No surprise. Tim Geithner expects that there would not be any “enthusiasm” for a VAT at this time. Today’s political scene, dominated as it is by demagoguery is perfect for knee-jerk opposition to any new ideas. America is supposed to be the wellspring of creativity, but not when it comes to government finance. The problem is there is no political leader in the forefront promoting sweeping tax reform, even if it would make the U.S. more competitive in world trade, even if it would stimulate business, even if it would fairly collect from multi-national corps that now park profits in lower-taxed countries, even if it would make tax loopholes vestigial remnants of a corrupt tax code, even if it would eliminate absurd complexity.
The one leader who might emerge to make a difference, Gov. Mitch Daniels of Indiana, is still in the background, not having made a commitment to run for president. However, he has a vision of sweeping tax overhaul that would be good for the economy. It replaces the entire tax system with a value-added tax plus a flat income tax with a high threshold to achieve balance and fairness. He spoke of this vision for a new, smart, competitive tax system while accepting the Herman Kahn Award at the Hudson Institute last year. The press, if it would play an investigative role in examining tax reform would do well to interview him on the subject. After all, among Daniels’ credentials are experience as head of OMB, and corporate management, as well as govenorship.