Verily, Volcker avers VAT is in the vicinity
Reuters has the scoop:
The United States should consider raising taxes to help bring deficits under control and may need to consider a European-style value-added tax, White House adviser Paul Volcker said on Tuesday.
Volcker, answering a question from the audience at a New York Historical Society event, said the value-added tax “was not as toxic an idea” as it has been in the past and also said a carbon or other energy-related tax may become necessary.
Though he acknowledged that both were still unpopular ideas, he said getting entitlement costs and the U.S. budget deficit under control may require such moves. “If at the end of the day we need to raise taxes, we should raise taxes,” he said.
Me: It would be tough to find a think-tank economist or policymaker who doesn’t believe a VAT is on its way as part of a strategy to raise taxes. (As I wrote earlier this week.) And not just on the rich. On the broad middle class. But it is no magic bullet. A VAT can be tricky to implement and could merely fuel more government spending. This will be a major political battle. I don’t see how it happens without a financial crisis as a spur. At the very least, a VAT would have to replace much of the current tax system and accompany major entitlement reform. Where to begin!?