VAT’s The Matter?

Fiscal Policy: Sometimes the worst ideas are the most tempting. So it is with the value-added tax, or VAT — a potential money gusher for strapped governments but a massive new levy on all Americans.

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At least twice a decade, it seems, desperate politicians latch on to the idea of a VAT as the best way to raise lots of money for their spending schemes. No wonder. Unlike our current system, a VAT would impose a uniform levy at each level of production, from raw materials to finished goods, so the revenue potential is huge. Which is why it keeps coming up in our free-spending Capital. Earlier this year, Treasury Secretary Tim Geithner, fresh from crafting a $700 billion bailout for the banks, a $787 billion "stimulus" package and untold billions more in other spending, suggested that a good way to pay for it all might be a VAT. More...

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