A VAT Of Taxes

by Pejman Yousefzadeh on March 26, 2010

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Charles Krauthammer seems to grudgingly endorse the idea of a value-added tax, but one can tell that his heart is not in it. I can certainly understand why, but Krauthammer may potentially have reason to be a bit more enthusiastic. As noted in my interview with Bruce Bartlett, the implementation of a VAT can be combined with a significant cut in income and corporate taxes which would reduce the burdens on individuals and individual corporations, while at the same time, enhancing revenue by broadening the base. In short, a legislative package may and should be constructed which will bring about lower taxes in exchange for a VAT that will increase revenue without distorting the economy the way higher income and corporate taxes do.

This could give us both badly-needed tax reform, and a significant increase in federal revenue. I should note as well that the fact that Krauthammer is seriously contemplating the implementation of a VAT means that the idea is catching on. I won’t be in the least bit surprised to see more people on the Right sign up in support of a VAT as the best way to address the current fiscal crisis without dampening the economy in the process.

  • peteramsd

    Over 140 countries in the world have the VAT (or GST as its known in Canada, Australia and across Asia). All of the US's immediate neighbours operate the VAT (Canada, Mexico, Russia).
    Canada has a corporate tax rate of 15% – how does that compare with 35% in the US??? Imagine the higher levels of compliance and far less tax avoidance measures if US businesses only were asked to pay 15% in taxes!!!

  • peteramsd

    Over 140 countries in the world have the VAT (or GST as its known in Canada, Australia and across Asia). All of the US's immediate neighbours operate the VAT (Canada, Mexico, Russia).
    Canada has a corporate tax rate of 15% – how does that compare with 35% in the US??? Imagine the higher levels of compliance and far less tax avoidance measures if US businesses only were asked to pay 15% in taxes!!!

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