With talk becoming ever more increasing on the issue of a Value-Added Tax (aka, VAT); Americans for Tax Reform has joined with members of the House and Senate to revive the Anti-Vat Caucus, which is solely based on the goal of ensuring that American taxpayers are not burdened with yet another draconian measure to impose taxes. The implications for such a tax would be devastating to an economy that is struggling and to working families all across the country. The Anti-VAT Caucus will fight against any such form of taxation that would not only break the President's pledge made in New Hampshire that "No family making less than $250,000 a year will see any form of tax increase,” but would further stifle the growth of the economy in a time where jobs, spending, and taxes are on the top of the voters’ lists.

There is so much information about the VAT to be considered, but here are some of the major points, courtesy ATR’s Tax Policy Analyst Ryan Ellis:

  • VATs  don’t displace other taxes.  In fact, the evidence from Europe shows that other taxes rise as VATs rise.  The reason is that more VAT revenue begets more government spending, which creates demand for yet more tax revenue.  According to Dan Mitchell of the Cato Institute (who gets his data from the OECD), in 1967 the U.S. and Europe each collected about $0.27 in taxes for every $1.00 produced.  The U.S. is still collecting that much, but Europe’s tax burden has shot up from 27% to over 40%
  • Other taxes rose in Europe as the VAT grew.  Personal income taxes grew from 7 percent to 11 percent of Europe’s GDP.  Corporate income taxes grew from 2 percent to 3.5 percent of GDP.  Taxes on income and profits grew from 9 percent to 14 percent of Europe’s economy.  As the VAT grew, so did all the other taxes.
  • Americans for Tax Reform Foundation has estimated that if the United States adopted a European-style VAT tax base, every 1 percent point in VAT rate would yield the tax revenue equivalent of 0.4 percent of GDP (or about $50 billion per year).  Even a 1 percent VAT with a European base would be as big as the net tax hike under Obamacare.

ATR has now begun to ask candidates to join the Anti-Vat Caucus, if elected. The follow candidates have already made the promise to join:

In addition to these candidates, more than 60 federal elected officials have signed onto the Anti-VAT caucus, you can see the complete list here.