Recent comments by Mitt Romney in which he contemplates a Value-Added Tax and Co-Insurance are becoming fodder for his rival presidential candidate Newt Gingrich’s campaign, which has taken to calling Romney a “Massachusetts moderate” and now says Romney has looked at “European Socialist ideas.”
Gingrich campaign spokesman R.C. Hammond said that the Romney ruminations were part and parcel of the case Newt Gingrich will be making to voters this week: that he represents conservative values, while Romney is a “Massachusetts moderate.”
“The fact that he’s willing to look at European Socialism shows just how far out of the conservative mainstream he is,” Hammond said.
In a December 24 story in the Wall Street Journal, Romney is described not favoring the idea of “layering a VAT onto the current income tax system. But he adds that, philosophically speaking, a VAT might work as a replacement for some part of the tax code, ‘particularly at the corporate level,’ as Paul Ryan proposed several years ago. What he doesn’t do is rule a VAT out.”
A value added tax, or VAT, is a form of the consumption tax in which the tax is levied based on a product’s price, not including the cost of materials, that originated in and is popular in Europe, imposed by the European Commission, and the governments of France and the UK, among others.
Gingrich’s campaign was not the only one to notice. The American Enterprise Institution‘s James Pethokoukis wrote that “(m)any conservatives/libertarians simply hate, hate, hate the idea of a VAT….They view it as a way to fund a massive expansion of government. I would be surprised if those quotes don’t end up in a 30-second, anti-Romney ad in Iowa or New Hampshire”
Anti-tax crusader Grover Norquist once called the VAT “a European-style sales tax. It’s assessed on the profits generated at every stage of production (raw material, manufacturer, wholesaler, retailer, etc.), so there is constant reporting and payment. As such, it’s an extremely efficient money machine for big government. The VAT is embedded inside the price of a good … As such, people forget they pay it, and European governments have found it too easy to raise the tax repeatedly over time.”
The other policy point raised by Romney came in a December 22 interview with the Concord Monitor, in which the former Massachusetts Governor said that “I don’t believe a path to make us more like Europe will make us stronger. I don’t think Europe is working in Europe. I know it won’t work here.”
The newspaper wrote that “Romney said there are policies of European nations that could be worth considering in the United States. Switzerland, he said, has a health care model where people pay about 20 percent of their medical bills, giving them an incentive to consider cost when making medical decisions. ‘I’m not going to adopt a Swiss health care system, but the power of incentives in a co-insurance model that the Swiss have is something states might want to look at,’ he said. ‘So there are many things, in addition to good food, that we can learn from our European friends. But what I don’t want is to adopt a strategy of ever-shrinking government support of the military and ever-increasing support for government programs.’”
At a town hall in Littleton, NH, earlier this year, Romney said he’d “like to see us open doors for something like coinsurance, not copay, coinsurance and try some of these ideas on a state by state level.”