I include this article because it was in this weeks’ Parade Magazine which is the most read publication in America with a circulation of 32 million and a readership of 71 million. Lots of people saw this to no comment or followup I could find.
With our national debt at $13 trillion we could very easily pay it off in one year with a VAT of 13%. Or in 5 years at 6%. And fund health care for everyone, save Social Security and all go to Mars for the weekend.
But if we were to do that Ron Paul, Rand Paul, the Tea Party, Sarah Palin, Glenn Beck, Rush Limbaugh and the entire Republican Party would have no reason to exist. Can’t have that!
Do We Need a National Sales Tax?
Alarmed by our country’s annual $1.4 trillion deficit, some economists have suggested that the U.S. adopt a national sales tax. Currently, about 150 countries have this type of value-added tax, or VAT: In Great Britain, it’s 17.5%; China, 17%; Mexico, 16%; Egypt, 10%; and Kazakhstan, 12%. The tax typically applies to all purchases, as well as to services from haircuts to stock trades.
VATs "often generate half of a country’s public revenues," says Robert Goulder of Tax Analysts, a nonprofit publisher of tax-policy magazines. In France, for instance, the VAT accounts for 52% of the money the government collects. "Most of the 150 countries that have a VAT would be fiscally crippled without it," Goulder says.
In the U.S., each 1% of VAT could raise $1 trillion over 10 years, according to the Congressional Budget Office. While some federal lawmakers are warming to the idea, others say such a tax disproportionately hurts the poor, who spend most of their income on necessities. Some countries counter that problem by using a dual-rate structure—lowering or eliminating the VAT on purchases like prescription medicines and groceries. However, some policy experts worry that a VAT could actually raise so much money—and so easily—that it would encourage Congressional waste. "A VAT would take the pressure off the government to rein in spending," says Rudolph Penner, a fellow with the Urban Institute, a public-policy think tank. "And the more they spend, the more taxpayers have to shell out."
This type of regressive taxation works in Europe as they have a real safety net in place and the disparity of wealth there is not increasing in leaps and bounds as it is here. But we could do it for awhile and get ourselves out of this mess quite easily.