I Want YouI Want You

To Pay More TaxTo Pay More TaxChicago Community CommitteeChicago Community Committee

January 20, 2010January 20, 2010

Budget Picture GloomyBudget Picture Gloomy 2009 receipts = $2.1 trillion2009 receipts = $2.1 trillion

Down $500 billion from 2007Down $500 billion from 2007 Spending = $3.5 trillionSpending = $3.5 trillion

Up $700 billion from 2007Up $700 billion from 2007 Deficit of $1.4 trillion Deficit of $1.4 trillion Equal to 9.9% of GDP vs. 3.2% in 2008Equal to 9.9% of GDP vs. 3.2% in 2008 MSR projects deficit of $1.5 trillion for MSR projects deficit of $1.5 trillion for

20102010 Cumulative deficits of $9 trillion 2010-Cumulative deficits of $9 trillion 2010-

10191019

Federal Receipts Return to Federal Receipts Return to NormalNormal

(as percent of GDP)(as percent of GDP)

15

16

17

18

19

20

21

Receipts Modern Average

While Spending is Far While Spending is Far Above NormalAbove Normal

(as percent of GDP)(as percent of GDP)

15

17

19

21

23

25

27

Receipts Spending

Producing Unsustainable Producing Unsustainable DeficitsDeficits

(as percent of GDP)(as percent of GDP)

0

2

4

6

8

10

12

Deficits Average Deficit

And Unsustainable Federal And Unsustainable Federal DebtDebt

(as percent of GDP)(as percent of GDP)

10

20

30

40

50

60

70

80

Receipts Spending Debt Average Debt

Entitlement Spending SoarsEntitlement Spending Soars(Spending as a share of (Spending as a share of

GDP)GDP)

Entitlement Spending Entitlement Spending Exceeds RevenuesExceeds Revenues

Income Tax Rates More Income Tax Rates More Than DoubleThan Double

A Tale of Two StrategiesA Tale of Two Strategies

Reagan – Starve the BeastReagan – Starve the Beast Obama – Glut the BeastObama – Glut the Beast

Spending as inevitableSpending as inevitable As act of God or natureAs act of God or nature As long-term outcomeAs long-term outcome Anything but a conscious decisionAnything but a conscious decision

Implication of GluttonyImplication of Gluttony

If spending inevitable, then so are If spending inevitable, then so are higher taxeshigher taxes

Corporate rate already too highCorporate rate already too high Means pressure on top individual Means pressure on top individual

raterate Current system nearly tapped outCurrent system nearly tapped out Must find another revenue sourceMust find another revenue source Answer – A VATAnswer – A VAT

The VAT WaveThe VAT Wave

Less harmful to an economy than Less harmful to an economy than income taxesincome taxes

Competitive advantages of border Competitive advantages of border tax adjustmentstax adjustments

Massive revenue potentialMassive revenue potential

Low Flak to Jack RatioLow Flak to Jack Ratio

Glut the BeastGlut the Beast

Massive spending hikes inevitableMassive spending hikes inevitable Spending is anything but an act of Spending is anything but an act of

policypolicy

Projected deficits are unsustainableProjected deficits are unsustainable

So higher taxes are inevitableSo higher taxes are inevitable

So a high-rate VAT is inevitableSo a high-rate VAT is inevitable

A Choice Will Be MadeA Choice Will Be Made

The choice is an open questionThe choice is an open questionCut spending dramaticallyCut spending dramatically

ororAccept a high-rate VATAccept a high-rate VAT

The choice is open, the choosing is The choice is open, the choosing is notnot

Freedom and prosperity are Freedom and prosperity are hanging in the balancehanging in the balance

I Want YouI Want You

To Pay More TaxTo Pay More TaxChicago Community CommitteeChicago Community Committee

January 20, 2010January 20, 2010