Is a VAT Tax the Only Thing Separating the U.S. From a Banana Republic?
On a day of mind-numbing acronyms that few aside from tax preparers can decipher without IRS instructions, we should note one that could mark the way to tax system salvation. It’s spelled V-A-T. Currently, 143 countries levy some form of a value-added tax, or VAT, on goods and services. The United States is the only OECD country without one. In the European Union, VAT is the gold standard for funneling revenue to the federal level. The slippery socialists in France are able to fund 45% of the French state through VAT. The sales tax common in most U.S. states is similar to VAT, but it only goes toward state expenses. One of the more viable proposals for an American version of the VAT comes from Yale University Professor, Michael Graetz. He proposes a 10-14 percent VAT in the US, versus the 19-25 percent required in Europe. This would generate enough revenue to allow the direct elimination of 100 million income tax returns. Coupled with a new maximum income tax rate of 25% on the wealthi
