When discussing the topic of taxes you’ll get a wide variety of opinions from the different sides of the political aisle. The United States is one of the countries in the developed world that does not have VAT, but there are many of the opinion that we should have one.

From the Left

Progressives in general like the VAT as a new source of revenue that could help finance key programs like Medicaid, Medicare, and social security. Washington has been very good at spending, but they lack a general appetite to fund these programs for which the VAT could be an answer.

On the flip side, it does raise taxes on everyone, including the poor. A loaf of bread for example may now cost $3.30 v. $3.00 due to the VAT and a lower income person will not be able to avoid having to pay the $0.30 VAT. Especially during today’s economic downturn this could be a very hard pill to swallow for the liberals as it would be a logistic nightmare to exempt people from a certain lower income bracket.

From the right

Conservatives in general like the VAT, provided it would replace corporate taxes and lower income taxes. They feel the tax system in general is inefficient, even with the tax bill pushed through congress a few years ago and signed by the President (Donald J. Trump), and the VAT would level the fairness of it all.

On the flip side, VAT would provide an incentive to Washington to spend that money. The U.S. economy is worth over $21 trillion in GDP as of 2019, and you could easily see that VAT at let’s say 10% could add a quick $2 trillion to the federal coffers. To the conservatives it’s too intrusive and they worry the spending could keep going uncontrolled.

From the center

Maas Media feels that a VAT would be justified in today’s economy, and for the following reasons:

1. Fairness – many conservatives complain about the poor or lower incomes not contributing at all to the economy and to the government programs. A VAT would mean that they too pay taxes, even if their federal income and/or state income taxes are null. For liberals it means that even the rich can’t avoid paying taxes. Buying a $250,000 sports car won’t let you get out of paying the VAT, provided of course the law stipulates that VAT is not tax-deductible, which it shouldn’t be in order for it to be fair
2. Auto-adjusted – if GDP keeps going up, and thus the economy keeps growing, so does the revenue collected via VAT. The government should start with a base percentage and only under certain conditions would they be allowed to raise it.
3. Lower Corporate and Individual Taxes – a VAT would provide an incentive to lower corporate rates down to let’s say 15%, and individual rates by another 5 points across the board. Again, because of the fairness (see above), everyone pays into the system.
4. Simplification – it allows the government to simplify the tax code. Many tax loopholes would disappear, and individuals would find it harder to cheat the tax man.

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