Although many economists have suggested that Congress consider a value-added tax (VAT), their pleas are apparently falling on deaf ears. Members of both the Democratic and Republican parties have rejected the idea of implementing a VAT. No doubt. Have you ever seen a politician win an election on a platform of higher taxes?
“It’s the worst of all worlds,” said Rep. Tom Price (R-Ga.), a member of the House Ways and Means Committee. “The American people don’t want to be Western Europe.”
That hasn’t stopped economists, including some who once worked for Republican administrations, from arguing in favor of the VAT’s merits.
At a string of congressional hearings and think-tank events over the last month or so, economists with experience at the highest levels of government — including in Republican White Houses — have showered kind words on the VAT. The tax’s efficiency, they have said, comes because it does not particularly penalize savings and makes what is subject to taxation less of an opinion, among other reasons.
“If you take everyone’s projections of where we’re going in the future, it looks like we’re on a trajectory where we’re going to need more revenue,” said Donald Marron, who worked in the George W. Bush White House and is now director of the Urban-Brookings Tax Policy Center. “And then you have to have a discussion on where that comes from.”