About VATinfo

This reference site lists and links articles, Op/Ed’s, video and books that explain and advocate a Value Added Tax for the United States. The primary sources of these excerpted works should be looked to as informed voices for answers to follow-up questions on the need for and implementation of a VAT.

The U.S. is at a competitive disadvantage by not employing a VAT, which would work to create a more level playing field in this era of globalization. Today, all U.S. trading partners employ a VAT, as do over 150 countries.  The VAT concept, approved under GATT rules, is border adjustable and subtracts the burden of government from the competition of goods and services in world trade.

Consideration is being given to a VAT as the better means to cover growing U.S. budget deficits in the future – when the economy rebounds.  The federal budget is in large deficit, now, with three dollars expended for every two dollars collected in tax revenues.  Deficits are projected to expand further with the increase in expenditures for Social Security, Medicare, Medicaid as the baby boomers reach retirement age in greater numbers.  After all practical spending cuts are made, additional taxes will still be needed to achieve a balanced budget.  Most economists, and most citizens would prefer to have a future tax increase in the form of consumption taxes rather than income taxes.

The VAT could be implemented in a revenue-neutral tax plan that affords flexibility for increases as needed after the economy recovers.  For political considerations as well as stimulus, a VAT would likely be implemented along with an initial reduction to overall taxes, much as Canada and Japan did. The recent Domenici-Rivlin proposal offers just that with a payroll tax holiday.

Another approach, revenue-neutral replacement of the Corporate Income Tax with a VAT, would eliminate a competitive disadvantage in world trade, and there are other stimulative benefits to be gained from this shift.  The VAT would reduce or eliminate the usage of transfer pricing to shift profits to lower-taxed countries, as the U.S. would become the lowest (corporate) taxed country; multi-national corporations would no longer have an incentive to park profits abroad.  The double-taxation of dividends would be eliminated.   And, with a broad-based VAT without preferences, gone would be the lobbying for loopholes.

In addition, the time-certain implementation of a VAT would be an off-budget stimulus, as consumers would likely speed up purchases to avoid the VAT.  The VAT consumption tax would work to restructure the economy by putting a drag on spending and encouraging savings.

About the Publisher
Steve Abramson is an entrepreneur and innovator who has created start-up companies in different industries.  A graduate of Lafayette College with an MBA from NYU, his career began at Merrill Lynch as a Corporate Planning Analyst.  He was an advertising account executive at the core agency of Saatchi & Saatchi, and later became a leading publisher and printer of pharmaceutical advertising literature.  Steve has published books on fine art and the First Amendment, and holds patents for a color recognition system used in all the major computer design software.  He worked for Jerry Brown’s 1991 presidential campaign in New York, at which time Gov. Brown called for sweeping tax reform with a VAT and a flat tax on personal income.