WebCPA reports that the international accounting firm KPMG (formerly Peat Marwick Mitchell for whom I worked in the early 80′s) warns that the U.S. may seek to broaden the tax base by enacting a federal value added tax or VAT :
A new study by KPMG has found more governments worldwide imposing value-added taxes and goods and services taxes to make up for declining revenue from other sources, and warns the U.S. may follow suit.
The long-term slide in corporate income tax rates came to a halt in many countries in 2009, according to the report. KPMG sees signs that any further cuts will likely be paid for by measures to broaden the tax base. A federal VAT has been proposed as a potential revenue-raiser in the U.S. to help address the country’s rising deficit. The U.S. is the only G-20 country without a federal VAT or GST, and has one of the world’s highest statutory corporate income tax rates.
“These shifts present clear evidence of a major, and a potential long-term change in the way that many governments around the world are funded,” said Tim Gillis, partner-in-charge of KPMG LLP’s state and local tax practice. “For U.S. multinationals, it means that the management of indirect taxes will become much more important from a compliance, risk management and performance perspective.”
3 responses so far ↓
1 David Emery // Oct 23, 2009 at 4:25 am
I think the US should be very cautious on this. What started as a 5% tax in Europe seems to be spiraling out of control. On this site http://www.tmf-vat.com they talk about average rates in Europe heading above 20% next year to combat rising deficits.
Do we really want this?
David
2 Peter // Oct 23, 2009 at 8:37 am
Hi David,
It’s just another way to tax the middle class and still be able to say you aren’t.
3 Anti-Tax Groups Oppose VAT // Dec 11, 2009 at 2:44 am
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