Wayne, England has a VAT, but I'm not certain if it has performed as expected, better or worse. There are several problems with a consumption tax. In its natural form, it is certainly the most regressive form of taxation. So, you get govt. involved in deciding what items must be excluded to make it less regressive. Many states do not tax food, for example, but they tax the hell out of gasoline. Aren't they both necessary in this economy? Then you have the problem that the wealthy can buy their goods elsewhere, so you have to increase tariffs and customs to try to catch their leakage. This is why we see smuggling cigarettes from North Carolina to New York as a huge business. So, you have to have a war on smuggling.
The fairest form of taxation is one we will never see. A steep progressive tax with no deduction at all. But everyone wants their deductions, from the wealthy to the baby machines to the charity scams to the churches. And a huge estate tax after a large deductible fairly indexed to inflation. We pay taxes on what we work for, but the wealthy inherit their money tax free, thanks to various loopholes and accounting flim flam. BTW, unlike one of the several lies Ronald Reagan told, no farm has ever been lost due to estate taxes. These two taxes would get rid of abortions like The Alternative Minimum Tax. Sadly, the multi-billion dollar tax form business would die overnight. <G> |
