Archive for May 31st, 2009

In theory, the VAT is a relatively non-destructive tax. Like the flat tax and national sales tax, it is a single-rate, “consumption-base” levy. Several people have asked me, then, why I am so vociferously opposed to such a measure. The answer is simple: I do not object to a VAT as a replacement for the current income tax. But that is not a realistic option. Instead, politicians are salivating for a VAT because it is a very efficient way of generating more money to spend. And the last thing I want is to make it easier for politicians to transfer a larger share of national output from the productive sector of the economy to the government. This video compares the flat tax and national sales tax, but it also applies to the VAT.

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