Monday, January 14, 2013

Sorry, middle class. The VAT may be inevitable.

If the government fails to enact structural reforms in spending, an entirely new source of revenue will be needed. The most likely one is a value-added tax that would crush the middle class.

FORTUNE -- You can't blame middle-income Americans for wondering whether the new "fiscal cliff" deal really protects them from big tax increases in the future. That's essentially what President Obama promised in championing the hike in rates for high-earners signed into law on January 2. Still, the politicians and pundits keep talking about how our steep deficits and mountainous debt will rise even after the new revenue is counted. So it's only natural for the folks to ask the obvious question: Now that the affluent are paying far more, where's the extra cash supposed to come from?

Read more: http://finance.fortune.cnn.com/2013/01/14/vat-middle-class/?iid=HP_LN

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