“Without its own VAT, the U.S. is placed in a comparatively uncompetitive situation. In 2006, foreign VAT nations collected rebates totaling $218.2 billion while the U.S. was forced to pay $122.4 billion in foreign taxes. Each year the foreign VAT imposes a $290 billion burden on exported U.S. goods and another $85 billion on services. This encourages outsourcing as American companies move offshore in order to circumvent the VAT and reap the same benefits as the companies producing in those nations.
In 2005, this foreign tax was applied to 94 percent of U.S. imports and exports. In EU countries alone in 2001, the average foreign VAT rate applied was 19.4 percent, coupled with an average tariff of 4.4 percent, this levies a total tax of 23.8 percent on American goods and services. Despite the obvious flaws of not having a national consumption tax, those making laws on Capitol Hill, with very few exceptions, do not have the political fortitude to pass such a tax.”