VAT

VAT stands for Value Added Tax and it is simply a consumption tax. Like...the tax rate on anything you buy in Massachusetts is, say, 10 percent.

So you thought that car cost 30 grand? Nope. It was 33 grand. And you’ll pay other VATs, like a tax for your license plate, registration and other stuff.

Note the V and the A in there. Value-Added. And it’s a fair question to ask “Value Added for whom?” The answer is, uh...the government.

VAT taxes that $3 gallon of gas at the same rate for Bill Gates as it does for Joe Sixpack. It is a regressive tax...that is, rich and poor all pay the same rate. And yes, Bill Gates’ jet probably uses more gas than does Joe Sixpack’s. But the rate per gallon is the same.

And this causes controversy among the various political factions who feel that it's wrong to tax the poor at the same rate as the rich. When it comes to income tax, the rich are taxed vastly more, not just in volumes of dollars taxed but in the rate of tax applied.

Like...someone in a blue state making 30 grand a year pays 15 percent tax on their last dollar; someone making 500 grand pays like half. So, over time, a number of politicians have suggested that VAT should somehow have an income level overlay.

That is…the buyer of a given gallon of gas should state what income tax bracket they’re in. And that for Bill Gates, that gallon should cost like 38 dollars, whereas for the union toll booth worker, they only have to pay 2 bucks.

Fair? Not fair?

We’d ask the union toll booth guy, but uh...it’s apparently his lunch hour...