Friday, April 23, 2010

Value Added Tax?

This is an interesting possibility. I have my doubts that we'll ever really get an actual debate that airs the important points of the issue, but here are a few cautions I would throw out there.

  • Unless this tax replaces the income tax we ought never even consider it.
  • Given the hidden nature of a VAT, it becomes far too easy for the kleptocrats of all stripes to hike taxes without being as obvious as would be a change in the withholding on our paychecks, or the sales tax added on the end of a cash register receipt.
  • One general rule is that if you tax something, you get less of it (cigarettes are a good example, and gasoline is being targeted in the same way). Think of the name of this tax: Value Added tax. This means that the (unintended?) consequence of such a tax is to yield less value added in the economy. That doesn't sound like a good idea, does it?
If we're going to move from an income tax to a consumption tax, let's be fair and honest about it, and go with a national sales tax on everything but food, medicine, and shelter.

Frankly, I think the main attractions of the VAT for our politicians are that it's hidden, it taxes every part of every chain of production, and it's European.
After all, they know more about having a dynamic economy than we do, right?


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