Black Coffee: My Favorite Blogs, Money News & Opinions #43 (The Value-Added [Tax] Edition)

It’s time to sit back, relax and enjoy a little joe…

Blogs I’ve Been Following This Week

Welcome to another rousing edition of Black Coffee, your off-beat weekly round-up of what’s been going on in the world of money and personal finance. Here’s what caught my attention over the past week…

With Congress continuing to look out for the best interests of Americans everywhere, this time by considering the imposition of a Euro-style value-added tax on its citizens to help pay for all these new entitlement programs and the expanding reach of Big Government, I thought I would add my own value-added tax of 20 percent to this week’s list of featured articles.

Before you get all upset and round-up your own little tea party protest on my cul de sac, let me tell you how this tax is going to work: I’ll write up my usual blather on the great articles I came across this week – but then I am going to trim twenty percent of the words from each article summary.

As an allegory for how the government would utilize any new revenues from a real VAT tax, I’ll use the “taxed” words later on for useless endeavors like writing more op-eds to the Los Angeles Times.  (There goes any chance of me ever being mentioned by Kathy Kristof as a personal finance blogger worth checking out in the Times’ Business section.)

Early Retirement Extreme - There is an old joke that asks, “Why did God create economists?”  The answer: In order to make weather forecasters look good.  For this week’s Black Coffee kick-off article, Jacob had a very interesting piece that looked back at history in an attempt to see if he could try and divine what kind of interest rates we can expect during the rest of the 21st Century.  For retired people like Jacob, this is especially

The Oblivious Investor - Mike is a career renter and, therefore, more than well-acquainted with the process of getting renter’s insurance.  In fact, this week he shared his tips for getting renter’s  insurance.  The last time I rented a house was back when I was in college, when I rented a room for $350 per month from a very hot 40-something landlord of mine named Kathy.  I’ll never forget the time Kathy knocked on my door very late one Saturday night asking for a cup of sugar.  “But Kathy,” I said, “I thought you were diabetic.”  She told me she was, but

Hope to Prosper – Speaking of one-eyed environmentalist amputees, Bret featured an informative article highlighting some Earth Day investment ideas featuring the latest green technologies.  Wait a second, that didn’t

Money Help for Christians – In this slightly provocative article, Craig discusses credit card fanaticism – or should I say “anti-credit-card fanaticism.”  You know, I was once assaulted by a fanatic who

Punch Debt In the Face – And that’s why I no longer wear those German helmets with the pointy spikes on top – it’s just too risky.  Still, according to Ninja, if you want to reap the biggest rewards, it is important to take at least a few risks in life.  True, sometimes they don’t always pan out, like the time I decided to do a stage dive and the crowd parted like the Red Sea.  By the time I knew what

Barbara Friedberg Personal Finance -  If somebody offered to tell you the secret of how to always buy low, would you listen?  I know I would.  So I guess this is your lucky day because Barb promises to do exactly that.   I’ve made some real bone-head

Go Banking Rates -  Hey!  Here’s a tip that’s guaranteed not to steer you in the wrong direction:  GoBankingRates  is holding The Thank Your Bank Sweepstakes, where you could win $1000 or an Apple iPad.  Yep.  Thankfully, unlike my lame blog that only offers up boring books for prizes, the folks at GoBankingRates are really going all out here.  My contests are so lame that the last one attracted all of six entries.  Now I’m not making excuses, but how do you expect me to rustle up big-time sponsors when I happen to be saddled with the Google-bestowed title of worst personal finance blogger.  You know, the more I think about it, the more I realize Larry and Sergey have really screwed me.   In fact, I think I’m going to write a letter to those bozos and tell them to

The Way-Back Machine: Past Posts You May Have Missed

From June 2009:

18 Crazy Things You Didn’t Know About the National Debt -  I occasionally write a column in this space entitled “18 Things You Didn’t Know…” where I come up with – what else? – 18 fun facts about a particular money-related topic that you can amaze your friends with.  Here’s one I did late last Spring on the National Debt.

Credits and Debits

Credit: A couple weeks ago I highlighted a report that noted that 47 percent of Americans pay absolutely zero income taxes.  Even so, according to a recent Gallup poll, 93 percent of Americans characterized their taxes as still being either “too high” or “about right.”  Huh?   Clearly, the majority of Americans who aren’t paying any taxes are happy with the status quo.   And why not?  They are being handed more and more government entitlements with each passing day, and yet they don’t have to pay for them.   Yet.

Debit: The Associated Press reported this week that President Obama is still open to a new value-added tax (VAT) that would be imposed on Americans.  VATs tax the value that is added at each stage of production of certain commodities.  For example, the VAT would be applied to raw products delivered to a mill, the mill’s production work and so on up the line to the retailer.  Currently businesses can buy materials tax-free, and a sales tax comes only at the end of the chain.

