Once Considered Unthinkable, U.S. Sales Tax Gets Fresh Look


Levy Viewed as Way to Reduce Deficits, Fund Health Reform.


With budget deficits soaring and President Obama pushing a trillion-dollar-plus expansion of health coverage, some Washington policymakers are taking a fresh look at a money-making idea long considered politically taboo: a national sales tax.

Common around the world, including in Europe, such a tax — called a value-added tax, or VAT — has not been seriously considered in the United States. But advocates say few other options can generate the kind of money the nation will need to avert fiscal calamity.

(Except, of course, bringing troops home and ending trillion-dollar “nation building,” reigning in spending, not buying vaccines full of mercury and other toxins, not starting trillion dollar programs and ending the Federal Reserve (to name a few items). Add to this the fact that Obama is talking about year-round school.)

A Rasmussen Reports poll shows that 59% of those polled to not want to raise taxes on those earning less that $250,000 to pay for health care.

“There is a growing awareness of the need for fundamental tax reform,” Sen. Kent Conrad (D-N.D.) said in an interview. “I think a VAT and a high-end income tax have got to be on the table.”

A White House official said a VAT is “unlikely to be in the mix” as a means to pay for health-care reform. “While we do not want to rule any credible idea in or out as we discuss the way forward with Congress, the VAT tax, in particular, is popular with academics but highly controversial with policymakers,” said Kenneth Baer, a spokesman for White House Budget Director Peter Orszag.

A new value-added tax (VAT) is “on the table” to help the U.S. address its fiscal liabilities, House Speaker Nancy Pelosi (D-Calif.) said Monday night.

Pelosi, appearing on PBS’s “The Charlie Rose Show” asserted that “it’s fair to look at” the VAT as part of an overhaul of the nation’s tax code.


Value added tax (VAT), or goods and services tax (GST) is a consumption tax (CT) levied on any value that is added to a product. In contrast to sales tax, VAT is neutral with respect to the number of passages that there are between the producer and the final consumer; where sales tax is levied on total value at each stage (though in US and many other countries sales tax is only charged at final sale to the final consumer and use tax final user, thus there are no sales taxes paid at wholesale or production level), the result is a cascade (downstream taxes levied on upstream taxes). A VAT is an indirect tax, in that the tax is collected from someone who does not bear the entire cost of the tax.—Value Added Tax(WIkipedia)


The Hill
Once Considered Unthinkable, U.S. Sales Tax Gets Fresh Look (Washington Post)

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