says:

    Yepo! Like I explained earlier, I lived with VAT in my country of origin. Started at 2% and is now around 29%. How are the poor going to buy food, if they are even paying VAT on that as well as clothing etc.

  53. larrylunts says:

    If the tax rate on everybody goes up January 1, so be it. All the Democrats have to do is introduce a bill on January 2 lowering tax rates on those earning less than $250,000 per year, and let the Republicans oppose THAT. Republicans wouldn’t be able to hold a town hall meeting in their home districts because of the pitchforks and the angry mobs.

  54. It's not a democratic republic. It is a constitutional republic. This is what happens with democracy: http://economiccollapsenews.com/

  55. The solution to what ails America is freedom.

  56. TeaParty Patiot says:

    Boehner should get off his ass and look at the fraud that the 'rats committed in this last election. Ohio, Forida, Utah, Colorado, Wisconsin, Kansas, and Nebraska, Illinois have all admitted to having some precincts with over 100% voter participation some have 147% voter participation. Pretty neat eh? how would you like voting in an area where you get one vote and others get multiple votes? in other states is has been discovered that the voting machines (with no paper record) are recording romney votes as being cast for the 0'bomb. Is it any wonder that the 0'bomb did not prepare for the debate. He already had the votes sewn up. This should be the RNCs ad Boehners primary concern. If the 0'bomb is fraudulently elected then he is out and boehners agreements with him are mute. That is IF boehner and the RNC get off thier fat asses and give us an honest election

  57. Texas Chris says:

    We don't even have a democracy. We have a coin toss, where the elite party bosses choose what goes on each side of the coin; welfare on one side, warfare on the other.

    You don't get to choose either-or. You get to choose which comes first.

    Then you pay for both.

  58. Texas Chris says:

    "Because they make more"…? No way. When I go to McDonnalds and order a Big Mac, they charge me $1. Now if some poor homeless bum comes in after me, should he get it for 10 cents? I mean, I make more…

    No. No progressive tax. Pay for the services you use. If a service doesn't generate enough revenue to keep the doors open, then close it, we didn't need it anyway. And, to keep it honest, the funds stay within the system that generated profits.

    Enough of the Marxist failed redistribution bullcarp. Enough.

  59. Texas Chris says:

    You are an economic idiot.

  60. Texas Chris says:

    Our worst enemy was not Bronco Bama. It's the rot of the neoconservatives within our own party.

  61. Texas Chris says:

    Don't leave out socialized medicine. Medicare Part D, anyone?

  62. Texas Chris says:

    Taxing the income of an individual is slavery. Therefore, unconstitutional. No tax is flat, no tax is fair, it's all theft.

    If the government follows the constitution, it won't need an income tax, a VAT, or a corporate tax.

  63. Texas Chris says:

    Every person who buys products or services on the free market in the US pays taxes. Corporate taxes are 35%, and any purchase has that tax included in the price.

    Now, it is valid to say some people receive more in benefits than they pay in taxes, but that is a totally different animal all together…

  64. In order for this to work, jobs have to be created, and the welfare freeloaders have to be given a timetable to get a job, even if it means cleaning toilets until they can get hired for a better job. Then we can get everybody to pay a 10% flat tax. No more, no less.

  65. I agree.

  66. I agree with Capt'Turbo that is. 🙂