The U.S. is broke.
We owe more than we can pay.
That was true before the health care bill. Now it's even worse.
Most states are broke.
They owe more than they can pay.
Governments made the same bad bet that many citizens and businesses made.
The bet that our economy could only continue up. That real estate values could only continue up.
Therefore, we bet that cheap credit was a great idea.
Cheap credit on commodities that can only go up in value is a great economic plan.
When you can't repay the credit cause you couldn't afford it to begin with, oops.
The banks that loaned it are cooked. But they are too big too fail, so the U.S. taxpayer (who already can't pay their bills) bails them out.
So now, politicians are faced with a very hard choice.
Whack budgets, or raise taxes.
And since politicians like to get re-elected, guess what the choice is.
So, buckle up.
Value Added Tax.
It is very complicated to explain. You can look it up on Wikipedia.
But, it's coming.
It is common in much of the world. Europe, Canada, Mexico all have a version.
In most places, it replaces income, property or sales tax.
Not here in the good old U.S. of A.
This is going to be a tax on top of all other taxes.
And this tax will be collected by the feds.
On sales of products, and for the first time, services.
Your accountant, your lawyer, your masseuse, your personal trainer, your bowling alley, your doctor, your dentist, your guy that mows the lawn.
All products and services will be subject to the VAT.
Since the politicians in Washington D.C. can't control their spending, they need to raise more money.
Especially since income taxes and import duties are going down since our economy is down.
They need more taxes to raise income to offset their spending.
It's like the worst third wife you ever thought of.
"I need more money cause I can't and shouldn't have to stop spending."
Imagine Mr. Pelosi explaining to Nancy that there is not enough money to pay for more Botox to keep her eyebrows in place.
That's what we are dealing with.
So, in the next month or so, I believe you will hear Value Added Tax, or VAT, become a term that you will like as much as TARP and healthcare reform.
Ms. Pelosi said last fall that it would be necessary.
The Obama administration has been studying it for a while.
It will be a lovely conversation.
Whilst we deal with the largest tax increase in history (healthcare reform), we are about to be told that we all must sacrifice more to make it possible.
As the old Vaudeville song went, "This fucking I'm getting isn't worth this fucking I'm getting".