An American VAT? Don’t Bet On It.

For indispensable reporting on the coronavirus crisis, the election, and more, subscribe to the Mother Jones Daily newsletter.


The Washington Post has an article today arguing that the value added tax (VAT), which is popular in Europe and used in more than 130 countries, is getting a “fresh look” in the United States. Hogwash.

A value added tax is like a sales tax that applies at every stage of the production cycle. The tax is collected from wholesalers and raw materials suppliers, not just retailers, but the end result for consumers is the same, since the businesses pass their tax costs down the supply chain. Other countries have found VAT useful because the costs of collecting it fall largely on businesses, not government, and because its structure discourages the black markets that high sales taxes often create. And economists say VAT doesn’t discourage work, savings, or production as much as some other taxes do. But most liberals don’t like VAT because, like sales taxes, it’s regressive—its burden falls disproportionately to the poor.

According to the Post, Kent Conrad, the Democratic chair of the Senate budget committee, is giving the VAT a look-see because the Dems are hoping to find a way to pay for universal health insurance. Well, it may be “on the table,” as Conrad said, but VAT isn’t going anywhere soon. When you consider the politics of the situation, it seems pretty clear that the Dems are trying to look like they’re considering all the options. But any sort of significant VAT isn’t really in the cards. “While we do not want to rule any credible idea in or out as we discuss the way forward with Congress, the VAT tax, in particular, is popular with academics but highly controversial with policymakers,” Kenneth Baer, a spokesman for White House Budget Director Peter Orszag, told the Post. That’s a long way of saying that VAT is an interesting idea that isn’t politically viable right now. Consumption taxes raise the final prices of goods and services. Consumers would definitely notice even a modest VAT when they bought their apple pie, beer, and baseball tickets. Do the Democrats, now at the height of their power, really want to be blamed for instituting a new regressive consumption tax in the middle of a recession? Don’t bet on it.

SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

payment methods

SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate