An American VAT? Don’t Bet On It.

Let our journalists help you make sense of the noise: Subscribe to the Mother Jones Daily newsletter and get a recap of news that matters.


The Washington Post has an article today arguing that the value added tax (VAT), which is popular in Europe and used in more than 130 countries, is getting a “fresh look” in the United States. Hogwash.

A value added tax is like a sales tax that applies at every stage of the production cycle. The tax is collected from wholesalers and raw materials suppliers, not just retailers, but the end result for consumers is the same, since the businesses pass their tax costs down the supply chain. Other countries have found VAT useful because the costs of collecting it fall largely on businesses, not government, and because its structure discourages the black markets that high sales taxes often create. And economists say VAT doesn’t discourage work, savings, or production as much as some other taxes do. But most liberals don’t like VAT because, like sales taxes, it’s regressive—its burden falls disproportionately to the poor.

According to the Post, Kent Conrad, the Democratic chair of the Senate budget committee, is giving the VAT a look-see because the Dems are hoping to find a way to pay for universal health insurance. Well, it may be “on the table,” as Conrad said, but VAT isn’t going anywhere soon. When you consider the politics of the situation, it seems pretty clear that the Dems are trying to look like they’re considering all the options. But any sort of significant VAT isn’t really in the cards. “While we do not want to rule any credible idea in or out as we discuss the way forward with Congress, the VAT tax, in particular, is popular with academics but highly controversial with policymakers,” Kenneth Baer, a spokesman for White House Budget Director Peter Orszag, told the Post. That’s a long way of saying that VAT is an interesting idea that isn’t politically viable right now. Consumption taxes raise the final prices of goods and services. Consumers would definitely notice even a modest VAT when they bought their apple pie, beer, and baseball tickets. Do the Democrats, now at the height of their power, really want to be blamed for instituting a new regressive consumption tax in the middle of a recession? Don’t bet on it.

DOES IT FEEL LIKE POLITICS IS AT A BREAKING POINT?

Headshot of Editor in Chief of Mother Jones, Clara Jeffery

It sure feels that way to me, and here at Mother Jones, we’ve been thinking a lot about what journalism needs to do differently, and how we can have the biggest impact.

We kept coming back to one word: corruption. Democracy and the rule of law being undermined by those with wealth and power for their own gain. So we're launching an ambitious Mother Jones Corruption Project to do deep, time-intensive reporting on systemic corruption, and asking the MoJo community to help crowdfund it.

We aim to hire, build a team, and give them the time and space needed to understand how we got here and how we might get out. We want to dig into the forces and decisions that have allowed massive conflicts of interest, influence peddling, and win-at-all-costs politics to flourish.

It's unlike anything we've done, and we have seed funding to get started, but we're looking to raise $500,000 from readers by July when we'll be making key budgeting decisions—and the more resources we have by then, the deeper we can dig. If our plan sounds good to you, please help kickstart it with a tax-deductible donation today.

Thanks for reading—whether or not you can pitch in today, or ever, I'm glad you're with us.

Signed by Clara Jeffery

Clara Jeffery, Editor-in-Chief

payment methods

We Recommend

Latest