Taxes

VAT Pack? Some Republicans Support Value Added Tax

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Rat pack!

The Hill reports bipartisan support for a value-added tax:

The idea of a value-added tax (VAT), attacked by national Republicans ever since it was floated by a White House adviser, has some GOP supporters in Congress.

Five Republican House members are co-sponsors of a bill by Rep. Bill Pascrell (D-N.J.) that would impose a border tax on imports similar to an importing country's VAT if the U.S. government couldn't negotiate a way to cut trade imbalances. In the Senate, George Voinovich (R-Ohio) has suggested that replacing income taxes with a VAT could be one way to streamline the tax code.

"I don't know whether it would [be more efficient] or not," Voinovich told The Hill. "All I'm saying is that we shouldn't just say it's a bad thing."

Voinovich was one of just 13 senators to vote against a "sense of the Senate" resolution offered by Sen. John McCain (R-Ariz.) in April calling the VAT "a massive tax increase that will cripple families on fixed income and only further push back America's economic recovery." Every other Republican and most Democrats voted for the non-binding resolution.

Yesterday, The Daily Caller reported that the president's fiscal commission will almost certainly recommend raising taxes:

Leading Democrats on the commission tried during the first week of meetings to finesse their way toward a discussion of what they consider inevitable — by arguing that any tax hikes would be "pro-growth."

"If we can put forward some practical proposals that control the rate of spending in the future and that raise revenues in a pro-growth way, I think we'll get a hearing in the Congress," said Alice Rivlin, a former White House budget director for President Jimmy Carter, who is one of 18 commission members.

If you didn't read the word "tax" in the previous sentence, that's because most who favor raising taxes don't like to use the word. Instead they use "revenue," as in the money that comes to the government from taxpayers.

Commission co-chair Erskine Bowles made clear last week that any recommendations he puts forth or supports by the Dec. 1 due date will include higher taxes. The three working groups that he set up to meet weekly over the next several months are focused on mandatory spending, discretionary spending and revenue reform.

Any solution is "going to involve revenue, and we have to face up to that," he said. Bowles, a former White House chief of staff to President Clinton, also followed Rivlin's tack, arguing that any tax increase would have to be good for the economy, business, job creation, etc.

Elsewhere in Reason, Veronique de Rugy called the VAT "the wrong policy at the wrong time."