How America might get a Value Added Tax

http://blogs.reuters.com/james-pethokoukis/2010/04/05/how-america-might-get-a-vat-of-its-own/

by startuprules • 16 years ago

9 18 16 years ago

blogs.reuters.com

tptacek5• 16 years ago

The theory of this article is that we will:

(a) Shift from a complicated progressive tax to an even more complicated regressive tax, and simultaneously

(b) Adopt a series of reforms that will end Medicare and Social Security.

Whether you agree with the principles or not, we're more likely to get a flat income tax than a VAT.

Anon84• 16 years ago

     we're more likely to get a flat income tax than a VAT.

One can only hope.

aidenn0• 16 years ago

I don't know about VAT being more complicated than our income tax system, but other than that, darn you for posting what I was going to post.

VATs and sales taxes are regressive. I'm continuously astonished that people seriously talk about replacing our income tax system with them.

encoderer• 16 years ago

It's not surprising if you posit that most the "talking class" in the country is in the higher tax brackets. (Not to say that everyone in those brackets is against our progressive tax system. I'm at 28% myself and still think progressive is the only viable option if we care about a middle class in this country)

matrix• 16 years ago

It doesn't have to be an either/or thing though. The big advantage of VAT is that they are much simpler (cheaper) to administer and greatly reduce tax evasion. So, having a VAT combined with a reform of income taxes could make a lot of sense.

A VAT alone would be far too regressive but combined with a sensible income tax (and credits) to counter-balance the regressive effects could be a big improvement over the system today. I don't think I've seen anyone propose having a VAT replace income tax.

cryptnoob2• 16 years ago

You probably are not aware of this, but when used in this context, "progressive tax", you are referring to a tax system advocated by the progressive movement from the late 19th and very early 20th century. The progressive movement is the father of modern day liberalism, and actually was a tarnished word for awhile, resulting in it's adherents beginning to call themselves liberals. It's interesting the pendulum has swung back, to where "liberal" is considered tarnished, and "progressive" is the preferred term.

My point is that, the opposite of "progressive", in this context is not regressive, it's conservative. Calling it "regressive", obviously sends very clear signals as to which one is "good" and which is "bad", by those who wish to send such signals, which is how this all got started. However, it has now come into use by those who may not mean to imply those values, which may, indeed, be the case with you.

mainland• 16 years ago

Actually, a tax is termed "progressive" when the tax rate increases as the taxable amount increases. A "regressive" tax is a tax where the tax rate decreases as the taxable amount increases.

It's true that "progressives" often advocate "progressive" taxes, but the term has a technical meaning when applied to taxes. Feel free to look it up yourself.

tptacek5• 16 years ago

"Conservatives" don't necessarily believe that's a good idea to tax people with lower incomes more aggressively than those with higher incomes. So, whatever the point you're trying to make here is, it's orthogonal to my comment.

hugh3• 16 years ago

Nope, far more likely we'll get the VAT _and_ keep our existing tax system as well. The article's flaw is in assuming that the tax needs to somehow be made palatable to voters; it doesn't, all they need to do is continue to increase spending until it becomes impossible to not raise taxes.

Reagan's "starve the beast" strategy was based on the assumption that if you continue to cut taxes, eventually congress will be forced to cut spending, but it didn't work. Obama's "gorge the beast" strategy is based on the assumption that if you keep increasing spending then eventually congress will have to raise taxes. It looks like it might work a lot better.

viggity• 16 years ago

"It looks like it might work a lot better"

Gorge the beast might work better at raising tax rates, but I'm not sure if it is going to work out better for the country

fexl• 16 years ago

This concept of gorging the beast reminds me of something I read in a book called "Being Sovereign":

"Individuals tolerate limitations and control, obey mindless bureaucratic nonsense, make a sincere effort to "follow the rules," until they don't. While their own best interests seem to be served by obedience, people try very hard to obey even the most idiotic of directives. When it becomes clear that they cannot prosper, or may not even survive, following the rules, they revolt. It should come as no surprise that people have limits, and there is always a straw that breaks the camel's back, but the perception of people accepting more and more nonsense as they try to "go along to get along" misdirects those in power to believe they can continue to be arbitrary and capricious far past the breaking point."

Diogenes• 16 years ago

It's not going to happen, as the Constitution reserves these powers to the States. The States retain (so far) plenary power with regards to transactions within their borders.

A very detailed refutation: http://www.heritage.org/Research/Reports/2005/05/Beware-the-...

How America might get a Value Added Tax

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