WaPo: Reasonable people like the VAT

According to this Washington Post story, the value added tax is generally viewed by "serious people" as a great idea, and those who oppose it do so only out of political cowardice, crankiness, or naivete.

As Washington braces for the first serious conversation in more than a decade about deficit reduction [read VAT], some economists and independent budget experts fear that the hyperpartisan political atmosphere is narrowing the options for dealing with the chronic budget shortfall. [. . .]

Economists across the political spectrum argue that a VAT, which taxes spending rather than income, should at least be on the table when a commission appointed by Obama meets next week to craft a plan to reduce soaring budget deficits. Providing federal support to a vast wave of retiring baby boomers is almost certain to require higher taxes, budget experts say, and a VAT would be efficient and easy to collect and could raise significant revenue without imposing additional taxes on earnings. [. . .]

"Behind closed doors, almost everyone serious in Washington understands there's a big problem," Burman said. "But in public, basically if you say anything intelligent, you're killed."

Of course there's a big problem. Perhaps someone should have thought about the exploding deficit before enacting a massive new entitlement against the will of the people. But then, cynical observers might say they did think of it, and a VAT was part of the plan all along:

Expand the beast and then feed it. Spend first -- which then forces taxation. Now that, with the institution of universal health care, we are becoming the full entitlement state, the beast will have to be fed.

And the VAT is the only trough in creation large enough.

As a substitute for the income tax, the VAT would be a splendid idea. Taxing consumption makes infinitely more sense than taxing work. But to feed the liberal social-democratic project, the VAT must be added on top of the income tax.

The VAT is the monster tax proportionate to our monster government:

. . . a VAT is not just any old tax, it is a plague of potentially epic proportions that promises to further expand the size and scope of the federal government and prop open the spending floodgates for good. [. . .]

The lack of transparency that comes with a VAT, coupled with the power of small percentage increases to increase tax receipts by tens or hundreds of billions of dollars, would give the government carte blanche to raise taxes a little bit at a time.

Any remaining incentives to reduce spending back to sustainable levels would all but vanish, and Americans would be faced with a larger, more emboldened federal government than the one that got us into this.

George Will calls the VAT "the obituary for the Founders' vision of limited government":

Because a VAT potentially taxes everything, it would be riddled with exemptions. This is because it maximizes the political class's opportunities for showing favoritism -- by, for example, exempting certain "green" goods. It also widens that class's scope for the pleasure of being bossy. For example, it could reduce a VAT's regressiveness -- like rain, a VAT falls equally on the rich and the poor, but the poor devote a larger portion of their income to consumption -- by exempting most foods but not those that the nanny state disapproves: "Put down that sugary soda and step away from the vending machine!"

How do those "serious people" view Congress's powers of self-restraint?

Putting a VAT in the hands of Congress is like giving an alcoholic the keys to the wine cellar and saying he’s welcome to drink just one bottle. Of course, the following morning several bottles will have been consumed.

I envision something more like a rampaging horde of alkies. But the simile works.

But even the current climate of "hyperpartisanship" (a negative way of saying that our "representatives" are feeling the heat from a politically engaged public) isn't enough for the Obama administration to rule out a VAT. It's the statist's dream come true. Obama just wants the idea to come from someone else.

*Updated to add a link to Pete du Pont's Will the VAT Lady Sing? If so, it's over for America

Most recent posts here.