Debit: Value-added taxes are common throughout Europe to maintain their social entitlement programs and are added to every single consumer good, from food and gasoline to clothing and electronics.  VATs are extremely regressive, as they hit the poor with a much greater impact than the wealthy.  That is because they spend a bigger percentage of their personal income to buy basic goods and services.  Because they work as a drag on the private sector, hindering both growth and consumer spending, VATs are often blamed for Europe’s persistently high unemployment rates.

Debit: The VAT would fundamentally change the way taxes are collected in the U.S., putting the burden on businesses to collect fees incrementally.  Critics say it is a way to hide massive sales taxes from consumers and permits the size of government to grow even bigger than it could without a VAT.   I wholeheartedly agree with that assessment.

Credit: Here’s an idea: instead of looking for new ways to feed the ever-growing monster that is the US government with our hard-earned money via taxes, why don’t we take a machete to Big Government and knock it down to size before it completely enslaves us and our children?

Credit: Meanwhile, with the US continuing down its new-found path to a socialist paradise, rumors are floating around the Internet that suggest President Obama is also considering a proposal that would see the US join the European Union.

Credit: While researching the VAT tax story at HotAir, I came across this pithy comment from “logis” regarding our ever-expanding Nanny-state government: “The federal government is more of a parasite than it’s ever been: it’s just a really, really big one.  Some people might think a parasite’s life is a pathetic one – and they are right about that. But it is also a very very SIMPLE one. A parasite has only one interest. As long as the blood keeps coming, nothing its host says or does could possibly matter to it. When the blood flow is interrupted, the parasite knows only one possible response: suck harder.”  Amen, brother.  America, if you love your children you better wake up before November or that big leech on our ass is going to suck the life right out of this country.

By the Numbers

Lessons learned and the reasons why those who love Big Government also tout the “benefits” of a value-added tax.

1954 The year the VAT made its introduction – on the citizens of France.  It was the brainchild of a French civil servant named Maurice Laure.

13.5% The VAT tax rate in France when it was first introduced.

19.6% The current VAT tax rate in France.

0% The current VAT tax rate in the United States.

18% According to the nonpartisan Tax Foundation, the VAT tax rate required to balance the U.S. federal budget.

30% The average government spending in Europe as a percentage of GDP before the VATs began to spread in the 1960s.

47% The average government spending in Europe as a percentage of GDP today.

7% The average increase in government spending in the US as a percentage of GDP since the 1960s, less than half that of Europe’s over the same period.

Letters, I Get Letters

No letters again this week.  If you have a question you’d like to ask, or a comment you’d like to make regarding some of my irritating opinions, please feel free to drop me an e-mail at: Len@LenPenzo.com

I’ll feature the most interesting question or comment I get each week here on Black Coffee – assuming I get one, that is.

If you’re lucky enough to be the only question in the mail bag I’ll highlight your letter, whether it’s interesting or not.

Other Useless News

• My shameless campaign in this space to get an article picked up by the Consumerist actually worked!  My kid-cereal taste-test article was featured there last week.  Some of the reader’s comments over there regarding the names of the kids’ on my expert panel were too funny – but I dare not share them with my neighbors.

• Check this out!  Here are the Top 5 Blogs with the “Stickiest” Visitors to Len Penzo dot Com (minimum 25 referrals) so far during the month of April.   The visitors from these blogs tend to visit more than one page more often than visitors from other blogs.  The number in parentheses is, on average, the percentage of visitors that check out more than one page here every time they visit.

1. Political Calculations (50.02%)
2. Canadian Finance Blog (48.98%)
3. Financial Samurai (45.95%)
4. Monevator (42.86%)
5. Time Magazine: It’s Your Money (42.00%)

Thank you to everybody who has referred their readers to my site over the past month!  Remember, “stickiness” tends to work both ways, so be sure to check out those blogs as well – the odds are if you enjoy my blog you will enjoy those blogs as well!

I would like to welcome some of my most recent Twitter followers from the past week…

@farecoup
@Bucksome
@Smartbride
@RandyFritz
@aerodayzi
@FickleFinance
@OwenC
@KickDebtOff
@MoneyMonk
@CooltobeFrugal

As a reminder, if you happen to enjoy what you’re reading – or not – please feel free to follow me on Twitter. And don’t forget to subscribe to my RSS feed too!

Carnival News

This week I had articles featured at the following carnivals:

- Carnival of Personal Finance at Punch Debt in the Face  (Editor’s Pick – Hooray!)