Some See Value-Added Tax, Common in Other Developed Countries, as Potential Help for U.S. Budget Problems

Blog Post
Monday, June 07, 2010

As concern about long-term federal deficits and debt mounts, some policy experts in Washington have been discussing the possibility of a value-added tax (VAT). Some envision it as a replacement for current taxes while others favor it as an add-on to raise additional revenue.

A value-added tax is similar to other consumption taxes such as the retail sales tax but is collected at each step in the production process. Americans are well acquainted with the sales tax because it is often used at the state and local level. But among developed countries, the United States is unusual for not using a value-added tax.

Although Congress is not actively considering a VAT and The Concord Coalition has not taken a position on it, Concord maintains that all policy options should remain on the table.