Re: The Trouble with Tax Reform

It is ironic that opponents of VAT wrongly refer to it a “hidden tax,” even though the percentage VAT built into prices is readily understood by consumers in the countries that employ the VAT.

In contrast, in The Economist, 02/04/11, David Leonhardt, “The trouble with tax reform,” makes the point that the Corporate Income Tax is riddled with uncertainty due to the loopholes, deductions, and credits available. The CIT, is truly the hidden tax, since the amount for which the consumer pays is entirely uncertain, both between industries, and within industries.

The VAT, as a revenue-neutral replacement for the CIT (if employed without tax preferences) would be certain, and gone would be the lobbying influence for tax loopholes.