March 20, 2015

THE INEVITABLE SWITCH TO TAXING CONSUMPTION:

The Global VAT Craze (WSJ, March 20, 2015)

The VAT is a sort of turbo-charged national sales tax on goods and services that is applied at each stage of production, not merely on retail transactions. Politicians love it because it is the most efficient revenue-raiser known to man, and its rates can be raised gradually to finance new entitlements or fill budget holes. The VAT is typically introduced with a low rate but then moves up over time until it swallows huge chunks of national economies.

E&Y finds that rates have been rising again, especially since the financial panic and recession. E&Y says standard VAT rates now average a knee-buckling 21.6% in the European Union, up from 19.4% in 2008. Average standard rates in the industrial countries of the Organization for Economic Cooperation and Development have climbed to 19.2% from 17.8% in 2009.

Here in America we'll avoid Europe's problem with VAT by using to to replace taxes on income, investment and savings, rather than as an add-on.

Posted by at March 20, 2015 7:38 PM
  

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