How Big Do You Like It?

Every time anyone predicts how much money a VAT will raise, ask yourself "are the considering the depressive impact of this tax on consumption?" "How will they adjust the tax so that it does not penalize exportation (as the Euro VAT does)?" "How much will this tax depress the growth rate of the economy?"
If effect we're already paying a VAT, only we pay it through corporate taxes. You don't know you are paying corporate taxes, but as the Fair Tax folk point out, "income taxes now make up about 23% of the cost of goods sold. Take away that tax and the cost of a $100 good, they say, would drop to $77." (http://articles.moneycentral.msn.com/Taxes/Advice/IsHuckabeesFairTaxReallyFair.aspx)
The Fair Tax idea is to make this tax visible, and use it to replace the income tax. The VAT is another beast entirely. Corporations are still taxed if they profit, a tax which of course you and I pay when we buy anything from a profitable corporation, but in addition, the government would add a Federal VAT. In other words, in addition to profit, a tax is paid for the amount of value added by any corporation in the manufacturing process. If an auto maker turns a ton of steel into cars, and so doing increases the 'value' of that steel by 10%, they pay a tax accordingly. It's a sneaky politicians way to get us to pay more without noticing.
Why do they need more money all of a sudden, enough to be talking about an entirely new form of taxation?
"The basic budget problem is simple. For decades, the expansion of Social Security, Medicare and Medicaid -- programs mostly for the elderly -- was financed mainly by shrinking defense spending. In 1970, defense accounted for 42 percent of the federal budget; Social Security, Medicare and Medicaid were 20 percent. By 2008, the shares were reversed: defense, 21 percent; the big retirement programs, 43 percent. But defense stopped falling after Sept. 11, 2001, while aging baby boomers and uncontrolled health costs keep retirement spending rising.
A VAT could not painlessly fill this void. Applied to all consumption spending -- about 70 percent of GDP -- the required VAT rate would equal about 8 percent. But the actual increase might be closer to 16 percent because there would be huge pressures to exempt groceries, rent and housing, health care, education and charitable groups. Together, they account for nearly half of $10 trillion of consumer spending. There would also be other upward (and more technical) pressures on the VAT rate.
Does anyone believe that Americans wouldn't notice 16 percent price increases for cars, televisions, airfares, gasoline -- and much more -- even if phased in? As for a VAT's claimed benefits (simplicity, promotion of investment), these depend mainly on a VAT replacing the present complex income tax that discriminates against investment. That's unlikely because it would require implausibly steep VAT rates. Chances are we'd pay both the income tax and the VAT, making the overall tax system more complicated."
http://www.realclearpolitics.com/articles/2010/04/19/how_big_a_government_do_we_want_105225.html