VAT Trap: The inevitable fix for the deficit
14th April 2010
Briefly, a VAT resembles a sales tax passed in the end onto the consumer at the register. But the government collects most of the money during the stages of a product’s manufacture. Since manufacturers are writing the checks, it’s an extremely efficient, virtually fraud-free way to collect money.
But it’s never gotten much support in the U.S. for two reasons. First, it’s a regressive tax: Low-earning families pay a bigger portion of their incomes than the wealthy. And second, the VAT — first introduced by a French civil servant in 1954 — has fueled the rapid growth of government in France, Germany, and even Japan. In fact, no other country spends the kind of money we’re planning to spend without a VAT. The numbers tell the story.