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President Barack Obama’s economic team is already calculating government revenues from a possible value added tax (VAT), according toThe New York Times on April 18.
But since any Social Security plan would probably preserve benefits for those nearing retirement, it would not help the administration achieve its goal of reducing the deficit to 3 percent of gross domestic product, from 10 percent, within a decade.
One way to reach that 3 percent goal, by the calculations of Mr. Obama’s economic team: a 5 percent value-added tax, which would generate enough revenue to simultaneously permit the reduction in corporate tax rates Republicans favor.
The reported VAT calculations may explain President Obama’s recent attempts to alter the terms of his central campaign promise — a promise that no family making less than $250,000 per year would see “any form of tax increase.”
Twice in the past 10 days, Obama has claimed his pledge 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.”
In a speech on the evening of April 15, Obama repeated the truncated promise: “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.