(Gov. Daniels) Herman Kahn on Tax Reform & VAT, 11/27/10

It was smart marketing for Domenici/Rivlin to label their VAT a DRST (deficit reduction sales tax), and as a result there has not been much outcry about the VAT component.

Contrast that response with the well-publicized criticism that followed Indiana Gov. Mitch Daniels’ endorsement of sweeping tax reform including a VAT. Gov. Daniels, on the occasion of accepting the Hudson Institute’s Herman Kahn Award, Gov. Daniels had quoteed from Kahn’s 1982 book, “The Coming Boom.” Herman Kahn was co-founder and Director of the Hudson Institute, a conservative think-tank, so it is somewhat curious that the critical response to Gov. Daniels’ endorsement of Kahn’s tax reform proposal came almost entirely from conservatives.

Of course, the makeup of our economy has changed in the eighteen years since Kahn’s book was published, but the principle should still apply. It would be instructive to have OMB run the numbers based on different percentages and proportions.