CNN has an article up today discussing the chances of a Value Added Tax, or VAT coming to the USA. Billed in the article as “most potent, efficient machine for revenue generation yet invented,” implementing a VAT here would definitely be ‘change,’ though I’m not sure it’s one most people would believe in. The VAT is common in Europe, and from what I can tell, most people despise it.
There are many ways to implement such a tax… if it comes it will be interesting to see what kind of social engineering it will enforce. Taxing food & clothing will be seen as horribly regressive and against Democratic party principles, whereas jacking up the rates on Rolexes and BMW’s will have conservatives screaming ‘class war’ at the tops of their lungs. If it comes, I’m sure it will be codified inside some multi-thousand page law that almost no-one will truly understand.
I am guessing someone in or connected to the incoming Obama administration is floating this as a trial balloon. As the article notes, we have already committed to trying to spend our way out of this crisis, and that will require large sums of new revenue coming in. Raising income taxes is probably political suicide, so something like the VAT makes sense, since it can be done behind the scenes and more often… especially given how well American consumers pay attention to small incremental price rises.
I wouldn’t be thrilled with another form of taxation being dumped on us, especially since it would be used to pay for government stimulus programs that I don’t think will work. If nothing else, a VAT would probably mean less consumption of non-essential crap, which would be a good thing in the eyes of the sustainability crowd… just as long as that new Prius doesn’t get whacked too hard.