support for the VAT with caveats

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Freddie

Freddie deBoer used to blog at lhote.blogspot.com, and may again someday. Now he blogs here.

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3 Responses

  1. Avatar Jason Arvak
    Ignored
    says:

    Wouldn’t a VAT be potentially devastating to an economy in recession? I mean, demand is already dramatically suppressed by stagnant wages and concerns about future employment. A VAT would essentially raise the cost of all manufacturing and services across the board, directly and immediately resulting in decreased consumer demand and increased unemployment even before we account for the construction of a huge new system of regulations and inspections to monitor and enforce the new tax.

    I can’t see how anyone with even a basic knowledge of economics could advocate implementation of a VAT under current or near-term foreseeable conditions.Report

  2. Avatar Freddie
    Ignored
    says:

    That’s a fair point Jason!Report

  3. Avatar Jason Arvak
    Ignored
    says:

    I guess the real problem with a VAT seems to me is that it functions as an across-the-board disincentive towards ALL economic activity, especially if the proceeds are spent on building an intrusive government bureaucracy that will then only add MORE disincentives in the form of new inspection and reporting requirements.

    It also undermines the U.S. competitive position vis-a-vis other countries that do not have a surcharge appended to all of their products.Report

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