Sunday, November 21, 2010

Paul Volcker, others support US VAT tax (replacing income tax?) to fuel "entitement state"

I heard this morning about a proposal from Paul Volcker to implement ra national value added tax (essentially a sales tax),.  Some people say this could replace the federal income tax entirely, maybe also eliminating state income taxes too.

To eliminate the IRS and avoid the regressivity of a VAT alone, there would have to a poverty line rebate mechanism.

The CNBC story Nov. 15 about the VAT by Barbara Stcherbatcheff, “Would a national sales tax really work in the U.S.?” has link here.

Charles Krauthammer has also discussed the VAT, and also discusses the mandate that individuals buy health insurance. Charles says we’ve never had a requirement for people to enter into contracts with private companies, but we do that with auto insurance (for the privilege of driving). He says that the VAT is how the Europeans extended the “entitlement state”.

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