As more and more on the left are floating the idea of imposing a Value Added Tax (VAT) to pay for some of their outlandish spending proposals, and indeed as a general panacea to the country’s fiscal woes.
Veronique de Rugy, writing in Reason, has a great article on just why this is a bad idea. Specifically, she notes:
The first thing to note is that Greece collapsed in spite of having a 19 percent VAT since 2005. The second thing is that there’s little to no chance that the government could credibly commit to assign even a share of any new VAT revenue to deficit reduction. Take President Obama’s first budget, released last year. In it, he assumed that most of the $600 billion coming from proposed cap-and-trade fees would be allocated to deficit reduction. A year later, his budget still assumes the revenue (even though the law is not yet passed), but all of it has been allocated to spending programs, not to reducing the deficit. A government that cannot commit fictional revenue to deficit reduction is unlikely to do so with actual money either.
I would strongly urge you to read the whole article.
Americans for Tax Reform has recently re-invigorated our Anti-VAT caucus. There are currently 45 Congressmen and 2 Senators in the caucus. ATR strongly urges all elected officials to join.