Liberal commentator Nancy Skinner conceded there is one issue the right is right on - the value-added tax (VAT) is an absurd idea.
Skinner who is a regular guest on the Fox Business Network, stated April 7 that the VAT will do absolutely nothing to help the ailing economy, concurring with the "Bulls and Bears" panel.
"Everybody, you're going to be surprised: I finally found a tax I don't like, and it's this VAT tax!" Skinner exclaimed. "Here's why - it doesn't produce any behavioral changes - it's hidden as Gerri Willis said. What you want in a tax is a tax that changes behavior."
As Reuters reported April 6, White House adviser Paul Volcker - of the Larry Summers school of economics - threw out a trial-balloon recently, saying the U.S. may need to consider a European-style value-added tax to raise revenue and bring the deficit under control.
Skinner prefers using taxes for social engineering, and cited cap-and-trade as an example.
"That is why a cap and trade tax - it moves from fossil fuels to try to move us just like the baggage issue into clean energy technologies that spur growth. This does nothing," she said.
Also on the "Bulls and Bears" panel was Mike Norman of Pitbull Economics.
"Look this is very basic economics, taxes do one thing - they regulate demand," Norman said. "You increase taxes in an economy where demand is already very soft and the outcome is very clear - we go back down."
"They did this in 1937. They did it in Japan in 1997, not a VAT tax, but they increased taxes, and it aborted their recovery at the time - and they're still struggling with this."
"This is a dumb idea, we are facing a demand crisis," Norman continued. "If you want to shoot for income equality or greater income equality, you raise the people at the bottom. By the way, the VAT tax is very regressive, it's going to hurt people at the bottom who can't afford to be hurt anymore, it's a terrible idea. If they do it - the economy is going down."
Image via: guardian.co.uk