The Atlantic’s Derek Thompson – you’ll remember him from my post The Atlantic: Anti-taxers are Wrong As People - seems to be upset that a national valued added tax (VAT) doesn’t seem to be in the cards for the immediate future:
How far are we from a value-added tax?
Pretty far. This April, the Senate voted 85-13 for a symbolic resolution that “promised” to never, ever consider a value-added tax (read this Flashcard on the Value-Added Tax). A White House spokesperson said the president “has not proposed this idea nor is it under consideration.”
But the Wall Street Journal’s John McKinnon presses aheadwith a smart overview of the tax, anyway. With a bloodbath in 2012 looming, the White House won’t have the guts to stage a VAT battle until after Obama’s possible reelection, he suggests — especially since corporations will scream about a new tax on their products.
But there’s a way to defend against some of that screaming: tie the VAT to, among other things, reductions in the corporate income tax. This is a good reminder that the VAT, if it ever comes, will not perch itself on top of the tax system like a cherry sundae. It’s more likely that it would be swapped in for other tax cuts.
A VAT, unlike most of the tax proposals of the pro-tax left, is not a class-based tax and I could be persuaded to support it. But not while we’re recovering from a recession.
The economy needs to get well before we make products more expensive for consumers and, thereby, make Paul Krugman ‘s prophecy of a double-dip recession come true.¹
Footnotes:
¹ And the very last thing we want to do is encourage Krugman to make more economic predictions.
1 response so far ↓
1 Adam // Jul 19, 2010 at 12:49 am
There is nothing wrong with the income tax if it was applied fairly and equally. Unfortunately, the deductions, credits, and nearly everything else in the Code other than section 61 has been modified to favor certain types of transactions. Remove all deductions and credits, create a single taxpayer rate for all individuals, no special treatment for parents with children, and the disfavor and confusion will end. Perhaps then Congress could enact real tax breaks by lowering the effective rates instead of creating deductions that only 12 people qualify for. And if all the deductions are thrown out, there goes the need for the AMT. However, my suggestion is unlikely to ever take hold because deductions have become such an entrenched part of the system.
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